Beefing Up U.S.-Brazil Relations? / by Mark Langevin

 Dilma and Obama

Dilma and Obama

Yesterday’s working meeting between Presidents Barak Obama and Dilma Rousseff promised to reboot bilateral relations. The governments’ joint communique outlined their plan for moving relations ahead and,

highlighted the traditional ties that bind the two countries and underscored their determination to strengthen an increasingly diversified and mature partnership, grounded in mutual respect and trust, shared values, and a focus on meeting the needs and aspirations of the societies of the two largest democracies and economies in the Americas.

The communique also pointed to how the U.S. and Brazilian governments plan to deepen discussions over bilateral and multilateral cooperation, including

“the important role of the principal mechanisms for bilateral coordination and dialogue – the Global Partnership Dialogue, the Economic and Finance Dialogue, the Strategic Energy Dialogue, and the Defense Cooperation Dialogue.

Once again, the two governments have met and agreed on how best to discuss issues of mutual concern. For example, Presidents Obama and Rousseff stressed in the communique that

“the accelerated growth of the economy of the United States—the chief destination for Brazilian exports of manufactured products—and the strong ties that unite the two countries offer important opportunities for expanding bilateral trade and investment flows…In keeping with the objective to expand bilateral trade flows, the Presidents underscored recent advances in the areas of trade facilitation and conformity assessment. They praised the recent signing of the Memorandum of Intentions on Trade Facilitation between the U.S. Department of Commerce (DoC) and Brazil’s Ministry of Development, Industry and Commerce (MDIC) and reiterated the importance of sharing public-private sector best practices to advance trade.”

The aforementioned Memorandum of Intentions on Trade Facilitation erects a working group and spells out a bilateral communications process to share information about border management and bilateral trade flows to reduce business costs. Given the increase in bilateral trade, such an effort is not surprising, but it does not constitute much more than an agreement on how to communicate about the opportunities to identify onerous import/export requirements (not necessarily eliminate them).

Apparently, the two governments continue to negotiate a Bilateral Memorandum of Intent on Standards and Conformity Assessment to further facilitate bilateral trade. Such an agreement could render bilateral import/export requirements more transparent in an effort to reduce transaction costs.

On the multilateral level, the Presidents endorsed efforts to ratify the World Trade Organization Trade Facilitation Agreement (TFA) at the December Ministerial meeting. They also agreed to hold another meeting of the Joint Commission on Economic and Trade Relations before the end of the year. All these efforts demonstrate an interest in removing obstacles to current bilateral trade, but do not contemplate engaging in negotiations to exchange concessions to create novel bilateral trade and investment opportunities in the foreseeable future, with one exception.

The only concrete step toward advancing bilateral commercial relations during the presidential working meetings was the announcement that certain Brazilian producer-states (and Argentina) would be allowed, under a new rule change, to export beef products to the U.S. market. The U.S. Department of Agriculture reports that

“based on the evidence of a recent risk assessment, we have determined that fresh (chilled or frozen) beef can be safely imported from those Brazilian states provided certain conditions are met.”

While it does appear that Brazil must achieve additional compliance of USDA requirements, this concession represents a concrete step taken by the Obama administration to deepen commercial cooperation. It builds upon the October 2014 Memorandum of Understanding Related to the Cotton Dispute (WT/DS267) that concluded the decade long conflict over U.S. cotton production subsidies and export credit guarantees. Moreover, it confirms, as the joint communique reports, that

“The United States Department of Agriculture and the Brazilian Ministry of Agriculture, Livestock, and Food Supply are committed to working collaboratively to strengthen our already strong relationship. The partnership reflects mutual efforts toward overcoming differences, as well as a continued commitment to reducing barriers to agricultural trade.”

While the beef accord should not be interpreted as a bilateral breakthrough, it does show that these governments are making progress in addressing politically sensitive trade issues that have hampered relations in the past. The resolution of the cotton dispute and the concession made to Brazilian beef producers are necessary, albeit insufficient conditions to move toward bilateral negotiations over a broader array of trade concession exchanges between these countries. Certainly the Obama administration has pushed this agenda forward, despite consequential domestic opposition. Indeed, the announcement of the marketing opening for Brazilian beef imports prompted the National Cattlemen’s Beef Association (NCBA) Chief Executive Officer, Forrest Roberts, to resign his post just as the NCBA openly criticized the bilateral agreement. The President of the NCBA reportedly castigated USDA’s risk assessment and the bilateral accord, stating

“The arrogance of this administration in continuing to press forward with rules that have a profound impact on industry, without consulting those affected, is appalling… The haste and sloppy nature of this rulemaking points clearly to the administration's political agenda in forcing this rule forward, literally in spite of the science.”

The condemnation of this market concession for Brazil shows that the Obama administration stepped away from its own domestic political comfort zone to conclude this singular step toward advancing bilateral commercial cooperation. No, this particular commercial breakthrough does not constitute “beefing up bilateral relations,” but it does signal to Brazil that the Obama government is willing to move on bilateral issues despite significant domestic political opposition. Brasilia would be wise to seek a more thorough understanding of the U.S. politics that permeate President Obama’s willingness to improve bilateral relations in the short term.

The Presidential working meetings also touched upon other familiar themes, including easing travel restrictions through the Global Entry and Visa Waiver Programs, but little progress has been made during the ramp up to this round of presidential diplomacy. The governments also recognized the value of the university student exchanges, largely a one way affair driven by the “Ciência Sem Fronteiras,” program that finances Brazilian students’ studies at foreign universities, including a very large portion who choose to study at U.S. institutions.

Also, the governments agreed upon a sensible protocol to avoid double contributions to the Social Security systems of both nations on behalf of U.S. and Brazilian citizens working across the bilateral borders. This agreement demonstrates that both governments can work together to advance the interests of the citizens of both countries, but more could be done by these governments to facilitate bi-national dialogue and cooperation between the citizens and representative civil society organizations of the U.S. and Brazil. It is important to note that Presidents Obama and Rousseff, in their public comments or communique, DID NOT make reference to the U.S.-Brazil Joint Action Plan to Eliminate Racial and Ethnic Discrimination and Promote Equality or suggested other meaningful mechanisms to facilitate greater cooperation between the vibrant and engaging societies of the U.S. and Brazil. Trade is critical, but deepening bilateral cooperation is dependent upon government recognition and facilitation of the dense bi-national social and organizational relations that propel the people of the U.S. and Brazil into a very close orbit.

Lastly, the working meetings and the joint communique point to ongoing efforts to deepen security related cooperation, including a Second Meeting of the Working Group on Internet and Information and Communications Technology slated for Brasilia later in the year and the ongoing Defense Cooperation Dialogue. Moreover, the presidential working meetings were pinned to the possibility of increasing bilateral coordination in the COP21 international climate change policy negotiations to be held in Paris at the end of the year. Both governments agreed to achieve a 20 percent renewable mix in their electricity generation and set more ambitious greenhouse gas emission targets, but such statements do not constitute binding bilateral cooperation in any meaningful sense at this juncture.

It is important that Presidents Obama and Rousseff met in Washington.

It is notable that they have come to agreement on beef, but also a reminder that both national governments are not prepared to move forward at this time on negotiations over new trade concessions or collective security issues. Rather than negotiate resolution to conflicts through a focus upon mutual interests, the governments continue to prefer agreement on how best to communicate through an array of consultative mechanisms.

Can we hope for more?

President Obama has demonstrated a willingness to tackle key bilateral commercial conflicts, namely cotton and beef, within a broader context of an aggressive, trade expansion (albeit diversionary) policy framework that includes the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP). If Brazil wishes to make significant reforms to its own trade policy, seeking to more effectively integrate Brazilian enterprise and workers into higher value added production chains (Automotive, Aviation, Electronics among others), now is the time. Brazilians and their government are right to oppose trade diversion, and President Obama’s trade policy is chock full of diversionary moves that attempt to rectify the large U.S. trade deficit, but Brazil has too much to lose by sitting on the sidelines.

The Brazilian government must counter U.S. and EU trade policies through engagement and negotiations that seek a productive balance between evident diversion and future opportunities for Brazilian entrepreneurs and workers short of a Doha type global agreement. However, contemplating a more proactive trade policy that consistently engages Washington and takes advantage of President Obama’s remaining time in office requires much more focus on the domestic politics of trade in the U.S. Brazil needs to quickly identify and seek partnerships with U.S. domestic political forces that would serve to bolster its government’s foreign policy as it relates to bilateral relations with the U.S. and possibilities for further coordination on a host of global governance issues.

It is obvious that President Obama is in a hurry to achieve as much as he can in the second half of his second term in office, but can the Rousseff administration match this sense of urgency to advance bilateral relations?

I hope so.