Political situation & its impact on the product to be exported

Brazil is a Federal Republic with 26 states and over 5000 municipalities and which comprised of the Federal District. The federal capital is Brasília which is located in the federal district.  Furthermore, the federation is set on five principles which are sovereignty, citizenship, dignity of human beings, and social values of labor and freedom of enterprise, and political pluralism. The 1988 constitution grants broad power to the federal government, made up of executive, legislative, and judicial branches. The executive and legislative are organized independently in all three spheres of government and the judicial is organized only at the federal and state or federal district spheres.

The basic law of the country is the Brazilian constitution which are establishes the system of government, the attribution of powers to the Legislative, Executive and Judiciary branches of government and the legislative competence of the  federal, state and municipal administrations. Although Brazil is an economic leader in Latin America, it has failed to become an effective global power due to the social and economic problems. After the act of shielding Brazil from the 2008 and 2009 financial crisis by President Lula and his economic team, although they were affected but it was not a major hit as opposed to other countries.

Since January 1996, profit of Brazilian company paid to the foreign investors not subject to any withholding tax. Brazil is relatively open to foreign countries and do encourage the incoming and outgoing investments of the country. Foreign investment is not subject to government approvals or authorizations, and there are no requirements for regarding minimum investment or local participation in capital.  But except in very limited cases such as financial institution, insurance companies and other entities subject to the regulating authority of the central bank of Brazil. There is free of any tax if you invest foreign capital in Brazil within the amount stated in the foreign direct investment mode of the electronic system of registration of the central bank of brazil  may be repatriated at any time and there is no minimum period of investment. But if any excess over the amount which you stated in the foreign direct investment mode will be treated as a capital gain and it will subject to a 15% withholding tax.

In addition, Brazil is one of member of the World Trade Organization and is a member of the Latin American Integration Association. Brazil follows the World Trade Organization standards for tax classification, customs valuation, dumping, and subsidy and so on. Brazil is also signed the Treaty of Asuncion that created MERCOSUL is composed of 4 sovereign member states which are Argentina, Brazil, Paraguay and Uruguay. Which are presently includes Venezuela and Chile, Bolivia, Peru and Ecuador as associated members. The objective of MERCOSUL is free transit of production goods, services and non tariff restriction between members of states. They also fixing of a common external tariff and adopting of a common trade policy against with nonmember states, and get the balance of position in regional and international commercial. The main goal of MERCOSUL is to stimulate existing trade market and foreign investments among its member. Brazil is one of MERCOSUL of members, so it brought us easily to export on our milk powder for babies to others country. 

Besides that, human rights in Brazil are protected by Brazilian constitution and laws but the unavoidable abuses are still persisting nowadays. One of the serious issues that the government are fights actively against was Slave Labor and the sadness condition was resulted Brazil been remarked poor record since last century.

The slave labor referring to the workers are forced to work to pay their debt to the employee. The debt is an ever-increasing debt. Although it is prohibited by the Brazil government, the group of slave still exists in most of the industry. According to last investigation of local newspaper, over 40,000 Brazilian who find themselves serve the company for no real wages and individual freedom was limited from certain distant of work place from where they live.

It has brought us advantage on export the milk powder business. The countries that our firm targeted to export the products was grouped as high-cost country sourcing. In Brazil, we managed to get labor in slightly low cost compared to putting business in supplier countries said USA and UK. Not to say increase the numbers of slave labor, but the company come out with a plan of helping them to clear the debt while they work for us for the wages.