Brazil: US and Brazil strengthen trade

PJ: During the recent mid-term elections in the US, the primary call from voters was an improved economy and an increase in jobs. The goal of President Obama's trip to South America was to improve trade relations which in turn would have the potential to increase jobs in the US. Despite the trip being overshadowed by the Libyan crisis, coupled with the ever-present criticism by the right-leaning US Congress, the goal of improving economic opportunities for the US seem to be coming to fruition.

The Rio Times

Brazil and US to Strengthen Trade
By Anna Fitzpatrick, Contributing Reporter

RIO DE JANEIRO, BRAZIL - U.S. President, Barack Obama’s visit to Brazil last week helped put trade between the two nations back on the agenda. The two largest economies in the Western Hemisphere signed a trade and economic cooperation agreement to boost commerce by expanding trade and remove non-tariff barriers, according to a statement from U.S. Trade Representative Ron Kirk’s office.

During his speech on Sunday in Rio, Obama stressed the importance of a strong trade relationship between the two nations stating “in a global economy, the United States and Brazil should expand trade, expand investment, so that we create new jobs and new opportunities in both of our nations”.

U.S. sales to Brazil climbed to a record US$35.4 billion last year, as reported by Bloomberg News, largely because the Brazilian Real’s two-year, 41 percent rally against the U.S. Dollar made American goods more attractive. Another major factor is Brazil’s blossoming middle class and growth in consumer spending.

However since 2009 China replaced the U.S. as Brazil’s largest trading partner. As the U.S. Ambassador to Brazil, Thomas Shannon pointed out the U.S. have a “desire to improve our trade and investment relationship. While both countries are negotiating more than ever in absolute terms, in relative figures we have seen a decrease”.

At the same time, O Globo recently reported that U.S. trade barriers are creating losses of at least US$2 billion per year for Brazil; US$400 million in beef, US$600 million in ethanol, and US$1 billion in cotton. Brazil had a trade surplus of US$9.8 billion with the U.S. in 2005 and now as of last year, carry a deficit of US$7.7 billion.

Strengthening trade links with Brazil will be a sign of a successful visit for the Obama camp, particularly since his State of the Union Address in 2010, when President Obama emphasized the need for a high level effort to promote U.S. exports in order to boost the flagging economy.

During the meeting in Brasília with Obama, Rouseff pointedly stressed that the relationship between the two nations must become “a construct amongst equals” a sentiment that Obama reiterated in his speech later in his trip.

During this visit Obama will push for American owned Boeing to win the US$6 billion deal to supply Brazil with fighter jets that he hopes will add to his economical revival package. A bid that some speculate has been boosted since the meeting on Friday.

The countries have clashed over trade issues such as U.S. ethanol and farm subsidies in recent years, including a near trade war over WTO defined illegal cotton subsidies in the U.S.

Despite disagreement over ethanol tariffs protecting the U.S. market, bio-fuel development has been an area of collaboration between the two countries, which between them produce 70 percent of the world’s ethanol. In 2007 both nations signed a Memorandum of Understanding to develop and research bio-fuels bilaterally and have since gone on to advance this relationship.

During his speech in Rio on Sunday, Obama emphasized the importance of why “the United States and Brazil are creating new energy partnerships – to share technologies [and] create new jobs”.

Marcos Jank, CEO of the Brazilian Sugarcane Industry Association (UNICA) hailed the meetings in Brasília with Obama and his delegation of CEOs a success, with plans for the two countries to work together on developing sustainable bio-fuels for the aviation industry.