Brazil in the OECD would be a transformational leap forward

Brazil in the OECD would be a transformational leap forward
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Brazil would benefit immensely from the support of the United States for its accession to the Organization for Economic Cooperation and Development (OECD), a move that would shape the country’s economic reform agenda and set Brazil’s future on a clear path toward a market-oriented economy and private sector-led development.

The OECD is a forum that promotes high international standards, transparency and global best practices, and a platform for governments to work hand in hand to share economic reform experiences and solutions to common challenges. The OECD’s standards for transparency and good governance have spurred growth and development across the world.

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Brazil is the ninth largest economy in the world and the second largest economy in the Western Hemisphere. It was the eighth largest destination for global foreign direct investment flows in 2015. In recent years, Brazil received more than half of South America’s total incoming foreign direct investment. The United States is a major investor in Brazil, with a cumulative investment of $64 billion in 2016. Yet, Brazil ranks 125th in the World Bank’s latest “Doing Business Report” and remains one of the most cumbersome markets to do business.

Because of the sheer size of this emerging economy, adherence to internationally recognized standards in policy domains such as trade, taxation, investment, rule of law and intellectual property would greatly improve global governance, and ultimately deepen the region’s integration in the global economy. The support of the United States would demonstrate the growing and strategic importance of Brazil and the entire Latin American region in the global economy. Recently, in a letter to Secretary of State Rex TillersonRex Wayne TillersonTrump concealed details of meetings with Putin from senior officials: report Forget the border wall, a coup in Guatemala is the real emergency Tweets, confirmations and rallies: Trump's year in numbers MORE, the Brazil Caucus of the U.S. Congress expressed its support for Brazil’s bid as an important signal of its commitment to making democratic reforms and taking on responsibilities on the global economic stage.

This is an opportunity that cannot be passed by. The decision to apply for OECD membership is the result of a long-maturing economic transformation in Brazil. Legislative and regulatory actions to cut red tape and encourage competition are starting to bear fruits, contributing to efforts to establish more secure economic footing. U.S. support would strengthen the hand of the reformers and benefit U.S. companies that view Brazil as an increasingly important market that needs to come around. Ultimately, it would foster alignment and convergence on diverse economic policies that promote global investment, trade, and a business-friendly environment. Brazil’s accession to the OECD could also strengthen U.S. economic ties within the Western Hemisphere.

The path for Brazil’s full membership will be a long and arduous, one that will require a concentrated effort at the highest level. The Brazilian government has demonstrated its commitment and is working diligently to prepare for OECD accession. Brazil has adhered to 35 OECD legal instruments and has been collaborating and participating in various OECD committees for the past two decades. In 2012, OECD named Brazil a key partner, and in 2015, Brazil and the OECD signed a cooperation agreement, later launching the OECD-Brazil Program of Work.

The forthcoming decision by the OECD is just a first step, but it is one that Brazil has shown its willingness to take, fully recognizing the powerful and transformative impact that adhering to OECD values and principles will have on its economic framework. With Brazil’s timely accession, upcoming reforms such as the pending tax and other business reforms would be bolstered by OECD standards, with no room for concessions.

The U.S. business community remains a staunch partner to Brazil as it moves toward market-oriented reforms and deeper integration in the world economy, and the Brazil-U.S. Business Council encourages the administration to support the application of Brazil to join the OECD.

Cassia Carvalho is executive director of the Brazil-U.S. Business Council.