Brazil Intensifies Complaints Against U.S. as Summit Nears

Brazilian leaders have hardened their stance on joining a proposed hemispheric free-trade zone, saying they will agree only if the United States opens up its agricultural and steel commodities markets and modifies anti-dumping laws.

Their comments over the last week are the latest in a string of Brazilian complaints that U.S. trade policy unfairly keeps the South American nation’s orange juice, sugar, tobacco and steel out of the world’s richest markets.

But the rhetoric has toughened with the approach of the April 20-22 summit in Quebec City of 34 presidents and prime ministers to discuss a Free Trade Area of the Americas, or FTAA. Leaders are expected to set a timetable for negotiations and possibly move up inauguration of the zone to 2003 from 2005.

Latin America’s largest economy, Brazil has taken the toughest pre-summit stance of any nation in the region. Most are eager to form the bloc and benefit from what they hope will be huge trade gains such as those enjoyed by Mexico since the 1994 North American Free Trade Agreement. The FTAA would in essence be a hemispheric extension of NAFTA.

With negotiations about to enter an intense stage, Brazilians say they are disappointed that the U.S. hasn’t departed more from current policy, which has caused a reduction in key exports such as orange juice concentrate and steel.

Brazil’s top FTAA negotiator, Ministry of Foreign Relations Undersecretary Jose Alfredo Graca Lima, criticized U.S. trade policy during the Clinton years and said Brazil was not interested in joining the FTAA if “it’s just status quo.”

“Just some liberalization and tariff reduction might be a very meager package,” Graca Lima said. “What we want is true market access and some kind of revision of anti-dumping legislation. Liberalization must be shared.”

In a speech Sunday night in Rio de Janeiro to a group of foreign executives, President Fernando Henrique Cardoso said trade agreements tend to favor rich nations by giving them a “giant apparatus of protectionist tools.”

In what could be a negotiating ploy or an attempt to lessen expectations for an FTAA agreement, Cardoso described the Mercosur trading bloc of Brazil, Argentina, Uruguay and Paraguay as “for us a destiny,” whereas FTAA is “an option.”

And on a trip to Washington last week, Brazilian Foreign Minister Celso Lafer accused the U.S. of asking Brazil to make legal changes to facilitate foreign investment while showing itself unwilling to reciprocate.

The United States has countered that its overall tariff rate of 3.3% is one-quarter of Brazil’s and that it is the most open market in the world. As for FTAA negotiations, a top U.S. trade official in Washington said in response to Brazil’s complaints that “everything is on the table.”

“Some things are going to be tougher to negotiate than others,” said the official, who asked not to be identified. Restrictive U.S. agricultural policy may be hard to modify because of congressional support. As for modifying U.S. anti-dumping laws, “we think there is less need to change them,” the official said.

New U.S. Trade Representative Robert B. Zoellick has said he is willing to discuss the anti-dumping issue.

Cardoso is scheduled to meet with President Bush in Washington on March 30. Discussion is certain to include the FTAA.

Brazil generally is perceived as weak in international trade. With an economy bigger than Mexico’s but with just a sliver of its U.S. trade, Brazil would seem to have much to gain in the FTAA. Brazil was one of the few major trading countries that last year ran a deficit with the U.S., exporting $1.5 billion less than it imported.

“Brazil is almost alone among key Latin American nations in downplaying the FTAA,” said Sidney Weintraub, political economist at the Center for Strategic and International Studies in Washington. “But it’s kidding itself if it thinks it’s going to become a powerful economic country without much more foreign trade.”

Others say Brazil is merely sending a clear signal to other potential trading partners. An economist on Brazil’s negotiating team thinks the rhetoric is mostly posturing, not an effort to reduce expectations in case FTAA talks fail.

“Brazil is trying to make it clear what it wants, to guarantee we can gain some important points,” said Sandra Polonia Rios, an economist with the National Confederation of Industry, based in Rio de Janeiro.

Rios acknowledged that powerful industrial interests oppose Brazil’s entry into the FTAA because of fear they will not be able to compete. For that reason, some Brazilian observers believe, the government is preparing itself and the nation for the FTAA talks to fail.

“The foreign relations ministry thinks that Brazil could give up more than it would gain by joining,” said Roberto Iglesias, economist with Funcex, a foreign trade think tank in Rio.

The Quebec meeting is the first meeting since 1998 of presidents and prime ministers from all the hemisphere’s nations except Cuba.

President Bush ran on a pro-free-trade platform last year and has said he will seek “trade promotion authority” from Congress this year.

That’s the new phrase for “fast-track” negotiating authority, which Clinton failed to obtain but which Brazil, Chile and other countries say is essential if the FTAA is to succeed.

Call it fast track or trade promotion; by either name, the authority would give the Bush administration the power to negotiate an FTAA agreement and present it to Congress on an all-or-nothing basis.