Brazil Warily Eyes Hemisphere-Wide Trade Proposal ; Latin America's Economic Powerhouse Heads to the Quebec Summit Today with a List of Demands

Article excerpt

Celso Lafer speaks softly, but in his spacious office overlooking the remarkable architecture and wide-open spaces of Brasilia, there is no sign of a big stick. No one should take the foreign minister's quiet demeanor for weakness, however.

As he prepares to lead the Brazilian delegation into the trade summit of the Americas, which begins in Quebec today, Mr. Lafer says that if the proposed trade bloc from Alaska to Argentina is to become a reality, then the United States must pay attention to Brazil.

With half the region's GDP and population, Brazil is the world's second-largest market for executive jets and helicopters, the second for cellular telephones and fax machines, the third for soft drinks, the fourth for refrigerators, and the fifth for compact discs.

But with low quotas and high tariffs making it difficult for competitive Brazilian industries to penetrate the US market, and a looming deadline that could allow American companies to overrun unprepared Brazilian producers on their home turf, Lafer wants to know exactly what Brazil has to gain from the proposed Free Trade Area of the Americas (FTAA). His message to the Bush administration is blunt: "We're only joining the FTAA if it's convenient," he says. "What's in it for us?"

That stance could hold up an accord that would create a hemisphere-wide free-trade bloc of 800 million people and $10 trillion.

U.S. tariffs on tobacco and sugar that exceed quotas, anti- dumping measures imposed on steel and ethanol, and non-tariff barriers on goods from shrimp to sheets have caused considerable ill feeling in Brasilia.

"In all the sectors where we are competitive, the USA applies a range of barriers that effectively shuts us out of the market," says Paulo Skaf, president of the Brazilian Association of Clothes and Textiles Industries, one of the sectors prevented from exporting more because of a low US quota allowance. "We have to take it upon ourselves to demand the elimination of agricultural subsidies, the elimination of quotas on textiles, the elimination of antidumping (measures) for steel and the important exemptions made for sugar and ethanol. We have the conditions to be proactive and aggressive."

There are good reasons for both nations to look to a future of bilateral cooperation. Brazil can gain by entering lucrative US markets and the US can make a solid and important ally in a region the Bush administration has identified as a priority.

The US Council on Foreign Relations has stressed the importance of Brazil in formulating US policy in Latin America. "If we want to expand the Free Trade Area from North America into South America, Brazil is going to be the critical nation," the New York-based council said in an open letter to President Bush in February. "A realistic and sustained dialogue with Brazil is central to any successful US policy in the Western Hemisphere. Brazil is the fulcrum."

Former US ambassador to Brazil Anthony Harrington notes that the country's economy is twice the size of Russia's and almost as large as China's. US direct investment in Brazil is greater than in Mexico, Harrington says, and some 400 of the Fortune 500 companies have a presence here.

"Brazil can - and should - play an increasingly prominent role in U. …


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