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Brazil: Leading BRICs
Group 4:Murali
AbhinavPawanDashmeshNiranjan
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Dilma Rousseff
Elected as president onJan 1,2011
Born in an upper-middle class family
Minister of energy in2002
Promoted by Lula as apresidential candidatein 2010
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Exported gold and lumber in 16th centuryapart from tobacco, sugar and coffee
Declared independent in 1822 andestablished trade relations with northernEurope, USA and Latin America
In 1930 Getulio Vargas overthrew regimeand became a dictator by 1937
ISI to protect domestic producers and keep
currency stable Expanded into oil and mining and created a
bank to provide subsidized loans forinfrastructural projects
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Experienced significant balance-out-payment
crisis, when coffee prices dropped in 1950s In 1964 opened to FDI and introduced
radical measures to control inflation
In 1985 military regime collapsed andtransformed to democracy
In 2010 alone investment of more than $30billion
Goldman Sachs expected BRICs to beamong 5 largest economies by 2030
Contd..
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Lula da Silva
Elected as president twice in2003 and 2007
Lula oversaw stablemacroeconomic policies andpromoted trade
Raised internationalprominence through WTO andUN
Represents the struggle ofunderprivileged
Poor, factory worker, found
workers party
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Trade And Globalization
Brazil had set High Tariff Trades
Dilemma whether to join WTO or not
Joint WTO in 1995 Domestic players became Global
It Became in Top 20 countries forInternational Trade
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Doha Conference
Meetings were biased towards theemerging markets
Disputes over agriculture, investments
Brazil stood out as a leading voice
Led creation of WTO G-21
Cutting down on subsidies in agriculture
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Cotton Dispute
Brazil launched attack post Dohaconference
Subsidies To Agriculture In Brazil weremuch lower than other countries.
Improve yield of crops, soil, farmingtechnology
Yield increased from 200 kg/ha in 1980to 1450 kg/ha in 2009
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Brazils Claims
US cotton subsidies which weresupposed to decline in 1992, increased
Production flexibility contract payments
and normal payments violated WTOprovisions
They protested market loss assistancewhich compensated domestic mills andexporters
Export Credit guarantees, violated theAOA
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USA Response
According to Clause 13 of AOA grantedsignatory countries to phase outdomestic subsidies and export
promotions.
Several production flexibility contractshad expired by the time Brazil initiated
dispute. Other Subsidies were payable under
AOA
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WTO Rulings
US cotton policies had resulted in seriousprejudice to Brazil in the form of Pricesuppression in the world market
None of the US Domestic supportprograms cited in the disputes wereprotected by the peace clause; none were
exempted from the AoA and even theexpired programs were eligible for claimsconcerning distortionary price impacts
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Brazils Victory
$829 Million in Counter measure
$268 Million as retaliation
Cmara de Comercio Exterior (CAMEX)published a list of 102 items importedfrom US that would face higher tariffs.
CAMEX also proposed intellectualproperty retaliation measures Permitting Brazilian firms to use IPwithout the patent holders consent andcreating a special IP tax
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Obama government sought compromise
US would transfer $147.3 Millionannually as technical assistance to thecotton sector
Establishment of The InstitutoBrasileiro do Algodo
Brazil could claim success finally after 8years of WTO adjudication
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Intellectual Property and Health
Care Policies The countrys National Industrial
Property Institute was in charge ofmanaging technology-transfer
agreements, to minimize the currencyoutflow.
Cardoso administration argued that IP
rights would provide incentives to thedomestic firms to invest in productinnovation and scientific research
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The TRIPS negotiations advanced in theUruguay round and Brazil committed toIP reforms
The 1996 IP law made Brazil one of theworlds first nation to align with TRIPS
Under 1988 constitution, Brazils
ministry of health had declared Healthcare is the right of all citizens and a dutyof the state
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The Compulsory Licensing of
Efavirenz Brazil was considered as a high risk as
HIV / AIDS started spreading worldwidein early 1980s
World Bank forecasted that by the endof 1992, 1.2million people would beinfected by the virus
Brazilian government in a two-prongedstrategy was able to efficiently combatthis situation
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Within months of passing the 1996 IPlaw, Brazils congress also approved ahealth law guaranteeing universal
treatment of all the HIV Positive citizensfree
The combination of the prescription
drugs that made up the approach costmore than $15000 per patient annuallyin the US
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The second prong for AIDS strategyinvolved awareness by activists, publichealth professionals and government
officials
Non government organizations wereworking at the areas of risk to educate
them on this regard
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Brazil-Merck Price Negotiations
Governments spending on AIDSvaccination EFAVIRENZ increaseddramatically in 2005
per patients cost to treat AIDS was
$6,240 in 1997
$1336 in 2004
$2500 in 2005
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Brazilian officials adopted a three partargument for price reduction withMERCK (seller of drug name
EFAVIRENZ)
Argument was based on :-
Less cost in developing countries
Brazil offered a single annual purchase thatsaves companies marketing expense andhelp in efficient production planning
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RESULTOFPROPOSAL
This resulted in reduction of price to$570 per patient per year
To protect its IP, the company alsoproposed a multi year staged technologytransfer to BRAZIL national drug
manufacturer.
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MERCK RESPONSE
MERCK wanted the worlds 12th largesteconomy BRAZIL to help technologyinnovation by paying higher prices then
the poorest countries .
They were issued license under TRIPS(compulsory license ) valid for 5 years
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BRAZIL
Initially Brazil used to import drug butafter few years BRAZIL official drugmanufacture company was able to
produce and sell EFAVIRENZ at $210per patient.
This resulted in decrease in spending on
drug from 12%to 4% in budget Government saved up to $75 million per
year
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BRAZILIAN CAPITALISM
Played a central role in nations economy
Owes large enterprises, by serving asprimary source of capital
Its potential gained prominence whengoldman sachs predicted brazil to be in thetop 5 largest economy by 2030
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Poverty reduction
Minimum wage raised from $80 permonth in 2003 to $300 per month in2010
Non contributory pension programmesfor elderly rural citizens and retiredinformal economy workers
12 million families earned between 40$to 120$ depending upon number ofchildren
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Industrial policy
Govt intervened to provide direction andfin ancial support to national champions
Policies included cooperation betweenprivate sector and government
Export growth increased due to chinaspurchases in 2003
Oil production increased Beacme the agricultural powerhouse
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The brazil cost
Despite rapid growth, still brazil was aunderperformer
Though most challenging country to dobusiness but govt development strategywas an obstacle for enterprenuer
Due to poor infrastructre, labor laws,
large informal sector, high real interestrates, created brazil cost
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overcomings
In order to compete with other rapidgrowth countries, they have to improveeducation
speaccialising on the quality ofeducation
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Country of the future
Has real oppurtunity to become adeveloped country
Decide on policies to foster growth
Reinvigorate brazil leadership role inmultilateral negotiations
Try to establish a new rio round of
global talks
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