Brazil and the U.S.: Political and Cultural Links

 The Bolsonaro and Trump administrations have reached various agreements aimed at strengthening the bilateral trade partnership. During Bolsonaro's official visit to Washington in March 2019, the US and Brazil agreed to take steps to eliminate trade barriers for specific agricultural products. Brazil has agreed to impose a tariff rate quota, allowing for the entry of 750,000 tons of US wheat yearly without tariffs, as well as adopting "science-based conditions" for US pork imports. In exchange, the United States agreed to deploy a team from the Department of Agriculture's Food Safety and Inspection Service to examine Brazil's raw beef inspection system.66 The Bolsonaro administration had hoped that the audit would immediately reopen the U.S. market to Brazilian cattle, but has voiced disappointment that US restrictions remain in place.67 In 2017, Brazilian authorities uncovered that top meat processing corporations, notably JBS and BRF, paid food inspectors to accept the sale of tainted products, resulting in the US ban on fresh beef imports from Brazil.68 A bill presented in April 2019 (S. 1124, Tester) would halt all beef and poultry imports from Brazil while a working group assesses the potential harm to food safety. 

Recent Trade Negotiations

During Bolsonaro's formal visit in March 2019, the United States and Brazil announced a number of additional agreements. The Brazilian congress adopted a technological safeguards agreement in November 2019, allowing for the launch of US-licensed satellites from the Alcântara space center in Maranhão. The United States also supported Brazil's membership to the Organisation for Economic Cooperation and Development in exchange for Brazil agreeing to gradually relinquish its "special and differential treatment" status, which offers developing countries particular privileges at the WTO.
Building on those steps, U.S. and Brazilian officials are allegedly negotiating a more comprehensive trade pact.69 Without revisions to Mercosur's regulations, any deal to decrease tariffs would have to be discussed with the entire bloc. Mercosur entered into free trade agreements with the European Union and European Free Trade Association in 2019. The accords have yet to be ratified, and Argentina's recent political upheaval may complicate future negotiations.70
It is unclear if the Bolsonaro and Trump administrations would be ready to expose domestic producers to further outside competition. Industry associations in Brazil are reportedly pressing the Bolsonaro administration to prioritize cost reductions for domestic businesses before pursuing trade liberalization.71 U.S. businesses have also sought protections, and President Trump has threatened to levy tariffs on Brazilian goods (see text box below).

Trade and Investment Flows

U.S.-Brazil's trade has grown dramatically over the past two decades, but has been impacted by economic volatility, including the 2007-2008 global financial crisis and the 2014-2017 recession (see Figure 3). In 2019, total bilateral merchandise trade reached $73.9 billion.
The United States exported $43.1 billion to Brazil and imported $30.9 billion, resulting in a $12.2 billion trade surplus. The top U.S. exports to Brazil were mineral fuels, aviation, machinery, and organic chemicals. Mineral fuels, iron and steel, aviation, machinery, and wood and wood pulp were the major Brazilian imports to the United States. In 2019, Brazil was the 14th-largest commercial partner for the United States.72 The United States was Brazil's second-largest trading partner, accounting for 14.8% of total merchandise trade vs 24.4% for China.Certain products imported from selected developing nations receive non-reciprocal duty-free tariff treatment (73). Brazil was the program's fourth-largest recipient in 2019, accounting for $2.3 billion in duty-free imports to the United States, or 7.4% of all Brazilian product imports.74
The US-Brazil services trade is very considerable. In 2018 (the most recent year for which data are available), total bilateral services trade was $34.4 billion. The United States' service exports to Brazil reached $28.2 billion, while its service imports from Brazil totaled $6.1 billion, resulting in a $22.1 billion surplus. Travel, transportation, and telecommunications were the main U.S. service exports to Brazil, while business services were the top import from Brazil.75 In 2018, more than 2.2 million Brazilians came to the United States, spending $11.5 billion on travel and tourism.76 Brazil began exempting US residents from the country's tourist and business visa requirements in June 2019, potentially increasing US travel to Brazil in the following years.
US foreign direct investment (FDI) in Brazil has risen by more than 60% since 2008. As of 2018 (the most recent year for which data is available), the total amount of US FDI in Brazil was $70.9 billion, including major investments in manufacturing, finance, and mining, among other areas.77

Security Cooperation

U.S.-Brazilian collaboration on security concerns has historically been restricted, although law enforcement and military connections have improved in recent years. In 2018, the countries established the Permanent Forum on Security, which intends to encourage "strategic, intense, ongoing bilateral cooperation" on a variety of security issues such as arms and drug trafficking, cybercrime, financial crimes, and terrorism.78 The United States and Brazil also hold high-level security discussions through the long-standing Political-Military Dialogue and a new Strategic Partnership Dialogue, which met for the first time in September 2019.
Brazil is not a major drug producer, but it is the world's second-largest user of cocaine hydrochloride and possibly the greatest consumer of cocaine base. It is also an important transit country for cocaine destined for Europe.79 Over the last decade, organized crime in Brazil has grown in scope and scale, with some of the country's largest, well-organized, and heavily armed criminal groups, such as the Red Command (Comando Vermelho, or CV) and the First Capital Command (Primeiro Comando da Capital, or PCC), expanding their transnational operations. Much of the recent bloodshed in Brazil, notably in the country's north, has been related to fights between the CV, PCC, and their local affiliates over crucial trafficking lanes, according to security analysts.80
To combat organized crime, Brazil has increased security along its 9,767-mile border with 10 countries, including Colombia, Peru, and Bolivia, which are major cocaine producers. The Brazilian government's Strategic Border Plan, implemented in 2011, uses interagency resources, including unmanned aerial vehicles, to monitor criminal activities in high-risk areas along its borders and in the Amazon region. It has also conducted cooperative operations with neighboring countries. More recently, the Brazilian government has begun to purchase low-altitude mobile radars and other technology to support its Integrated Border Monitoring System. The system was originally intended to be operational along the whole Brazilian border in 2022, but due to funding constraints, the Brazilian government now expects that it will not be fully operational until 2035.81


Popular posts from this blog

Cyber Partnerships: The US and Brazil in the Digital Age

Common Aspirations: Brazil and the U.S.

Navigating the Future of US-Brazil Economic Ties

Search This Blog