House of Commons - Trade and Industry

Select Committee on Trade and Industry Written Evidence

APPENDIX 6

Memorandum submitted by the British Chamber of Commerce and Industry in Brazil (Britcham)

REPORT ON UK-BRAZIL TRADE AND INVESTMENT

1. CONTEXT

1.1 Brazil as a priority target for UK

Brazil is recognised as being the UK's most important trading partner in Latin America, and there is considerable potential to increase trade and investment between the two countries.

"Brazil clearly demonstrates the opportunities that exist with the emerging economies. UK businesses should not underestimate the current growth and future potential growth of these economies. In a world where the economic fortunes of countries are rapidly changing we all need to raise our game to ensure we see the openings as they appear on the global stage. What is clear is that your business should look in all directions—north, west and south as well as to the east—for these openings."

"The UK's trade relationship with Brazil is increasingly important. Brazil is our most important trading partner in Latin America, offering promising opportunities for UK exporters and investors alike."

1.2 JETCO process underway in Brazil—3Q06

Workshops were held in Brazil, in September 2006, with both Public and Private sector participants to discuss issues of mutual concern and interest.

JETCO recognised commitment on the UK side to increase UKTI resources both in Brazil and in the UK, in recognition of the importance of Brazil as trading partner.

Key recommendations of the joint statement included:

— developing a successful programme of events to increase awareness of the opportunities for bilateral trade and investment;

— further cooperation in science and innovation in bioscience and nanotechnology sectors;

— increasing collaboration on strategic sectors, specifically aerospace/aviation, financial services and the healthcare industry; and

— establishing partnerships in renewable energies, particularly ethanol.

(Source: press statement British Embassy website Brasilia—see Appendix 1 (not printed here)].

Other recommendations included

SME internationalisation;

— Market development through missions and joint ventures in the professional services sector'

— co-operation in intellectual property rights between INPI and UKPO, and industrial quality between INMETRO and UKNPL, promoting innovation and transfer of technology; and

— highlighting the importance of a comprehensive Investment Promotion and Protection Agreement (IPPA) and a Double Taxation Agreement.

[Source: full press release—see Appendix 1 (not printed here)).

— Next steps include a seminar on "Doing Business in Brazil" in London during 1H07, and meetings of officials before March 2007 to review progress.

— The next formal JETCO meeting is planned to be in London in 2007.

1.3 House of Commons Trade and Industry Committee Inquiry 4Q06

— The House of Commons Trade and Industry Committee has launched an inquiry into British Trade and Investment Opportunities with Brazil. This is part of a series of inquiries into the BRIC countries (Brazil, Russia, India and China).

— As part of their investigation the Committee visited Brazil from 22-24 November. During their visit to Brazil the Committee focused on the difficulties and opportunities faced by UK businesses wishing to trade, or develop investment links with Brazil, with particular reference to opportunities in the IT, life sciences, oil and gas, aerospace and financial services sectors.

— Britcham members are aware of the extension to the scope of the select committee inquiry to include all Mercosur countries, announced in a recent press release following the committee's visit to Brazil. While this may be interesting for comparison purposes, Britcham strongly suggests that Brazil is considered on a stand alone basis and any insights from their Mercosur-UK inquiry should be used to build country by country conclusions.

— Grouping Brazil with other more "populist" neighbouring Latin America countries makes it more difficult for investors in the developed world to recognise the true business potential, as there are wide differences between countries, and Mercosur does not act as a single entity. International investors and traders consider the risk of doing business in "Latin America" or "Mercosur" to be very different to the risk of doing business in Brazil. To increase trade and investment between Brazil and the UK will require significant changes in the awareness of specific opportunities, and care will be needed not to confuse or dilute the focus by drawing general conclusions about the region that may not be applicable to Brazil.

1.4 British Chamber of Commerce in Brazil

— This report represents the views of the committees of the British Chamber of Commerce and Industry in Brazil. Specific International Trade and Investment committees based in Sao Paulo, Rio and Porto Alegre have been established during the last year and are at an early stage in their development.

— Britcham represents 287 members: 25 large companies, 149 SMEs and 94 individual members in Brazil, plus 19 overseas members.

— The chamber's membership comprises a mix of Brazilian branches of multi-national companies and Brazilian companies with UK interests employing over 12,000 people in Brazil.

— The membership is active in a wide range of business sectors: including oil and gas, pharmaceutical, telecommunications, consumer products, and professional financial, tax, legal, auditing and consulting services.

To be the focal point for the UK-Brazil business community by providing a forum to foster bilateral trade, investments and services

Doing Business in Brazil

— Britcham publishes a directory of members each year. A copy of this is available to the UK House of Commons Committee to enable the committee to follow up questions.

2. UK-BRAZIL TRACK RECORD

2.1 Background

The UK was heavily involved in the development of Brazil's infrastructure in the early 20th century. There was a surge in UK investment in 1957-1960, under the Kubitschek legislation for the automobile industry GEIA (Rolls-Royce, Perkins, Baker Perkins, BOC). Importation was eased and finance flows were facilitated. At that time labour legislation was the main impediment.

Some government actions have de-stimulated UK interest. Market reserve legislation, forced RACAL out of modem manufacturing, mining companies have left, and some ideological attitudes toward pharmaceuticals have deterred investment. More recently there have been examples of the landless movement invading land and destroying agricultural investments in NE Brazil, destruction of BASF laboratories in the South, and invasion of ARACRUZ.

2.2 Investment

2.2.1 UK Investment Record with Brazil, Russia, India and China

During the five years to end 2004, UK companies invested around £2 billion in Brazil (net direct investment including re-invested earnings). More than twice as much investment was made by UK companies in Russia over the same period and almost 50% more was invested in China (excluding Hong Kong). Brazil was still seen as a better place to invest than India, which attracted just over £1 billion in the same period.

UK FDI position in BRIC Countries at end 2004 (£ billion)

(Source: National Statistics based on FDI Inquiries by Bank of England www.statistics.gov.uk/pdfdir/fdi1205.pdf)

At end 2004, the book value of net assets of UK companies in Brazil was £2.9 billion, compared with net assets of £1.6 billion in Russia, £1.9 billion in China and £1.7 billion in India. The book values reflect revaluation of foreign assets and movements in exchange rates as well as the historical starting position, and the more recent annual flow of investment in the charts above gives a better picture of what is currently happening.

2.2.2 Sources of Foreign Direct Investment in Brazil

During the period 2000-04, almost half (46%) of the foreign direct investment in Brazil has come from companies based in the US, Holland and Spain. UK companies have been in 15th biggest investors during this period with investments of around 2% of the total FDI in Brazil (US$2.9 billion (net FDI)).

Britcham's analysis of this FDI performance is at an early stage. The Britcham International Trade and Investment Committee will be examining the reasons for this apparently poor UK performance, to identify any structural differences between different companies' views of investing in Brazil.

Spanish companies (#3 in FDI) and Portuguese companies (#7 in FDI) may be more comfortable working in Latin America and Brazil particularly, but the leading investors US (#1) and Holland (#2) do not appear to have strong cultural, language or historical ties with Brazil.

There are complexities and difficulties of doing business (see section 2.4) but most of these affect all investors and do not account for the different levels of investment.

Awareness of opportunities in Brazil may be one factor differentiating investment from different countries (this is explored further in section 3).

Taxation agreements between countries may be driving the strong investment performance of companies registered in the tax havens of Cayman Islands, Virgin Islands and Bermuda, which have hosted investments of about ten times more than UK based companies during the last 4 years.

The fastest growing investors in Brazil are Holland, Canada and Luxembourg, with UK back in 13th place, with UK investment in Brazil on average being 8% less than in the previous year during the last four years.

2.2.3 Confidence of Investors in Brazil

At end 2005, Investors had gained more confidence in Brazil as the Lula factor receded from company risk assessments. Brazil was perceived as the 7th most attractive country for investment, moving up from 17th the previous year.

Foreign Direct Investment Confidence Index

2.3 Trade flows

International trade is typically the arm's length buying and selling of goods and services and is regulated by WTO agreements, to which Brazil is a signatory.

For the first half of 2006 the United Kingdom was Brazil's thirteenth biggest trading partner in terms of exports and fourteenth in terms of imports.

In the first half of 2006, Brazilian exports to the United Kingdom fell by just 2.03% in total. In the same period, Brazilian imports from the United Kingdom grew by over 10%.

The balance of trade shows a surplus for Brazil. The total value of trade has risen by over 2%, when compared with the first half of 2005.

In the first half of 2006, Brazilian total exports to the UK fell by just over 2%, compared to the same period in 2005. The main Brazilian exported products to the United Kingdom are piston engines and parts for motor vehicles; footwear; iron ore; bovine meat and bovine meat preparations; soya; poultry and plywood.

In the first half of 2006, Brazilian total imports from the UK grew by just over 10%, compared to the same period in 2005. Brazilian imports from the United Kingdom are predominantly centered on factors of production and capital goods with insecticides, herbicides and similar products; organic-inorganic compounds; heterocyclic compounds; whiskies; professional, scientific, controlling instruments and apparatus being the main products imported.

Brazil's Trading Partners (January-June 2006)


Rank	County of Destination	Exports $bn	Rank	County of Origin	Imports £bn

1	USA	11.2	1	USA	6.7
2	Argentina	5.3	2	China	3.5
3	China	3.7	3	Argentina	3.5
4	Germany	2.6	4	Germany	3.0
5	Netherlands	2.5	5	Japan	1.9
6	Mexico	2.1	6	Nigeria	1.6
7	Japan	1.8	7	South Korea	1.6
8	Italy	1.8	8	France	1.4
9	Chile	1.7	9	Algeria	1.2
10	Venezuela	1.5	10	Italy	1.2
11	Russia	1.5	11	Chile	1.1
12	Belgium-Luxemburg	1,3	12	Saudi Araba	0.9
13	UK	1.2	13	Taiwan	0.8
14	France	1.1	14	UK	0.7
15	Spain	1.0	15	Spain	0.6
	Others	20.6		Others	11.7
		60.9			41.4

[Source: Embassy of Brazil in London http://www.brazil.org.uk/commercial/bilateraltrade.html]

2.4 Complexity of doing business

The World Bank's Doing Business database aims to provide objective measures of business regulations and their enforcement. The Doing Business indicators are comparable across 175 economies. They indicate the regulatory costs of business and can be used to analyze specific regulations that enhance or constrain investment, productivity, and growth. Brazil is currently ranked 121 out of 175.

[Source: World Bank: Doing Business, September 2006.]

The World Bank concludes that governments and industry can achieve a win-win situation by working together to help simplify tax systems and improve revenue collection. Worldwide, it takes on average 332 hours per year for businesses to comply with all tax requirements. But this time ranges from 2,600 hours in Brazil to just 68 in Switzerland.

[Source: World Bank/PwC Report: "Paying Taxes—The Global Picture".]

Small businesses have a particularly hard time dealing with multiple tax payments. Brazil has started making this process simpler. In 2001 it introduced the Simples system, which allows for one monthly tax payment for businesses with annual revenues below $1.1 million. The payment covers eight taxes, including four federal and state consumption taxes, two profit taxes, one labour tax and one municipal tax. Opinion surveys have found that nearly 90% of businesses think highly of this reform—emboldening the government to plan more ambitious reforms to collect taxes electronically.

3. BARRIERS AND OPPORTUNITIES FOR UK-BRAZIL TRADE AND INVESTMENT

The following "barriers" reflect the views of Britcham members from their experience of doing business in Brazil. These issues are explored in more detail in the following pages and opportunities are highlighted which could lead to increased trade and investment for both the UK and Brazil.

It is recognized that the fundamental barrier, especially to small and medium sized companies, is the lack of awareness of opportunities. If the prize is big enough, then this barrier can be overcome, but gaining awareness of the barriers, and assessing the risks and the size of opportunities are difficult for many companies. This is discussed as the first barrier to trade and investment in this section.

With the new Brazilian government in place and ministerial appointments still being made, it is an opportune time to reinforce the benefits of simplifying tax and labour legislation for Brazil and investors and traders, and ensuring that increased trade and investment is built into government policies and plans. There are encouraging signs that the new government is already starting to consider simplification of the Environmental Licensing process to help investment projects to progress.

— Awareness of Brazil and Confidence of UK companies—(All business sectors).

— Tax legislation complexity—(All business sectors).

— Labour law complexity—(All business sectors).

— Availability of local skills and capabilities in SMEs—(All business sectors).

— Importation of Goods—(All business sectors).

— Oil and Gas Exploration Environmental Licensing delays—(Oil and Gas Sector).

— Access to infrastructure/gas pipelines—(Oil and Gas Sector).

— PPP: financial services—(Services Sector).

— Reinsurance Market—(Services Sector).

— Development of Carbon Trading Systems—(Services Sector).

— Telecoms legislation—(Services Sector).

— Legal framework for development of biosciences—(Bio-sciences Sector).

— ANVISA regulatory environment—(Bio-sciences Sector).

— Protection of Intellectual Property Rights—(Bio-sciences Sector).

Possible opportunities for collaboration are highlighted in the following sectors, which will be enabled by raising awareness and reducing the barriers. Further work will be needed to identify specific business opportunities:

— Collaboration in strategic sectors: Aerospace—Oil and Gas—Financial Services—PPPs—Biosciences—Exports—Education and technology business development.


Barriers to trade and investment	Examples	Opportunities to increase UK trade and investment?	Opportunities for Brazil?

All Business Sectors
Awareness of Brazil and confidence of UK companies	Contradiction between positive cultural "in vogue" image of both Brazil from the UK and UK seen from Brazil, vs a largely unknown image of a place to do business. "Brazil is still, in the eyes of foreigners (British) the country of carnival, football, alligators, criminals and indians." [source: Brazilian journalist in London, 2006]. Although in joke, the description by the journalist is a hidden truth of perception. Coupled with the known local problems of bureaucracy, corruption, ideology and inefficiency in the public sector, it is one of the intangibles behind the lack of interest. Difficulties of language and culture? See improving Confidence Index by AT Kearney.	Build a more robust business image of Brazil in the UK. Develop high level personal contact programmes. It may be useful to benchmark the impact of UK activity with the impact of high level visits from China, Germany and Japan, and their position as #2, #4, and #5 exporters to Brazil compared with UK at #14. Develop SME awareness of opportunities through private sector road-shows with public sector support in main business centres in Brazil and UK. Engage JETCO in continued consultation with key private sector organizations (eg Britcham) and Brazil-UK parliamentary groups. Reinforce Brazilian and UK business success (UKTI?). Offer risk assessment and risk management advice to SMEs (UKTI?)	Increased ability to export to the UK- building on robust business image. Build on UK exports as an entry to European markets. Increased foreign direct investment from the UK.
All Business Sectors
Labour law complexity	Labour law bureaucracy creates a high cost of employment. Restrictive work permits delay business start-up and increase costs.	Simplification of Brazilian labour law would enhance business efficiency and enable businesses to create more jobs.	Creation of more jobs.
All Business Sectors Tax legislation complexity	Examples from Oil and Gas Sector—IBP advocacy pack (source: Richard Taylor, BP]. Tax complexity and difficult-to-predict tax load in manufacturing situations. No double taxation treaty—creates high level of withholding/social taxes. Worldwide, it takes on average 332 hours per year for businesses to comply with all tax requirements. But this time ranges from 2,600 hours in Brazil (worst) to just 68 in Switzerland. [Source: World Bank Report: "Paying Taxes—The Global Picture" survey of the position of a standard modest-sized company in each of 175 countries. (2006)].	Simplification of Brazilian tax systems. Double taxation agreement between UK and Brazil to encourage more trade, reduce costs, and simplify corporate structures required. This is one of the items in the Joint Declaration from the recent JETCO meetings.	Improved revenue collection—governments and industry could achieve a win-win result by working together to help simplify tax systems. Increased Brazilian exports into the UK. Increased FDI in Brazil.
All Business Sectors Importation of goods	Customs delays with imported goods trapped through bureaucracy and inflexibility.	Brazilian government is already working to reduce customs bureaucracy.
All Business Sectors availability of local skills and capabilities in SMEs (National content rules apply to oil and gas, aerospace and automotive sectors)	Oil and Gas Sector: Difficulty of meeting current local content requirements for ANP license rounds [source: IBP]. The Brazilian and UK governments have objectives to promote their respective Small/Medium Size Enterprises (Sees), including helping them "internationalise" their businesses (eg: SEBRAE in Brazil and Small Business Service in the UK). Expansion of Brazilian supply chains will rely heavily on Brazilian SMEs. Much of UK industry's supply chain capability similarly resides in its SMEs.	Simplify National Content requirements in public sector contracts. Consider clarifying the rules to make them simpler to interpret. Allow investors to make commitments of equivalent value to invest in people skills (similar to carbon trading offset). Build on PROMINP programme in oil and gas sector and BNDES programme in aerospace sector, to reinforce requirements and pace of skills development.	Increased employment and productivity in Brazil. Develop competences for Brazilian SMEs to compete outside Brazil in international markets.
	Brazilian SMEs often need imported products, services and know-how to expand their capabilities, to fill supply chain gaps. UK SMEs who possess the products, services and know-how needed by Brazilian supply chains, often lack the resources to enter the Brazilian market alone. Co-operation between them can provide an ideal solution for both. Brazilian and UK SMEs face difficulties when attempting to form associations, eg — Reconciling business cultures/expectations. — Understanding of available opportunities — Uncertain taxation regime/load. — Uncertain protection of intellectual property. Addressing these difficulties and facilitating cooperation between Brazilian and UK SMEs, in the first instance specifically in the oil/gas and aerospace sectors, where there is an established Brazilian need and a demonstrated UK ability to help satisfy the need, extendable later to other sectors, will open up large opportunities for expanding bilateral trade and investment. [source: Rio IT&I Committee].	Develop specific packages to support export projects in priority sectors. Include help from government agencies and trade and industry bodies, and help in understanding business cultures. Consider extension of small business tax regime to reduce bureaucracy for medium-sized businesses during start-up. Encourage JVs with UK companies to build competences in Brazilian SMEs. Encourage training and exchange of experiences between UK and Brazilian companies.
Oil and Gas Sector Environmental licensing delays	Number of rigs lying idle awaiting IBAMA environmental permits. A more predictable system is required that enables effective planning to reduce the significant costs of waiting for permits to be granted. IBAMA focusing on impact and less on balanced decisions as required by law: balancing economic benefit vs environmental risk. Industry has a good track record but a poor perceived reputation [source: IBP]	Simplification of IBAMA licensing system through process improvement and prioritisation on issues that really protect the environment. Build environmental expertise in agencies and universities. Exchange best practice between UK and Brazilian agencies. Training agreements between UK and Brazil universities—including scholarships.	Better environmental assurance for Brazil, focusing on most important issues. Possible increased exploration investment from Brazilian and foreign companies. Brazil would have more confidence in being able to maintain oil and gas self sufficiency.
Oil and Gas Sector Access to infrastructure/ gas pipelines	Opportunity to share experience of development of UK gas regulations.	Guaranteed access to infrastructure—New Gas Law required to enable financing of new developments.	Faster growth of domestic gas market for Brazil. Increased FDI.
Services Sector PPPs: financial services	Opportunities for UK professional services companies advising on PPP contracts and on innovative financing. In 1994, the UK signed an Investment Promotion and Protection Agreement (IPPA) with Brazil, which is still awaiting Brazilian Congressional approval. Foreign investment currently restricted in internal transport, public utilities, media and other strategic industries.	Share UK PPP experiences. Encourage private investments—eg incentivise construction of new gas pipelines. Information on upcoming projects being considered by federal and state government would stimulate greater UK involvement. Ratification of the 1994 IPPA would help foreign investment.	Faster GDP growth with removal of infrastructure bottlenecks. Access to UK based capital markets. Increased foreign direct investment.
Services Sector Reinsurance market	Opening of Brazilian Market in 2007, and privatisation of the State's reinsurer, IRB. Build on President Lula`s visit to City of London in March 2006.	Market opening provides opportunity for associations between Brazilian and UK insurance companies. Ratification of WTO understanding on financial services would improve market clarity. Establish technical cooperation between FSA and SUSEP.	Growth in re-insurance market. New market opportunities for Brazilian insurance companies.
Services Sector Development of carbon trading systems	Share experience of first year of Carbon Trading system in Europe can be transferred to Brazil.	Definition of Tax Regulation related to carbon trading. Implementation of public policies on CDM.	Reinforces Brazil's climate change leadership position.
Services Sector Telecoms legislation	Brazil has a significant telecoms market (around 40 million fixed lines and close to 100 million mobile phones during the next 12 months), and although privatised, this sector has regulatory challenges.	Further liberalisation of the telecoms market, and ability to resell mobile services and mobile virtual network operatorships would stimulate business. Share UK experience.
Bio-Sciences Sector Legal framework for development of biosciences		Legal framework for access to genetic resources. Improvement of Brazilian Biosafety Act.	More rapid development of bioscience capabilities. Greater foreign investment.
Bio-Sciences and Health Sector ANVISA regulatory environment	In the pharmaceutical sector, ANVISA (Brazilian health authority) reviews all patent applications for pharmaceutical products and processes—a slow approval process. ANVISA also rejects patent applications for second use of products, as they are not classed as new products.	Improved ANVISA speed, transparency and stability. or; alternatively ANVISA approval could be eliminated and patent decisions delegated to INPI as the appropriate body with the necessary technical patent expertise. Clarify ANVISA's role as a technical body, not political/economic.	More competitive bio-sciences sector.
Bio-Sciences Sector Protection of intellectual property rights		High standards of IP protection, with consistent application and enforcement are needed—this is being developed by a JETCO working group. Improved National Institute for Industrial Protection (INPI) services, speed, infrastructure, and additional staff—this would help reduce the patent and trademark application backlog. Avoidance of political interference in patent process.

OPPORTUNITIES FOR UK-BRAZIL COLLABORATION

There are opportunities for collaboration between Brazil and UK to increase bilateral trade and investment in the following sectors, where the market and opportunities are large and UK/Brazilian companies are especially well placed to take advantage of them:

— Oil and Gas Sector;

— Aerospace Sector;

— Financial Services;

— Public-Private Partnerships (PPPs);

— Biosciences;

— Education and new technology business development; and

— Alternative Energy.

The barriers examined in the previous section apply to many of these sectors.

Further information on three areas of potential collaboration is included as follows:

Oil and Gas Sector

— The Brazilian oil/gas sector and the associated shipbuilding sector offer huge business opportunities, with programmed investments by Petrobras alone of US$87 billion over the next five years.

— The Brazilian government has an active programme to expand the national supply chains for the oil/gas sector (PROMINP Programme).

— Participation by foreign companies is encouraged, as a Brazilian subsidiary or in association with Brazilian companies, as a way of accelerating the objective.

— UK investors need a strong Brazilian-based SME capability and capacity to be able to meet national content requirements.

— UK is particularly strong in the oil/gas industrial sectors and has much to contribute to the objectives of expanding the Brazilian oil/gas supply chains.

Aerospace Sector

— The Brazilian aerospace sector is now the world's 3rd largest producer of commercial aircraft (Boeing, Airbus, Embraer).

— The Brazilian government has an active programme to expand the national supply chains for the aerospace sector (BNDES' programme).

— Participation by foreign companies is encouraged, preferably in association with Brazilian companies, as a way of accelerating the objective.

— The UK's aerospace industry is the world's 2nd largest and therefore has much to contribute to the objectives of expanding the Brazilian aerospace supply chains.

— Promotion of cooperation would help increase trade and investment in this area.

— Aerospace appears to be a Brazilian priority; UK trade would benefit from also treating this as a priority.

Financial Services Sector

— If the Brazilian economy is to grow at rates similar to other BRIC countries, it will need access affordable funding.

— Interest rates continue to be prohibitively high in Brazil forcing many treasurers to seek offshore funding in the form of debt or equity.

— Recently the Brazilian equity markets have witnessed an unprecedented level of activity. Over the decade to 2004, the number of IPOs in Brazil could have been counted on two hands. Since the launch of the BOVESPA Novo Mercado (a stock exchange requiring a high standard of governance), over 50 companies have launched IPOs.

— Although these IPOs are launched on the Brazilian market, approximately 60-70% of amounts are raised through 144As and Reg S (foreign investors).

— The Novo Mercado raised US$ 7 billion in 2005 and will raise over US$ 15 billion in 2006. This compares to the approx US$ 56 billion raised in London and US$51 billion in NY in the first seven months of 2006.

— The City is clearly an increasingly important venue for foreign IPOs. The large number of Russian, Indian, Chinese and Israeli companies raising capital through the main board and AIM on the London Stock Exchange is impressive.

— Brazilian companies are conspicuous by their absence. Currently, the challenges presented by the US markets have resulted in many prospective foreign registrants shying away from New York.

— Through UKTI, we encouraged the London Stock Exchange to visit Brazil which they did in September on a fact finding mission. At our request, Alderman John Stuttard, the Lord Mayor of the City of London wrote to the Chairman of the London Stock Exchange advising of his plans to visit to Brazil in August 2007 and invited the London Stock Exchange to accompany him. We believe that having Brazilian companies listed in London will increase the corporate dialogue and build new networks thereby promoting trade and service opportunities.

— Another important source of funding will involve the PPP initiative. Similar to the UKs experience with PFIs, the Private Public Partnerships have the potential to attract new sources of funding and reducing the participation of the state in new infrastructure projects. This first PPP program in São Paulo was announced in December 2006. The UK's expertise in advising on, planning and project managing PPP is second to none.

— The Brazilian reinsurance sector, currently a state monopoly, is expected to the opened to the private sector in the short term.

— The City has an important role to play in developing bilateral invisible trade opportunities.

(Appendices 1-6 not printed here.)

6 December 2006



© Parliamentary copyright 2007	Prepared 16 July 2007