Trade Subcommittee Holds Hearing on U.S.-Brazil Trade and Investment Relationship
The House Ways and Means Trade Subcommittee held a hearing June 12 on U.S.-Brazil trade and investment relations. In his opening statement, Subcommittee Chairman Devin Nunes described Brazil as a country with a strong democracy and a rapidly growing middle class. While two-way trade exceeded $59 billion last year and the U.S. recorded a bilateral trade surplus of over $5.5 billion, Chairman Nunes considers that the U.S.-Brazil trade relationship can still grow significantly partly because Brazil’s trade-to-GDP ratio is among the world’s lowest. U.S.-Brazil investment flows are also promising, with U.S. foreign direct investment flows into Brazil growing from over $5 billion in 2000 to over $12 billion in 2012 and Brazilian FDI flows into the U.S. surging from over $100 million in 2000 to over $1.8 billion in 2012.
The bilateral relationship faces important challenges, however. For example, a subcommittee hearing advisory indicates that Brazil’s industrial policy makes use of (i) industrial tariff rate increases made possible by Brazil’s high WTO bound rates, (ii) subsidized finance and (iii) forced localization rules. Nunes noted that Brazil has increased its local content requirements, limiting the access of Brazilian businesses to U.S. goods and services that could otherwise help boost Brazil’s global competitiveness. Yet, the chairman believes that overall the two countries “have arrived at a promising moment to seize opportunities and resolve trade irritants by pursuing a constructive, mutually beneficial bilateral trade agenda.”
Chairman Nunes is particularly interested in placing the numerous bilateral dialogues that are currently in place between Brazil and the U.S. under an overarching strategic economic dialogue. Nunes believes that by doing this “Congress could then more effectively provide oversight, incorporate parliamentary-level engagement, and ensure accountability for results.” Nunes mentioned plans to introduce legislation to advance this goal and welcomed input from the witnesses present at the hearing.