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How can Brazil use WTO's procedures to attract foreign investments

For being one of the main international investment destinations, Brazil has commonly been regarded as a recipient of foreign capital. In recent years, however, due to increase of Brazilian companies abroad, that position has reached a slight modification. This increased presence of Brazilian capital abroad has changed the priorities of Brazilian investment policy, now also focused on protecting these Brazilian investors and investments, alongside the traditional attention to the attractiveness of the country to foreign investments.

Having this in mind, and in order to maintain the attractiveness of foreign investments besides increasing the protection to the Brazilian investor abroad, a new model of bilateral investment agreement has been adopted from 2015 on, the Agreement of Cooperation and Facilitation of Investments (ACFI). Among the risk mitigation measures of Brazilian investor adopted by the Agreement are the non-discrimination clauses, such as most-favored-nation treatment, already widely adopted by the World Trade Organization (WTO).

The most-favored-nation (MFN) clause is a status that one nation attributes to another, obliging itself to provide it with the best conditions already guaranteed to a third nation with which it has a similar business. It is a treatment of fundamental importance for international trade and, consequently, for the establishment and operation of the WTO, but specifically for investments, the caveat is the obligation on the recipient country to grant the foreign investor treatment no less than the best terms already available to any other foreign investor, even if the agreements are concluded only between States.

This far, seven ACFIs have been signed by Brazil: with Mozambique, Angola, Malawi, Mexico, Colombia, Chile and Peru, all with application of the CNMF, whose interpretation always runs into difficulties of scope and scope, which is why it is fundamental to verify its temporal scope, its extension to investors and / or investments, and to identify the conditions and exceptions to its application, in order to further improve our investment policy.

Source: Jota

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