Exporting/Importing from Brazil Made Easier: Changes to the Foreign Trade Portal

This is an article I wrote to Bloomber, in partnership with Harris Group, a Chilean-Australian law firm. I`m not sure if or when the article has been published by Bloomberg, but I`m posting the original text. 

This article describes legal changes that helped Brazil to climb a few positions in the Doing Business ranking from 2018 (as mentioned here).

Brazil is a very large country, with clear regional differences. It is also organized as a federation, which means that part of the state authority resides in the member states. And, finally, it has a well-developed legal system, covering most of the areas associated with modern democracies, such as environmental controls, export quotas, etc. This legal system, however, is not backed up by an efficient administrative body, but rather by a very fragmented and often untrained team of public servants. As a result, entrepreneurs must face a myriad of local and federal regulations, managed by a circuit of suspicious bureaucrats.

This is even more apparent during the export process. There is frequent confusion regarding the production of documents. Different federal bodies have conflicting and overlapping competencies. Some procedures are performed on paper, while others are processed electronically, causing the exporter to type in the same information two or three different times. Moreover, the individual systems used by federal bodies do not communicate with the overall system, called “Siscomex”. Due to this gap in communication, the exporter must keep a physical file containing extracts of all the documents and licenses. This dossier was kept in place in order to instruct the inspectors, in case a physical inspection is needed.

In order to solve this, the Brazilian government has been studying a way to centralize the import-export procedure, making it more efficient. To this effect, several rounds of public consultation have been carried out. The government has also been continuously making changes to the Siscomex, in an attempt to streamline the process: improvements were  slowly taking place.

However, since the traumatic impeachment process of 2015–2016, the Brazilian economy has needed a burst of incentive to start running again. From the onset, President Temer’s administration has been in a hurry to deliver reforms that would have an immediate impact on results in GDP. It just so happened that the consolidation of export procedures was the kind of cheap reform that could be implemented quickly. It involved no major spending and the framework was already in place.

Indeed, the unified export system has started with exports by air and, as of June 2017, it became the main route for Brazilian exports in other modalities (road, rail, maritime, etc. ).

The main rules that put the system in place were the Federal Revenue Service/Export Secretary directive n. 349, from march 21, 2017 and the CONAMA directive n. 14, from march 22, 2017.

A description of the system’s main features and how it benefits business is provided below.

Unified Declaration

Exports are now managed through an easily accessible online platform (ww.siscomex.gov.br). The system has been designed as a "single window" platform, where several agencies can interact with the exporter. The interaction includes the publishing of rules and clarifications and also the exchange of documents and forms.

Moreover, the export procedures have been streamlined. They now depend on a single document, the Unified Declaration of Export (Declaração Unificada de Exportação, “DUE”).

However, in reality, saying that the export process depends on a single document is not absolutely correct. The DUE is drafted based on the tax invoice (another electronic document, issued by any company in Brazil that is selling merchandise, even within the country). Also, there may be additional registrations regarding the identification of packages and cargo (as we will see below). The great innovation is that the DUE, processed via the new Siscomex page, replaces two or three other independent registrations that were required, one at each step of the export process. Every time, the data had to be typed in the system again and the process was prone to mistakes. Now, the DUE moves along the path, maintaining all the relevant information.

Attachment of Documents—Special Approvals in one Place

One of the best improvement brought about by the DUE is the path for exportation of regulated products.

As any other country, Brazil restricts or controls exports of several items. Some are subject to quotas. Strategic products like oil and military equipment are subject to limitations. Some are subject to specific regulations, such as diamonds (which must receive the Kimberley certificate) or merchandise that is dependent on sanitary controls. Before the DUE, each license or certificate would have to be obtained independently and would later have to be somehow added to the export documentation, or presented during an inspection.

Now, these documents can be added to the system. Actually, the export procedure can be initiated without them and the exporter may obtain the licenses over time, as long as they are ready before shipping.

This brings about another feature of the Siscomex single window platform. Additional documents can easily be scanned, signed digitally and added to the platform, This was not possible, or was very restricted, in the past.

Cargo Control

The unified export system has also adopted a unified reference for cargo (call “RUC”). This has been designed according to the WTO recommendations regarding a "Unique Consignment Reference."

The RUC allows for the aggregation of several invoices into a single cargo and will be used to track shipments through all stages of the export process.

Management of information related to packages and cargo used to be somewhat chaotic. This is certainly a welcome improvement.

Detailed Specification

The system allows for the insertion of additional details about the products being exported. This feature aims at fixing a common problem, which was the request for more detailed specifications by the Customs importers. Since the information about the products was dispersed in several documents, and since the Harmonized System Code (adopted in Brazil with some modifications and called the “NCM code”) allows for generic classification (such as "other"), it was common to see a merchandise identified by its NCM, by a written description, and by some other code used internally by the Brazilian customs or tax authorities.

The system has been designed to coordinate and centralize all description in a single place. The identification will be complemented by a Global Product Code (created by GS1).

Test Mode and Consultation

A relevant feature is that the system has a testing mode, which allows the exporter to simulate the operation beforehand and to check whether additional licenses are required.

Conclusion

In summary, the system certainly brings a lot of improvements. It is being continuously improved and tends to make Brazilian exports much more agile.

The end goal is to reduce export times from 13 to 8 days and import times from 17 to 10 days. The Portal also aims to increase transparency by allowing companies to monitor the progress of their operations in detail over the internet.

According to the Doing Business study conducted by the World Bank, an export of a containerized good in Brazil takes on average 13 days to complete. An import of the same type of product requires 17 days. Additionally, it costs $ 2,215 on average to export a container from Brazil (excluding taxes), while for imports the same costs add up to about $ 2,275. This number puts Brazil in 124th place in the Doing Business trading across borders ranking.

With the Unified Foreign Trade Portal, the goal is to have export times from Brazil reduced by 38.5 percent to a maximum of 8 days, in line with global best practices, by 2017. As for imports, the aim is for average terms to be reduced to 10 days, a 40 percent decrease from current levels, by 2017. As a result of the time reductions and consequent money savings, Brazil intends to be among the 70 best countries in the world for foreign trade. Time will tell if this becomes reality.

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Harris Gomez Group is a law firm with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Mexico, Peru, Bolivia, Brazil, and Argentina. Over the last 16 years, we have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.

To better understand how we can support your management team, please contact Cody Mcfarlane at cmm@hgomezgroup.com