They are the two largest economies in the Americas, but the US and Brazil could do better in terms of business collaboration.
Bilateral trade last year was estimated at US$59bn, but from a Washington perspective at least, Brazil is seen as too much of a closed market to US manufactured exports. From a Brasília perspective, the view is just as critical. The US has long been seen as a pot calling the kettle black as far as protectionism is concerned - US agricultural tariffs and subsidies are highly criticised. There are some prospects of progress however, given the announcement in April that Brazil’s President Dilma Rousseff is expected to pay a State visit to meet her US counterpart Barack Obama in Washington later this year - possibly in October. Better diplomatic relations between the two countries might trigger some progress on the business front. Washington was displeased with the attempts by Rousseff’s predecessor Lula da Silva (2003-2010) to broker an agreement over Iran's nuclear programme: Rousseff has kept a lower profile on that front, and although a centre-left leader like Lula, has kept some distance from the more radical Latin American countries such as Venezuela. To get bilateral relations onto a more solid footing, Washington would have to make some moves too, such as being a little more supportive of Brazil's quest for a permanent seat on the UN Security Council.
If the political and diplomatic mood music can be got right, what is on the business agenda? One key aim would be to conclude a treaty to avoid double-taxation on US and Brazilian companies, something that has been discussed for years but never achieved. Some from of progress on reducing import tariffs and other barriers to bilateral trade is also necessary. For that to happen, further discussions on exchange rates will probably be necessary. Rousseff's administration has increased protective tariffs for some industries in response to what it says is a 'currency war' being fought between the US and other developed countries to make their exports unfairly competitive. That said, the Brazilian side may be ready to consider some concessions on this front, given the slowdown in economic growth in 2012, and strains in relations with key regional economic partners like Argentina.
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