Brazilian Export Processing Zones & Green Powershoring: Challenges & Opportunities

Abstract

In 2023, Export Processing Zones (EPZs) are playing a very meaningful role in promoting exports, attracting foreign direct investment, and creating employment opportunities in more than 150 countries around the globe. EPZs have been important players in fostering the extraordinary growth and expansion of the global supply and value-added chains, further integrating the global economy. Brazil is a latecomer in adopting this tool and strategy of trade and investment promotion and liberalization. This paper addresses the global EPZ experience and discusses Brazil's latest policies and procedures to expand the role of EPZs in Brazil's foreign trade policy. This paper introduces the concept of Green Powershoring stressing the increasing importance of EPZs embracing the UN's 2030 Sustainable Development Goals. This paper also addresses Brazil's unique position in offering multinational companies moving into Brazilian EPZs the opportunity to benefit from the country's clean and renewable energy matrix and Brazil's abundant fresh water reserves, another key resource for manufacturing. Thus offering companies established in Brazilian EPZs additional ESGs competitive advantages. Thus, Brazilian EPZs are well positioned to benefit from the green power shoring economy permeating new trends in global foreign trade and global foreign direct investment.

The Green Hydrogen Economy and the Global Net Zero Agenda: A Green Powershoring & Green Watershoring Perspective

“…Thus, only water-intensive and renewable energy-intensive countries will be able to cost effectively manufacture and become competitive producers and exporters of green hydrogen. Again, our assumption that Green Powershoring and Green Watershoring will became increasingly more important to domestic and foreign companies' foreign direct investment (FDI) decisions and strategies, seems to hold for companies seeking to use green hydrogen to address their overall net zero sustainability targets and strategies (Beswick, Oliveira, & Yan, 2021;DiFelice & Vargas, 2022;Braga, Gouvea, & Gutierrez, 2023;Talman, 2023;UNCTAD, 2023).…”

“…Countries that can be classified as having a strong Green Powershoring competitive edge are able to not only address the needs of their own domestic consumption of green hydrogen, but also capable of becoming a net exporter of green hydrogen (Arbache, 2022;Arbache & Esteves, 2023;Braga, Gouvea, & Gutierrez, 2023;. Green Watershoring can be defined as related to a country's availability of freshwater resources.…”

The Sustainable Brazilian Blue Economy: A Blue Powershoring and Blue Watershoring Strategy

“…Thus, only water-intensive and renewable energy-intensive regions, or countries like Brazil, will be able to cost-effectively manufacture green hydrogen. Again, our assumption that Blue Powershoring and Blue Watershoring will became increasingly more important to companies' foreign direct investment decisions and strategies, seems to hold for the Brazilian economy, making Brazil an appealing site for companies seeking to use green hydrogen to address their overall net zero sustainability targets and strategies (Beswick, Oliveira, & Yan, 2021;DiFelice & Vargas, 2022;Braga, Gouvea, & Gutierrez, 2023;Talman, 2023).…”

“…Brazil's Export Processing Zones legislation allows for foreign companies to bring their hydrogen manufacturing plants exempted of import taxes, making the production of green hydrogen in Brazil, a cost effective and a competitive proposition. (Braga, Gouvea, & Gutierrez, 2023).…”