Financial Services Policies Affecting US-Brazil Trade

 Brazil is one of the biggest and most important countries in Latin America. In recent years, it has become a major voice for developing countries, especially when it comes to making trade plans for the region and the world. Brazil helped make the Southern Common Market (Mercado Común do Sul, or Mercosul), co-chairs the Free Trade Area of the Americas (FTAA) negotiations with the US, was one of the founding members of the Group of 20 (G-20) coalition that represents developing country interests in the Doha Development Round of the World Trade Organization (WTO) negotiations, and meets with the US on a regular basis to work on trade and other issues. This is in part because of its power in all of these groups. Even though Brazil is the 15th biggest market for U.S. goods, Mexico is still the biggest market for U.S. goods in Latin America. Brazil and the US don't trade with each other as much as they should for economies their sizes. Still, trade and investment between the two are growing, and Presidents George W. Bush and Luiz Inácio Lula da Silva talked a lot about the possibility of stronger economic ties during their two talks. 

During President Bush's trip to Brasilia in November 2005

The two presidents released a joint statement stressing the need to build on the many bilateral working groups that had already been set up work together more on trade issues at the WTO take advantage of the chance to double bilateral trade by 2010. The United States and Brazil have worked to build a good relationship on purpose so that they can both support trade deregulation. As a developing country, Brazil's trade goals can be different from the US's, and the two countries often disagree on certain trade practices. There have been differences that have stopped work on the FTAA and trade disputes that are still going on before the WTO. For the US, this means that keeping a good working relationship with Brazil is important for moving its own trade goals forward. This study looks at Brazil's foreign trade policy and how it affects its trade with the US and the rest of the world in order to help Congress understand Brazil's stance on regional and global trade issues. It will be changed from time to time. The only thing that can partly explain Brazil's trade policy is economic incentives. Its "trade preferences" are also a result of its long-standing industry, foreign, and macroeconomic policies. The U.S. trade strategy focuses on negotiating broad trade agreements across many areas. Brazil, on the other hand, is mostly concerned with market access problems that affect its economic dominance in South America.

Brazil puts this first in all areas of trade

For example, it is trying to change WTO farming policies, make the Southern Common Market (Mercosul) bigger in South America, and fight the FTAA because it doesn't have a balance that works for Brazil. With 53% of GDP coming from services, Brazil's economy is modern and diverse. Industry and manufacturing make up 37% of GDP, and agriculture only makes up 9%. About 30% of GDP comes from agribusiness, which includes both raw materials and finished goods. This is why Brazil puts so much stress on agricultural policies in trade talks. Brazil grows the most sugar cane, oranges, and coffee in the world. It also grows the second most soybeans, beef, chicken, and corn. It also makes a lot of steel, airplanes, cars, and auto parts, but surprisingly, compared to the rest of the world, it doesn't deal much. That one country that trades with Brazil the most is the United States.

Brazil doesn't like some U.S. trade policies

Like the Byrd Amendment (which was repealed but had a program in place until October 1, 2007), which sends trade remedy cases' duties to industries that are affected, how the trade remedy rules are enforced, and what it sees as unfair treatment of Latin American countries in the U.S.'s expansion of free trade agreements. It also doesn't like barriers that are specific to certain goods, like tariff rate caps on tobacco, sugar, orange juice, ethanol, and ethanol; subsidies for cotton, ethanol, and soybeans; and antidumping orders that last too long on steel and orange juice. The United States is mostly worried about Brazil's relatively high tariffs, especially on industrial goods, Mercosul's common external tariff program, and Brazil's refusal to deal with issues that are very important to the US, like intellectual property rights, government procurement, investment, and trade in services. Even with these differences, both countries know that trade reform at all levels that are acceptable to both could bring big benefits. As a growing country, Brazil may have the most to gain from removing both foreign trade barriers and opening its economy even more. This is because both its exports and imports have the potential to grow by a large amount.