Select Committee on Trade and Industry Written Evidence


APPENDIX 27

Further supplementary memorandum submitted by UKTI

A—JETCO RECOMMENDATIONS AND PROGRESS

1.  Encourage the relevant authorities in each country to address issues that have been raised as a priority by the JETCO workshops.

    —  Good relationships established and regular meetings are taking place both in Brazil between the UKTI team in Brasilia and Brazilian officials to exchange information and discuss progress and in London between UKTI and the Brazilian Embassy.

2.  Consider and, as appropriate, develop a structured and co-ordinated approach to deliver successful programmes of events to increase awareness of the opportunities for bilateral trade and investment.

    —  Collaboration on events such as: Brazilian Chamber Lunch for the Foreign Secretary; Brazil Trade and Investment Conference in London attended by Andrew Cahn;

    —  Brazil awareness seminars with an engineering focus are being organised in the regions and already UKTI have organised four in North West, West Midlands, Yorkshire and Humber and London in the last five months. We are already seeing outcomes eg from the Yorkshire & Humber event five companies have expressed interest in Brazil which are being followed up.

    —  A series of emerging markets (including Brazil) seminars have been arranged in the South West region.

    —  A sharing of events calendars and strategies on relevant JETCO sectors, encouraging greater cooperation and participation.

3.  Foster co-operation through missions and other initiatives in areas of business development such as SME internationalisation.

    —  UKTI stand ready to help organise a visit to the UK from Brazil. Post are awaiting suggestions from the Brazil Industry Department on possible themes, timing etc.

4.  Encourage co-operation between: (a) the Brazilian National Institute for Metrology and Industrial Quality (INMETRO), and the UK National Physical Laboratory (NPL) and the UK Accreditation Service (UKAS); and (b) the Brazilian National Institute for Industrial Property (INPI) and the UK Patents Office.

    —  NPL, UKAS and UKPO. UKAS and UKPO are very keen on working with the Brazilians and would welcome an inward visit as a first step. Awaiting suggestions from the respective Brazilian bodies.

5.  Support a Brazilian mission to the UK during the first half of 2007 focused on technical aspects of the services sector.

    —  Inward visit by the Brazilian Ministry of Trade is planned for April 2007 to look at technical aspects of the services sector such as statistical measurement.

6.  Further co-operation in science and innovation, particularly in the bioscience and nanotechnology sectors and during the year of science.

    —  Full programme of events in place for the year of science. Sir David King is attending the opening ceremony in Brazil on 30 March.

7.  Establish partnerships in investment and trade in renewable energies, particularly ethanol.

    —  Terms of Reference agreed for the UK-Brazil-Southern Africa bioethanol partnership and first meetings held in December.

8.  Support the negotiations between Brazilian and British institutions for a joint project in the electronic sector particularly on electronic displays.

    —  Negotiations concluded and contract awaiting signature for the Cambridge Display Technologies.

9.  Promote co-operation on strategic sectors specifically: aerospace and aviation; financial services; and healthcare.

Aeropace

    —  The four companies that participated in the 2005 mission to Brazil are all developing business in Brazil as a result.

    —  UKTI Sector Group commissioned an in depth report on the aerospace industry in Brazil.

    —  This report showed that the industry welcomes the JETCO and wants it to focus on addressing barriers and highlighting the difficulties of getting into Embraer's supply chain.

    —  A UK-Brazil working group is therefore being set up under JETCO to focus on these issues. Industry has welcomed this.

    —  The first UK-Brazil Working Group meeting is expected to take place later this year. It will be made up of UK and Brazil public and private sector.

Financial Services

10.  Support the ratification of the Brazil-UK Agreement on the taxation of Air Transport and Shipping.

    —  Brazilian Minister Furlan will write to relevant authorities in Brasilia to expedite the ratification of the Agreement on the taxation of Air Transport and Shipping.

11.  Examine IPR issues under government leadership, with a view to increasing co-operation including promoting innovation and transfer of technology initiatives in order to reach adequate level of protection of intellectual property rights.

    —  British Embassy, Brasilia has submitted a bid under the Global Opportunities fund to UKPO experts to visit Brazil to deliver two-weeks of IPR training to Brazilian patent examiners in the fields of: Biology/Microbiology, Chemistry and Pharmaceuticals; and Electronics, Telecommunications, Physics, Electricity, Metallurgy, Agriculture, Forestry.

12.  Increase UKTI resources in Brazil and the UK in recognition of the importance of Brazil as a trading partner.

    —  Three new UK based staff will be added to the UKTI complement in Brazil bringing the total number of UK based staff up to approximately 5.5. Furthermore an extra local member of staff will be added to the team bringing the total of Local UKTI staff up to approximately 30.5.

13.  Support the ratification of the existing Investment Promotion and Protection Agreement and the agreement of a comprehensive Double Taxation Agreement.

    —  UKTI have met with HM Revenue & Customs policy adviser who has undertaken to visit Brazil in Spring 2007 to take forward technical level exchanges on the Double Taxation Agreement.

    —  A Brazilian Working group has been established to look at all of Brazil's pending Investment Promotion Protection Agreements.

14.  Promote joint ventures between UK and Brazilian professional services firms in their respective areas to develop the market.

    —  A series of joint events is planned to promote professional services during the Lord Mayor's visit to Brazil in August. Possibly followed by a mission to the UK to coincide with the JETCO Ministerial in London in September.

15.  Promote a seminar on Doing Business in Brazil to be held in London during the first half of 2007.

    —  Proposals to stage a "Doing Business in Brazil" event to coincide with the JETCO Ministerial in September, to include workshops on relevant sectors.

B—PROGRESS ON JETCO (INCLUDING FORTHCOMING EVENTS)

(See also the note on the three specific sectors covered under the JETCO)

    —  We have a good story to tell on JETCO. It is a unique forum for public and private sectors to focus on identifying opportunities, not problems. It is well regarded by all.

    —  We are currently finalising an ambitious programme of activities to raise the profile of Brazil's potential with British business. Activities include: sponsored missions; technical-level exchanges including on key issues such as Public Private Partnerships and Intellectual Property Rights; and themed seminars on "Doing Business".

    —  JETCO is also being used to develop relationships between key business organisations such as the CBI and Brazilian Business representational bodies.

    —  UK and Brazilian teams are working well together to address the 15 recommendations from the first JETCO. Initial deliveries, successes or plans so far are:

    —  good relationships established and regular meetings are taking place between UK and Brazilian officials to exchange information and discuss progress;

    —  collaboration on events such as: Brazilian Chamber Lunch for the Foreign Secretary; Brazil Trade and Investment Conference in London attended by Andrew Cahn. A sharing of events calendars and strategies on relevant JETCO sectors, encouraging greater cooperation and participation;

    —  full support for the JETCO process from UK Patent Office, UK Accreditation Service, National Physical Laboratory and the Civil Aviation Authority to cooperate with their Brazilian counterparts and undertake bilateral visits and missions;

    —  inward visit by the Brazilian Ministry of Trade (April 2007) to look at technical aspects of the services sector such as statistical measurement;

    —  full programme of events in Brazil in place for the year of science: Sir David King is attending the opening ceremony on 30 March; the Duke of York will be launching a design show case event in Brazil in April; and the Lord Mayor will open an event on human life in September;

    —  Terms of Reference agreed for the UK-Brazil-Southern Africa bioethanol partnership and first meetings held in December. The Taskforce has agreed to focus initially on assisting the implementation of Mozambique's national biofuels strategy and policy;

    —  negotiations concluded and contract awaiting signature for the Cambridge Display Technologies;

    —  progress on the three sectors highlighted in JETCO for cooperation: Aerospace, Financial Services and Healthcare;

    —  we are working closely with the Brazilian government to ensure that the Air Services Agreement is ratified quickly, but this process has been delayed because of the elections in Brazil;

    —  British Embassy, Brasilia has submitted a bid under the Global Opportunities Fund to support a visit by UK Patent Office experts to Brazil to deliver two-weeks of Intellectual Property Rights training to Brazilian patent examiners in the fields of: Biology/Microbiology, Chemistry and Pharmaceuticals; and Electronics, Telecommunications, Physics, Electricity, Metallurgy, Agriculture, Forestry;

    —  senior policy adviser from HM Revenue and Customs visiting Brazil Spring 2007 to take forward technical level exchanges on the Double Taxation Agreement;

    —  a Brazilian Working group has been established to look at all of Brazil's pending Investment Protection and Promotion Agreements (IPPAs);

    —  a series of joint events planned to promote professional services during the Lord Mayor's visit to Brazil in August. Possibly followed by a mission to the UK to coincide with the JETCO Ministerial in London in September; and

    —  proposals to stage a "Doing Business in Brazil" event to coincide with the JETCO Ministerial in September, to include workshops on relevant sectors.

C—UPDATE ON JETCO STOCKTAKE

  The JETCO six monthly stocktake meeting took place in Sao Paulo, Brazil on Tuesday 13 March. It was attended by about half a dozen officials on each side from Brazil and the UK, including two from UKTI in London, as well as about 20 representatives of the business community in Brazil. The British Chamber of Commerce in Brazil, CNI (the Brazilian equivalent of CBI) and FIESP (the business representative body covering Sao Paulo state) were all represented.

  The main focus of the meeting was discussing progress on the 15 JETCO recommendations with officials providing updates and business representatives making suggestions for further progress. Although there were many ideas, there was little consensus from business. Most of the discussion centred around the possibility of setting up working groups on particular sectors or issues and about the content and format of the "Doing Business in Brazil" seminar which the Brazilians will be organising in London this year (recommendation 15). It has since been decided that this event will be organised by the Brazilian Embassy in London to coincide with the Brazilian Chamber of Commerce Gala Dinner which is taking place on 16 May 2007.

  It was recognised that the elections in Brazil and changes in the Brazilian Government since September had hindered progress on some fronts. (The Trade and Industry Minister was finally appointed last Friday, 23 March.)

  In addition to this meeting, UK officials met separately with officials from ABDI (the Brazilian Agency for Industrial Development) and agreed on a number of further actions to make progress on the JETCO recommendations. In particular it was agreed that more needed to be done on both sides to raise the profile of Brazil in the UK and the opportunities in the market and also to raise the profile of the UK in Brazil. This fits well with the work which UKTI will be doing following the identification of Brazil as an emerging market in UKTI's strategy.

D—JETCO SECTOR PRIORITIES (Aerospace, Financial Services and Healthcare)

AEROSPACE

Jetco

    —  UKTI Sector Group commissioned an in depth report on the aerospace industry in Brazil.

    —  This report showed that the industry welcomes the JETCO and wants it to focus on addressing barriers and highlighting the difficulties of getting into Embraer's supply chain.

    —  The report also recommended that a UK-Brazil working group should be set up under JETCO to focus on addressing barriers to trade between Brazil and the UK, including tariff and non-tariff barriers and initiatives to promote trade, interchange and cooperation.

    —  This working group is now being set up and the first meeting is expected to take place later this year. It will be made up of UK and Brazil public and private sector.

General

    —  UK companies do have a presence in the aerospace sector in Brazil.

    —  For example, Rolls-Royce has been doing business in Brazil since the early 1950s and operates in four sectors there: civil aviation, defence, marine and energy. It has an HQ in Rio de Janeiro and employs around 400 people in the region. Its principal companies include Embraer, Petrobras, TAM, LAN, Varig, Brazilian Air Force and the Southern Cone Navies.

    —  We also know that at least three UK SMEs who have done business in Brazil recently: Senior Aerospace, TWI and Aeromet.

    —  The four companies that participated in the 2005 mission to Brazil are all developing business in Brazil as a result.

    —  However, history has suggested that trading in the market is difficult with regard to the sale of capital equipment and tax regimes.

    —  Local representation is necessary for UK companies to fully enter this market. This poses a barrier to those wishing to access the market for the first time, especially since this is not required in other emerging markets.

    —  Some British companies have tried to do business in Brazil but with no success have moved on to try other, easier markets. I understand that my officials have already supplied a list of these companies to the Committee.

    —  Brazil largely dominated by Embraer which has a well established supply chain. It costs more to break into a supply chain than to be involved in the development of new ones (eg India).

    —  Embraer is primarily focused on supporting inward investment in Brazil rather than dealing with companies who just want to supply products or services.

    —  There are not major incentives (eg tax breaks) in place in this sector from the Brazilian Government as there are in other markets. For example Mexico and the United States both offer tax incentives to British companies doing business in this sector.

    —  Companies from other European countries already have big contracts in Brazil in the aerospace sector. This gives them leverage and makes it easier for them to win new contracts than it is for UK companies.

    —  Leading aerospace companies from both France and Germany have historically had a shareholding stake in Embraer. This has facilitated their participation in the supply chain. Understand that EADS has recently sold its stake though and that Dassault Aviation of France has also reduced its stake.

    —  For military aviation, local companies are the key players in line with Brazilian Government policy.

FINANCIAL SERVICES

    —  UKTI is looking at how to engage with emerging markets in the financial services sector. Initial priorities are focused on China, India, the Gulf and Russia but the sector team is also looking at other markets long term. These priorities are based on extensive stakeholder consultations for the development of the Financial Services strategy.

    —  UKTI's Financial Services Sector Advisory board met last week and discussed a paper on South America. The board thought that the UK had lost out to the US in South America over the last 20 years, but that now would be a good time to re-engage the continent. They agreed that UKTI should engage actively with Brazil on financial services, and that it would serve as a useful pilot for the rest of the region.

    —  The board also noted that Government could add most value on helping to remove trade barriers and promoting good regulation, but in some countries with more open policies (eg Chile) business does not need Government support to exploit the opportunities.

    —  There are significant developments in the financial services environment with a clear interest from UK and Brazilian officials in improving and strengthening existing relationships.

    —  There is particular potential and progress in the area of Public Private Partnerships, PPPs, including a number of seminars and visits. After the first sponsored group attended the Partnerships UK masterclass on PPPs, Brazilian officials from both the federal and state governments have become the largest group attending the training in the last three years.

    —  The federal government is finalising details for World Bank funding to offer a PPP advisory contract to a UK company—the first contract of this type in PPP services.

    —  The Lord Mayor of the City of London will be visiting Brazil in August 2007. Other activity includes:

    —  In the area of legal services a joint seminar is being organised with the Brazilian Advocates Organisation on Intellectual Property Rights and patent protection.

    —  Events linked to the Lord Mayor of the City of London's visit.

    —  Possible support from UKTI for the London Stock Exchange's follow up to their September 2006 visit.

    —  Financial services briefing has been provided to UKTI teams in Brazil.

    —  The Brazilian Ambassador has offered to host a business lunch for the Lord Mayor on Wednesday 14 March.

    —  The Brazilian Finance Minister called on the Lord Mayor at the end of January.

Carbon credits

    —  Brazil is a leading market in carbon credit and the UK has a unique network of specialists in financing, project development and technology for clean development mechanism.

    —  Internationally renowned UK companies in the carbon sector are present and active in Brazil, providing a whole range of advisory services for all stages of the project cycle. UK engagement has strengthened with the visit of the Climate Change Projects Office last year to improve links with public and private sector contacts. A further visit by the Climate Change Projects Office is scheduled for this year.

Legal services

    —  Linklaters in Brazil has been contracted as the legal advisor for the first federal PPP project. Other UK firms also have potential to offer advisory services in co-operation with Brazilian firms for federal and state PPP projects.

    —  There has been a very successful co-operation with the Brazilian Bar Association which included a Young Lawyers Exchange Programme.

    —  Also scope for further engagement in the areas of Human Rights, Governance and Intellectual Property Rights.

Insurance/Reinsurance

    —  The reinsurance monopoly in Brazil ended in January 2007 as a result of new legislation. There are now prospects for business for UK companies and Brazilian officials will be attending Lloyd's international regulators conference in May 2007.

London Stock Exchange

    —  In the past 12 months the International Business Development team at London Stock Exchange has seen an increase in the number of enquiries coming from investment banks, law firms and Brazilian corporations interested in learning more about the Alternative Investment Market (AIM) at the London Stock Exchange.

    —  In addition, Infinity Bio Energy is in the process of becoming the first Brazilian company to be listed on AIM.

    —  The London Stock Exchange had a fact-finding visit to Brazil in September 2006 which allowed them to learn more about the dynamics of the market, make relevant contacts and understand how the decision making process for listing abroad operates. The team was impressed by the vitality of the markets and prospects for business identified during their visit.

    —  As a clear sign of the perceived value of the potential business prospects, London Stock Exchange is visiting Brazil again this March.

    —  The Lord Mayor will also be returning to Brazil in the Autumn.

HEALTHCARE

    —  Healthcare continues to be a UKTI priority in Brazil and a full programme of events has been approved for 2007-08. UKTI is looking at how the JETCO can be used to address trade barrier issues with the Brazilian Government such as new rules for registration of medical devices and diagnostic products.

    —  Healthcare was specifically included in the JETCO recommendations to support the potential of the Bio Products Laboratory technology transfer project.

    —  The Bio Products Laboratory, which is an operating division of the NHS Blood and Transplant Authority, has supplied several blood products to Brazil for the past ten years and believes it is was well placed to secure a negotiated agreement directly with the Ministry of Health.

    —  On the advice of our Ambassador in Brasilia, a Memorandum of Understanding (MOU) in healthcare was signed on 8 March 2006 to enhance the potential. Despite this MOU and continuing support from the Ambassador and the Department of Health, negotiations are going very slowly on the project/tender. The elections and change in the Brazilian Administration have had a particular effect as a new Health Minister has yet to be appointed.

E—UK-BRAZIL MOU IN THE ENERGY SECTOR

MEMORANDUM OF UNDERSTANDING BETWEEN THE DEPARTMENT OF TRADE AND INDUSTRY OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE MINISTRY OF MINES AND ENERGY OF

THE FEDERATIVE REPUBLIC OF BRAZIL FOR THE ESTABLISHMENT OF A CONSULTATIVE MECHANISM FOR CO-OPERATION IN THE FIELD OF ENERGY

The Ministry of Mines and Energy of the Federative Republic of Brazil

and

The Department of Trade and Industry of the United Kingdom of Great Britain and Northern Ireland (hereinafter referred to as "the Participants"),

Bearing in mind the importance for both Participants of developing diversified and sustainable sources of energy to guarantee social and economic development;

Desirous to exchange ideas and information on energy issues relevant to both Participants,

Have reached the following understanding:

1.  The Participants will set up a formal, regular and productive mechanism ("the Consultative Mechanism") to exchange views and information on energy issues and to identify areas of mutual interest for co-operation. These issues and areas may include:

(a)  Efficient and advanced energy technology;

(b)  Renewable energy technologies, including biodiesel and biomass;

(c)  Research in alternative fuels, academic development and the enhanced training of personnel;

(d)  Environmental conservation;

(e)  Information, planning and regulation, especially in the modernisation of energy systems and security of offshore energy infrastructures; and

(f)  Energy policies, trade and investment.

2.  Other areas of co-operation may be included if jointly approved.

3.  Each Participant may take the initiative to request a meeting of the Consultative Mechanism. The level of representation at a meeting will be jointly approved beforehand.

4.  To facilitate the exchange of views and information, each Participant will designate a Focal Point who will be responsible for the preparation of the meetings of the Consultative Mechanism held in his country.

5.  The host Focal Point will propose to his counterpart, through diplomatic channels, a draft agenda for the forthcoming meeting. All other communications regarding the agenda will also be conducted through diplomatic channels. It is understood that, so as to make full use of the meetings of the Consultative Mechanism, an agenda will be jointly approved at least two weeks prior to a scheduled meeting.

6.  During the consultation meetings, the Participants may examine and approve projects of co-operation in jointly approved areas. The method of work, the financial implications and the expected results of each co-operation project will be defined in a separate instrument for that project. Each such initiative will be managed actively, according to jointly approved performance measures and objectives.

7.  The Participants understand that this Memorandum of Understanding and the Consultative Mechanism which it creates do not create legally binding obligations between them.

8.  Changes to this Memorandum of Understanding may be proposed in writing at any time. The Ministry of Mines and Energy of the Federative Republic of Brazil or the Department of Trade and Industry of the United Kingdom of Great Britain and Northern Ireland can terminate this Memorandum at any time by providing written notice of at least thirty days to the other Government. Ongoing projects will not be affected by a decision to terminate this Memorandum of Understanding.

9.  Co-operation under this MoU is expected to commence upon signature by both Participants.

Signed in Brasilia on 1 February 2006, in the Portuguese and the English languages, both texts being equally valid.

F—UK-BRAZIL MOU IN THE HEALTHCARE SECTOR

MEMORANDUM OF UNDERSTANDING BETWEEN THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND FOR COLLABORATION IN THE FIELD OF HEALTH BETWEEN THE DEPARTMENT OF HEALTH, ENGLAND AND THE BRAZILIAN MINISTRY OF HEALTH

The Government of the Federative Republic of Brazil and the Government of the United Kingdom of Great Britain and Northern Ireland (hereinafter referred to as "the Participants")

Bearing in mind the advantages for both Participants of joint collaboration in the field of health, between the Department of Health, England and the Brazilian Ministry of Health, particularly in the area of blood and blood safety;

decide:

Paragraph 1

(a)  To exchange information on the development of health systems and associated technologies where this may be of mutual benefit;

(b)  To keep under review the scope for visits by, and interchange of, health professionals in order to better understand developments in each other's countries and to underpin the achievement of high professional standards;

(c)  Where appropriate, to encourage research and development activities that facilitate the identification and application of best practice systems of quality assurance and regulation;

(d)  To study ways of collaborating in other health areas.

Paragraph 2

Given the existing close cooperation between the Participants in this area, they have decided that collaborative activity in the area of blood products will be taken forward under the provisions of this Memorandum.

Paragraph 3

To facilitate the collaborative activities approved, each Participant will designate a Focal Point who will organise such meetings and exchanges between the Participants as may be necessary.

Paragraph 4

In accordance with the laws and regulations of the respective countries and with relevant international agreements to which Brazil and the United Kingdom are or may become parties, the Participants will ensure the adequate and effective protection and fair distribution of intellectual property rights or other rights of a proprietary nature resulting from cooperative activities conducted under the provisions of this Memorandum. The Participants ill consult one another for this purpose as necessary.

Paragraph 5

This Memorandum of Understanding is not intended to confer legal rights or obligations or to impose commercial responsibilities or obligations on either Participant. Each Participant will meet their own costs relating to the application of this arrangement. In respect of the United Kingdom, this Memorandum of Understanding only applies to the Department of Health, England.

Paragraph 6

Each Participant will notify the other of the completion of any formalities required for this Memorandum of Understanding to come into effect. This Memorandum will come into effect on the date of the later Government notification and will continue in effect for a period of five years unless terminated by either Government on giving six calendar months' written notice via diplomatic channels. Existing collaborative projects will not be affected by a decision to terminate this Memorandum

Paragraph 7

The foregoing record represents the understandings reached between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Federative Republic of Brazil upon the matters referred to therein.

Signed in duplicate at London on the seventh of March 2006, in the Portuguese and English languages, both texts having equal validity.

FOR THE GOVERNMENT OF THE FEDERATIVE REPUBLIC
OF BRAZIL
FOR THE GOVERNMENT OF THE
UNITED KINGDOM OF GREAT
BRITAIN AND NORTHERN
IRELAND







 
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