According to the government, there is interest in joining the Fabio RodriguesPozzebom/Agência Brasil group September 15, 2023
With the Organization for Economic Cooperation and Development (OECD) giving the green light since 2022, Brazil’s membership in the socalled “rich club” has been progressing slowly. For the R7The Ministry of Foreign Affairs (MRE) said that Brazil’s access to the group “is still under review by the Brazilian government in light of the country’s national interest and foreign policy priorities.” However, experts say the issue lost priority in the first months of President Luiz Inácio Lula da Silva’s administration.
The OECD brings together 38 countries that are among the richest in the world. Brazil’s approach to organizing began in 1991 and was enhanced over the following decades through membership in groups and committees. The intention to become a full member of the “club of the rich” was formalized in 2017 under the Michel Temer government and was considered a priority of Brazilian foreign policy from 2018 under the Jair Bolsonaro government.
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Officially, the Lula government says it is interested in joining the organization. However, discussions about the Mercosur agreement with the European Union and cooperation agreements with the BRICS countries (Brazil, Russia, India, China and South Africa) have gained attention in recent months.
Of the 268 instruments required by the organization to join the OECD, Brazil adhered to 118, leaving 150 remaining. The rules cover various areas such as governance, taxes, education and the environment.
advantages and disadvantages
Brazil is already a member of the OECD as a guest member, but full membership of the organization would give the country a seal of investment ability. Another advantage for Brazil is the possibility that the country becomes a kind of guarantor to the creditor abroad. This is what political scientist and researcher at the University of Helsinki, Finland, Kleber Carrilho explains.
“Brazil is gaining the impression of an economically stable country. This is good for the economy, for companies and for competition,” he states. In addition to improving integration into international markets, joining the OECD can also increase the chances of concluding economic agreements with more developed countries. Membership facilitates these transactions as the country is increasingly seen as a bearer of the seal of good political and economic practices.
However, the expert emphasizes that there is a contradiction between Brazil’s entry into the group and the ideological thinking of the current government. “The crucial point as to whether Brazil will take part or not.” [na OCDE] It’s about the state’s willingness to withdraw from the economy. This absence is defended by liberals, but it is not a feature of the current president’s economic thinking. “Perhaps that is why joining the OECD is not one of the president’s main concerns,” he notes.
Although Foreign Minister Mauro Vieira and Finance Minister Fernando Haddad publicly defended the OECD countries’ rapprochement, concerns remain about the organization’s interference in the government’s tax and economic system. An example is the abolition of the IOF (Financial Operations Tax), which is levied on foreign exchange rates and credit cards. With the changes, the government would no longer collect R$19 billion by 2029.
The question arises as to whether Brazil would be rich from the moment it joined the OECD, and many people have sold that idea. The point is that the world is going through a shift in the power game. The geopolitical game is currently being played very intensely. As a result, the governance structures that bring countries together are also being reinvented. It is possible that the UN itself will need to undergo a reformulation in the next few years.
The international lawyer Bernardo Pablo Sukiennik also assumes that Brazil’s accession to the OECD fundamentally depends on the will of the government. Although there are still hundreds of requirements to be met, the organization is making the way each country can implement the requirements more flexible.
“Certainly the current government on the Brazilian side is less willing to give up certain advantages in favor of joining the OECD. The Bolsonaro government, for example, agreed to forego trade and tax benefits that Brazil enjoys as a developing country in order to join the organization. The Lula government will not give up on this, so this could lead to slow progress in negotiations,” he explains.
What I see as a disadvantage is that in these negotiations they require political and economic adjustments that limit the government’s freedom of choice. For a developing country like Brazil, it is necessary that the state has a certain freedom to make decisions without being tied to as many obligations as the OECD requires.
Bernardo Pablo Sukiennik, political scientist and specialist in international law
Sukiennik still sees an obstacle for Brazil as the lack of installed capacity to process the information provided by the OECD, which can help the country plan public policies.
“From the moment Brazil becomes a member, it is necessary to be able to benefit from all the advantages of the OECD. For example, there are currently tax experts in the International Department of Federal Revenue who are very specialized and competent, but “It is a relatively small group that would not currently be able to conclude many double taxation avoidance agreements in addition to those in Brazil has to manage today,” he explains.
The expert explains that any agreement to prevent the double levying of the same tax in international trade requires the existence of a manager. “If Brazil goes beyond the current contracts and abruptly starts managing more contracts, it would have to dedicate a team to do that. This is an example. And there are other examples where not all sectors would be ready.” “At this moment it is easier to take advantage of the advantages that the OECD offers,” he adds.
Pressure on Congress
There is also pressure from the National Congress to advance discussion on the issue. The Chamber of Deputies’ Committee on Foreign Relations and National Defense is expected to hold a public hearing on the issue in the coming weeks.
Deputy Marcel van Hattem (NOVORS) Pablo Valadares / Chamber of Deputies
MP Marcel van Hattem (NovoRS), who requested the hearing before the Commission, criticized what he described as the Brazilian government’s “lack of interest in further developing the negotiations”. He also stressed that the government has reduced the positions of the Brazilian team at the OECD in Paris. Two positions were eliminated from the mission, which now has nine members.
“It is not clear what priority the new government will give to the process of joining the OECD. In a recent interview after a meeting with Chancellor Olaf Scholz, the President of the Republic stated that joining the OECD could be of interest to him. “Brazil, but that will depend on the opponents,” said the MP.
On August 31, Itamaraty set up a ministerial working group on the OECD. The aim of the college is to support the government’s consideration of the process of joining the organization.