Greater access to U.S. markets would help redress trade balance
EXPORT AMBITIONS THE UNITED STATES ACCOUNTS FOR A QUARTER OF BRAZILIAN TRADE BUT SELLS MUCH MORE THAN IT BUYS. BRAZIL WANTS TRADE BARRIERS TO BE LOWERED TO ALLOW MORE OF ITS PRODUCTS TO REACH AMERICAN CONSUMERS. MEANWHILE, IT IS BUSY SEEKING OUT NEW MARKETS FURTHER AFIELD

TRADING PLACES The incoming administration believes Brazil would benefit from a strengthening of South America’s common market, Mercosur

THE UNITED STATES is Brazil’s biggest single trading partner, with bilateral flows running at nearly $30 billion a year. However, according to Senator-Elect Aloizio Mercadante, who is International Relations Secretary of the Brazilian Workers’ Party and a close colleague of the incoming President, this figure could be much higher. “We can double the flow of exports in four years, and triple it in eight,” he says.

Mr. Mercadante seized the opportunity, at a meeting with U.S. Under-Secretary of State Otto Reich in Brasilia last month, to press for the restoration of trade credit lines for Brazil, arguing that these are essential if the Brazilian economy is to recover. “The U.S. government has a considerable influence on multilateral organizations and private banks,” he told Mr. Reich.

SERGIO AMARAL Outgoing Minister of Development, Industry and Trade

Brazil’s outgoing Minister of Development, Industry, and Trade, Sérgio Amaral, says the U.S. market is extremely important to Brazil. “The United States is our main partner as a country and an extremely important market because we export products of higher aggregate value there than we export to Europe.”
From 1991 to 1999, U.S. exports to Brazil increased 114 percent while Brazilian exports to the United States increased only 68 percent. The Brazilians would like to see the United States removing import barriers to allow freer market access for their products, from footwear, sugar, textiles and steel to soya beans, citrus fruits, and ethanol.

Brazilian companies have increased their productivity and become more competitive, says Mr. Amaral. “But in most of our important markets, we face very high protectionism. If we are to export orange juice to the United States, for example, we must pay a 63 percent tariff.”
This makes it important for Brazil to seek out new places to sell its goods. Commercial missions have been organized recently to Russia, China and India. “Our first priority is to open markets,” Mr. Amaral says. “This includes exploring markets where we don’t have a presence at the moment.”

The incoming administration in Brasilia is confident that bilateral trade with the United States can be boosted significantly, but it is also keen to see North and South America inter-relating much more on a regional basis.
Senator-Elect Mercadante, who is one of the incoming President’s top advisors, believes that just as the United States, Canada and Mexico are benefiting from working more closely together within NAFTA (the North American Free Trade Agreement), so Brazil and its neighbors would gain from strengthening South America’s common market, Mercosur.

Mr. Mercadante argues that macro-economic coordination mechanisms within Mercosur need to be enhanced. “Perhaps if Brazil’s exchange devaluation had been coordinated with the devaluation of the peso, Argentina’s situation would be different,” he says.
Mr. Mercadante would like to see U.S. negotiations with the South American economic bloc Mercosur taking place in parallel with talks about the Free Trade Area of the Americas (FTAA).

He points out that Washington has been negotiating bilateral agreements with other countries or groupings in the region, including Central America, Chile and the Andean Pact. “We are interested in seeking negotiations with the United States, which is the biggest importer in the world, independently from the FTAA,” he says.
According to Mr. Amaral, Brazil regards a free trade agreement as a positive development. However, he adds, “It is very important that the United States puts the real issues on the negotiation table. It is not useful for us to negotiate a trade agreement if all the specific import barriers are not removed.”

It is largely because of Brasilia’s firm commitment to trade liberalization that the United States has agreed to have Brazil as co-chairman of the FTAA talks. The hope is that this will ensure the final stages of negotiations reach a successful conclusion two years from now.
At the same time, Washington hopes to enlist Brazil as an ally in its trade disputes with the European Union (EU), mainly within the framework of the World Trade Organization.
In particular, Deputy Treasury Secretary Kenneth Dam would like to see the two countries working together to counter EU farm subsidies. Washington has proposed that all subsidies for agricultural exports should be eliminated. "We want the EU to agree to that," Mr. Dam says.