Brazil-U.S. Trade Relations

By Sara Enright
February 21, 2007

Event: Discussion on U.S./Brazil Trade Relations
Featuring: Marcos Jank, Institute for International Trade Negotiations; Gary Hufbauer, Peterson Institute for International Economics; Mac Destler, University of Maryland.

There has been little movement in bilateral trade relations between Brazil and the United States since 2003, when negotiations at the Fifth Ministerial Conference of the World Trade Organization (WTO) in Cancún, Mexico deadlocked over agricultural trade issues and Brazil joined the G20 trade block, said Marcos Jank, president of the Institute for International Trade Negotiations (ICONE), at a February 21 meeting at the Inter-American Dialogue.

Jank, along with panelists Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, and Mac Destler of the University of Maryland, addressed the continued difficulties of the WTO's Doha development agenda, which have continued to stall due to disagreements about agricultural goods, domestic support, and tariff rates.

As momentum grows for yet another conference for the Doha round, Jank warns that the termination of U.S. Trade Promotion Authority (TPA), scheduled to end in July of 2007, could potentially be a barrier to continued bilateral and multilateral trade negotiations. The TPA restricts Congress to a pass or no-pass vote on trade deals that President George Bush has negotiated with other countries, making it easier for the president to reach agreement with U.S. trading partners. Jank believes that if the TPA is not extended, or if participants in the WTO do not take advantage of the window of opportunity between now and July, Doha round negotiations could grind to a halt.

Hufbauer argues that the new democratic majority in Congress will be critical of extending the TPA, but that there is a 70 to 80 percent chance that they will "let it slide with tight restrictions." Destler believes that democrats on the Ways and Means Committee are open to voting on trade policy, "although, it will be more difficult if the renewal of Doha is all show and no substance."

Both Hufbauer and Destler agreed that Brazil would have to be more flexible and involved with the United States for trade relations to improve. As political allies with similar interests in negotiating trade agreements with India and China, it would be beneficial for the two countries to overcome their differences. Former USTR Carla Hills commented that the United States would be willing to slash subsidies if it had market access to Brazil, and asked why Brazil won't commit to a Free Trade Agreement and bilateral trade when they are both in its national interest.

Jank expressed hope that the United States and Brazil would consent to many bilateral trade agreements. "Brazil has been working hard for an agreement with the U.S., because we think that the world's largest exporters should work together in agriculture and many other areas," he commented. Yet the United States remains stubborn, especially in its unwillingness to negotiate trade in agriculture and services.

The United States did initiate talks about accessing the agricultural sectors of developing countries, but it has since backed off. Jank believes that negotiations were thwarted by a divide in the U.S. agricultural community between those who want free trade and those who are unwilling to give up subsidies. He argued that Brazil has much to gain from trade liberalization, and foresees a potentially profitable future in joint investment and trade in biomass technology, as well as ethanol and other biofuels.