State participation in domestic markets is necessary to bring about positive changes in the economic structure.
Under Decree 11,890 of 2024, article 2, I, subparagraph “a”, the preference margin is the price differential between domestic manufactured goods and services and foreign manufactured goods and services, which makes it possible to give preference to contracting domestic manufactured goods and services.
Accordingly, also in the same decree, art. 2, II, subparagraph “a” provides that the specific preference margin is the price differential between domestic manufactured goods and services resulting from technological development and innovation carried out in Brazil, and foreign manufactured goods and services.
Along the same lines, Irene Nohara explains preference margins1:
An innovative practice in Brazilian tenders is the option for tender notices, with prior justification, to require the contractor to provide, in favor of the Public Administration body or entity or those it designates through an equal-treatment process, commercial, industrial or technological offset measures or access to advantageous financing conditions, cumulatively or not, as established by the Federal Executive Branch, in accordance with art. 3, § 11 of Law 8,666/1993.
To this end, it is necessary to understand the objectives of preference margins. In this regard, when the Public Administration issues its tender notice abroad to seek companies to provide services and products, the fact that they are foreign is no obstacle to these companies qualifying in the tender, and the Public Administration is prohibited by law from imposing restrictions on them to the detriment of any other bidder.2
Thus, according to Bráulio Chagas and Magno Federici, the participation of foreign companies is fully possible in any type of tender in Brazil. Therefore, once the legal requirements are met, both domestic and international companies may be entitled to the preference margin, provided that the service is performed and the product is manufactured in Brazil.3
Accordingly, the regulation of preference margins under both Law No. 8,666/93 and the New Procurement Law is analyzed below.
Under the New Procurement Law, the preference margin may be used in two cases: (i) the purchase of domestic manufactured goods and services that meet Brazilian technical standards and (ii) recycled, recyclable (by-products of the recycling process) and biodegradable goods.
It is also worth discussing the conditions of the preference margin. The Federal Executive Branch will define, by regulation, which products are covered and the percentage of the preference margin, since Law No. 14,133/21 sets a limit of up to 10%, which may be applied to MERCOSUR countries provided there is reciprocity, that is, Brazil must also benefit from that relationship.
Law No. 8,666/93 referred to an additional preference margin; currently, there is a specific margin of up to 20% when domestic manufactured goods and services generate technological development and innovation.
It should be noted that, beyond general goods and services, both laws cover categories that are usually the focus of State support – the first of a social nature and the second related to environmental sustainability. In the case of the new law, goods linked to reducing environmental impact have the potential to focus on developing sustainable solutions in industry.
It is therefore important to remember that the preference margin policy leads the State to purchase products at above-market prices, and that it is only justified insofar as this purchase generates economic development, as established in the regulations analyzed above.
Meanwhile, preference margin policies cannot be used indiscriminately; they must follow the regulations so that there is a balance between paying more and, for example, creating jobs.
It is understood that, for preference margins to produce positive results, the State must use its purchasing power to achieve the strategic objectives of a medium- and long-term plan for national technological development.
Given Brazil’s economic and social context, it can be concluded that preference margins are not effective, since public accounts are not managed correctly and strategically. This can be shown by data collected by the Ministry of Finance revealing that the primary deficit — in plain terms, the hole in the public accounts — was BRL 177 billion in 2023, an unequivocal worsening of expectations.
In short, it is clear that the current reality of intense transformation in the productive sector and economic crisis requires a results-focused State policy guided by a clear strategy. Beyond the theoretical justifications for this, the examples of leading countries in the global market make it clear that focused use of State participation in domestic markets is necessary to bring about positive changes in the economic structure.4
Notes
- NOHARA, Irene; CÂMARA, Jacintho. Capítulo 18. Margem de Preferência aos Produtos e Serviços Nacionais In: NOHARA, Irene; CÂMARA, Jacintho. Tratado de Direito Administrativo: Licitação e Contratos Administrativos. São Paulo (SP): Editora Revista dos Tribunais. 2019.
- PIGHINI, Bráulio Chagas; GOMES, Magno Federici. Da margem de preferência nas licitações e empresas estrangeiras. Revista Direito, Estado e Sociedade, no. 42, 2013. p.33
- PIGHINI, Bráulio Chagas; GOMES, Magno Federici. Op. cit., p.33
- ARCURI, Marco; GONÇALVES, João Emílio. As margens de preferência adicionais: recomendações para sua efetiva aplicação no Brasil. Instituto de Pesquisa Econômica Aplicada (Ipea). 2022, p. 302
