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U.S. Official Identifies Four Areas of Potential Trade Cooperation with Brazil

Friday, September 13, 2013
Sandler, Travis & Rosenberg Trade Report

In a Sept. 10 speech to the Sao Paulo Federation of Industries, Deputy U.S. Trade Representative Miriam Sapiro outlined four areas in which she believes U.S. and Brazil can deepen and broaden their economic partnership. The two countries have tussled in recent years on a variety of trade irritants, from the U.S. failure to reform its cotton subsidy program to Brazil’s imposition of allegedly protectionist measures, and Sapiro pointed out that Brazil is not currently a participant in several of Washington’s top trade liberalization initiatives. However, she added, the U.S. wants to “do more with Brazil bilaterally” and “global economic headwinds” offer the two sides “a chance to pause, examine our relationship, see what is working and what is not, and determine the best ways to expand further our partnership.”

Sapiro pointed out that Brazil is now the United States’ eighth-largest goods trading partner, that bilateral trade in goods has more than doubled over the last decade, and that Brazil more than doubled its direct investment in the U.S. between 2010 and 2011 alone. However, she added, “there is a great deal more to do if the practice of this partnership is truly to match its promise.” She identified the following four areas for future work, subtly pointing out where the U.S. hopes Brazil will improve in each.

Innovation. Sapiro said the U.S. and Brazil “are already innovating together” but that “barriers still exist between our two countries that inhibit more innovation, including in the important area of intellectual property rights protection.” She declined to offer details but said “strengthening protections and opening markets to new technologies and ideas will encourage more innovation, all with the ultimate goal of supporting business and jobs here in Brazil and the rest of the world.” She noted that the third U.S.-Brazil Innovation Summit was to be held Sept. 11 and would feature discussion of possible cooperation in the energy, life sciences, and information and communications technology sectors.

Investment. Sapiro asserted that “signaling clear openness to foreign direct investment is a critically important part of maintaining economic vitality and deepening economic ties between our countries.” The rate of growth of investment between the U.S. and Brazil appears to be slowing, she said, and U.S. investors have expressed “frustration with the complexity of Brazil’s tax system, with local content requirements, and with a perceived lack of transparency.” She said one option would be to negotiate a bilateral investment treaty, asserting that the U.S. is “certainly interested” in a BIT and hopes the Brazilian government decides to pursue one.

Regulatory Cooperation. Sapiro encouraged Brazil to “demystify its regulatory system” and noted that “differences in our regulatory and standards systems create unnecessary costs, obstruct trade, and hurt competitiveness.” The U.S. is particularly interested in working together to “better explain our respective processes, especially with respect to increasing participation and transparency,” and to “develop new mechanisms to promote cooperation, collaboration and coherence.”

SMEs. Finally, Sapiro said, the U.S. and Brazil should “do more to bring our small and medium-sized businesses together.” For example, the U.S. hopes to see closer cooperation between its Small Business Development Centers and Brazil’s SEBRAE system “so more and more SMEs in both countries can export to the other’s market and also integrate into the global market.”

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