In the decade beginning in 1530, the Portuguese Government implanted a system in Brazil known as the inherited Capitanias which were pieces of land granted to noblemen, bureaucrats and the military, as established in the law of the time. In each of these areas, a Royal Treasure Unit was installed in order to collect the taxes. These units also had the function of being the customs offices and their landlords also played the role of customs judges.
It is known through the existing documentation that all the areas, with the exception of the ones in Maranhão, Santo Amaro e São Tomé, installed their customs offices. At the present stage of historic investigation, it is impossible to know with one is the oldest. There is evidence, however, that they might be the ones in São Vicente or in Pernambuco (at the time built in Olinda)
Since there was no definition of rules to govern these customs offices, they were faced against many unsolvable doubts. Only in 1549 the Royal Crown laid the rules governing these offices and their judges with the creation of the Great Royal Treasure Unit, in Bahia, led by Antônio Cardoso de Barros. The landlord remained the head and judge of the area, assisted by a registrar, a general manager, a summoner, the judge of the scales and some guards. Apart from his mere fiscal attributions, the landowner act as a representative to the crown, including military defense. They frequently commanded the defense from invaders, led expeditions for precious metals (like Brás Cubas and Francisco Monteiro) and faced popular mutinies. Ands they still had to collect taxes.
The main customs taxes, however, were not charged in Brazil, since only goods from Portugal were allowed in. (Don’t criticize this policy excessively; all the colonialist countries of the time used it; England kept it up to the XX century, in India and other colonies). The taxes collected in Brazil were based on the exports to outside the kingdom and the imports made by foreign traders. Some extra taxes, however, were collected on the exports and imports, under the heading of "donations" or " subsidies".
Still in the XVI century, two major alterations were made to the customs system in Brazil: the creation of a customs office in Rio de Janeiro, in 1566, which would become the most important of the country, and the use of law regulations from the Lisbon Great Customs Office, in 15 October, 1587, which became the model of all succeeding custom legislation. As amazing as it sounds, these regulations remained as the basic legislation for the Brazilian custom up to 1832! (1)
The law of 9 February, 1591, from the end of the XVI century, closes all the Brazilian ports to the foreign ships which did not have previous concession granted by the crown. New laws from 1605 completely prohibited the trade with foreign vessels, with the intention to harm the English and the Dutch.
Very little was changed in the system in the XVII century; New custom offices were created in the northern coast, the number of personnel was raised in the original ones, due to the increase in the external trade, while some other were closed due to the lack of activity in such ports.
The beginning of the XVIII century saw some sensible modifications. The gold found in Minas Gerais by the paulistas revolutionized international trade. It became impossible for the Portuguese government to stop the flow of goods arriving in the Brazilian ports. Closing them totally was an invitation for contraband, which was facilitated by the extension of the Brazilian shore and the lack of custom personnel. The solution found was some liberalization of the commerce with the maintenance of the metropolitan monopoly, that is, the prohibition of direct commerce with foreign countries. Foreign goods were allowed in the Brazilian ports, via Portugal. On the other hand, the Crown implemented a custom tax to all the goods coming in or leaving the country. As a consequence, the need for the service provided by the custom offices was enhanced, making it necessary to increase their personnel. Where once there was an employee, a section was created with many workers. The judge of the scales became the judge of the Section of the Scales. The custom offices in Rio de Janeiro, the main export port for gold and import port for the goods exchanged for the gold, became independent of the Royal Treasure Unit.
As the gold cycle became more important, the external trade increased, in spite of some periodic short term crisis. The custom offices that survived the economic stagnation of the XVII century consolidated themselves and gained space in the fiscal administration of the time. Paradoxically, around 1770, time when mining started its downfall, the Marquis of Pombal instituted the Erário Régio and the Royal Treasure Juntas as well as extinguished the old Units, making the customs offices autonomous, disconnected from the collection of internal taxes. Gradually, the role of the landlords was disappearing, with the installation of the new units. Their role remained only as customs judges, an assistant function that they already held.
The XIX century began with a radical transformation. With the arrival of the Royal Family in Brazil, the ports were immediately reopened to international trade. In spite of the collapse of the gold mines, the customs offices started to grow again, both in number and movement. The political circumstances lived by the Portuguese Crown, which was totally dependent on England, set guidelines which protected excessively the English – who paid a 15% tax – whilst all the others, including the Portuguese, paid 24% ad valorem. This awkward situation was only straightened in 1826, when the treaty agreed with England came to an end.
The Regency, despite all the rebellions and confusions, found time to organize the Empire administratively, with a centralized, yet rational, governmental structure. The Public Treasury was totally remodeled, between 1830 and 1832, with the extinction of the Erário Régio, of the juntas and of the Treasury Council, all of which substituted by the Public Treasury Tribunal and the General Treasury. The Income and Collection Tables were created, at the same time as many local offices were abolished, since there was no longer any reason for their existence.
The customs offices finally had new legislation to substitute the old Lisbon Customs Law, of 1587. In 25 April, 1832 a decree called Regulations for the Empire Customs was issued, which was substituted by a new one in 22 June, 1836. Concomitantly, the regency created the Income Tables in ports where there was no customs offices, regulated by decree in 30 May, 1836. The old Customs judges were substituted by Customs inspectors.
In 1845, the Finance Minister, Alves Branco, establishes new customs taxes which turned out to be a protectionist system which didn’t last long, but constituted a landmark in the Brazilian economic history.
The big reform of the Treasury, in 1850, affected the customs offices very little, but an important government agency was created to centralize the tax-related administration, called the Public Income General Directorate, which survived, with some alterations, up to the Aranha Reform, in 1934.
In 1860, though, new regulations for the customs offices were issued by the Decree 2647, in 19 September. In 02 August, 1876, these new regulations suffered major alterations introduced by Decree 6.272. This law served as base for the famous Customs Laws and Income Table Consolidation, enforced by a memo dated 24 April, 1885. Oddly, this consolidation had been made by an Customs employee for his personal use, but it turned out so perfect that the government decided to use for its own use. Later, it was made more updated, reaching our days under he name of New Customs Laws and Income Table Consolidation, the well known N.C.L.A.M.A.R.
Coffee had reactivated the Brazilian external trade in the latter half of the XIX Century. Brazil had begun to grow again and the customs offices would once again play a decisive role in fiscal administration. Despite of the current liberalism, some mild protectionist measures were adopted. As an outcome, there was in increment in contraband, specially in the meridian frontier, at the end of the century. This made the government create, in Rio Grande do Sul, a Special Service Against the Contraband, made of special cavalry forces, with over hundred guards. The situation was so serious that gunfight between the customs guards and contrabandists were rather common, as stated by the State Official Diary in 03 April, 1912.
The First World War, with its impact on the maritime commerce, obliged Brazil to produce and substitute goods which were longer available through importation. The Brazilian industrialization took place and became irreversible, even if in humble proportions. The 1929 crack, another restricting factor on international trade, ended up being beneficial to this industrializing tendency, despite the initial bottlenecks. As a consequence of the worldly crisis, the Liberal Revolution of 1930 took place, which in reality became a long nationalistic and fascist-to-be dictatorship.
In order to fight the resistance presented by the old bureaucratic oligarchies ingrained in the Finance Ministry, Minister Oswaldo Aranha, in 1934, proceeded to a radical reform in its administrative structure, substituting the National Treasury by the National Treasury General Directorate which was a huge agency composed of Departments, one of which being the Customs Income Section, giving Customs a specialized direction for the first time ever. This reform, needed politically, was rather arguable under a technical point of view, since it demanded the duplication of supporting organs and the inevitable rivalry amongst the various Departments.
In 1938, Brazil had already started to overcome from the crises effects, but a new war was imminent. In a meeting held in Teresópolis, President Vargas cut a deal with the Brazilian entrepreneurs: the customs policy was to be changed, with the creation of customs barriers, with views to enabling the Brazilian industry to develop without the competition of imported goods. The Second World War in September 1939 consolidated this agreement, making the country use very harsh customs protectionism.
Not even the end of the New State, nor the following changes in Public Administration, were able to change this protectionist system, which endured untouched up to 1964. The Castelo Branco government liberalized the imports a little, giving an end to administrative and exchange barriers as well as reducing fiscal taxes, but they were put up again in the Costa e Silva Government. The following military governments, willing to modernize the country and driven by the exchange crises caused by the increase on the prices of the petroleum, did not want to, or were unable to, liberalize our external trade practices further. On the contrary, they decided for the market reserve for computer goods and stimulated, trough fiscal incentives, the local production of numerous industrial sectors.
An advancement, however, was achieved: the law-enforced Decree 37, of 18 November, 1966, which was a result of the researches and studies done by Oswaldo da Costa e Silva (head of one of the teams from the Ministry of Finance Reform Commission) substituted the old N.C.L.A.M.A.R., providing out customs offices with up-to-date and modern legislation.
The creation of the Treasury Department, in 1968, reestablished the rationale in the federal fiscal organization and permitted the government to administer the complex system of fiscal incentives properly and, through the modernization of methods, repress the huge amount of contraband present against the protectionist measures. (a mistake made when the Department was created, the extinction of the name "customs office" only now was corrected, with the implantation of a customs control system; the post of "customs inspector" which had been substituted, few days before the implementation of the Treasury Department, by "customs administrator" and soon after by "Federal Treasury Inspectors and Deputies", was reinserted). Besides, The debt generated by the oil crises forced the country to multiply its exports, which, in turn, even to a lesser degree, increased the imports. The result, used for the payment of interest and amortization of the external debt, generated inflationary impacts and was subject to foreign criticism, as they were expecting it to be used in imports.
At the same time, this protectionist regimen also stimulated the contraband, making the creation of an specialized agency necessary, the Planning and Contraband Combat Coordination Commission – COPLANC, in 1977. In 1988, the Customs Control Coordination System was implanted, clearly acknowledging the need generated by increase of the external commerce.
It was since the Collor government, which took office in 1990, that a complete opening in the Brazilian ports was really tried. The subject, however, is rather polemic and involves serious discussion, since countries which have tried the same strategy are now having contradictory results, such as the reduction of inflation due to mass unemployment, the scrap of the industrial park and severe social conflict. Even the Economic European Commonwealth, considered the most successful international economic cooperation experience, is seen by some people today as a gigantic customs protection wall around European customers.
The Americas reacted against the closing of European ports with the creation of similar mechanisms: the NAFTA, led by the United States, and the MERCOSUL, integrated by Brazil, Argentina, Paraguay and Uruguay. It is a paradox that the neo-liberalism has led to the creation of these such huge customs alliances ... We seem to march not towards a world of free trade, but to a planet divided in customs blocks.
This, however, belongs to the future and History does not deal with the future.
(Author: José Eduardo Pimentel de Godoy)