Identifier
Created
Classification
Origin
05BRASILIA1067
2005-04-20 13:45:00
CONFIDENTIAL
Embassy Brasilia
Cable title:  

PRESIDENTIAL CHIEF OF STAFF OF DIRCEU ON FTAA AND

Tags:  ETRD KIPR SOCI BR FTAA 
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C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 001067 

SIPDIS

STATE PASS USTR
NSC FOR SHANNON, BREIER, AND RENIGAR

E.O. 12958: DECL: 04/19/2012
TAGS: ETRD KIPR SOCI BR FTAA
SUBJECT: PRESIDENTIAL CHIEF OF STAFF OF DIRCEU ON FTAA AND
POTENTIAL COMPULSORY LICENSING OF PHARMACEUTICALS

REF: BRASILIA 1017

Classified By: AMB. DANILOVICH BASED UPON REASON 1.4(B)

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 001067

SIPDIS

STATE PASS USTR
NSC FOR SHANNON, BREIER, AND RENIGAR

E.O. 12958: DECL: 04/19/2012
TAGS: ETRD KIPR SOCI BR FTAA
SUBJECT: PRESIDENTIAL CHIEF OF STAFF OF DIRCEU ON FTAA AND
POTENTIAL COMPULSORY LICENSING OF PHARMACEUTICALS

REF: BRASILIA 1017

Classified By: AMB. DANILOVICH BASED UPON REASON 1.4(B)


1. (C) Summary. On April 18, Ambassador and a
visiting delegation from the State of Florida met with
Presidential Chief of Staff Jose Dirceu to discuss Miami,s
bid to become the permanent FTAA secretariat site. Dirceu
took the opportunity to state his desire that the FTAA talks
move forward, repeatedly declaring that Brazil should export
at least four times more to the U.S. than it currently does
(USD$20 billion). Adding that he has already spoken to
Finance Minister Palocci about the Foreign Ministry,s
inflexibility on FTAA issues, Dirceu said that next month
both he and Palocci would seek to talk to President Lula
about this. Florida delegation members had varying reactions
to Dirceu,s performance, with some seeing his remarks as a
way to jump-start the stalled talks and others interpreting
his statements as providing cover (i.e., that Brazil has
earnestly sought to bridge the impasse) should the May 12
U.S.-Brazil Co-chair meeting fail to produce results.
Dirceu barely touched upon Brazil,s stance with respect to
key issues of concern to the U.S., such as treatment of IPR
within the FTAA common set. (In a subsequent conversation
later
that day, the GOB,s Chief FTAA policymaker Regis Arslanian
told the delegation that Foreign Minister Amorim planned to
push Brazil,s 4 1 Mercosul-U.S. FTA proposal in the
Minister,s April 26 meeting with the Secretary in Brasilia.)
Ambassador took the occasion to raise with Dirceu USG
concerns regarding potential GOB compulsory licensing of
HIV/AIDS antiretroviral drugs produced by U.S. firms; Dirceu
said that the GOB would consult with the USG prior to any
decision by President Lula. End Summary.


2. (SBU) On April 18, Ambassador accompanied a
visiting State of Florida delegation to a meeting with
Presidential Chief of Staff Jose Dirceu. The delegation
(consisting of Florida Secretary of State Glenda Hood,
Florida FTAA Chairman and former Amb. Charles Cobb, and
Florida FTAA President Jorge Arrizurieta) sought to argue the

case for Miami as the site of any permanent FTAA Secretariat.
From the Brazilian side, Dirceu was accompanied by Special
Advisor Americo Fontenelle. The meeting, scheduled to last a
half-hour, instead went for twice that time.


3. (C) After the Florida delegation spoke about
prospects for CAFTA ratification and the substantial trade
links between Florida and Brazil, Dirceu briefed on his
views. Brazil currently exports about US$20 billion to the
U.S., though it should be exporting at least four times that
amount, he said. Because of the FTAA stalemate, Brazil was
losing a historic opportunity to gain access to the U.S.
market, something he termed &a scandal.8 To sustain
growth of 5 to 7 percent per year, Brazil needed to increase
the percentage of GDP devoted to investment to 25 percent
(versus 21.5 percent now) and generate 2 million jobs per
year. An FTAA agreement, he declared, would help bring this
badly-needed investment to Brazil, further stimulate the
country,s highly-competitive agro-industry sector, and help
Brazil increase its service sector exports. Dirceu claimed
Brazil could become a major player in the services sector,
noting that currently 60 percent of the Brazilian
construction firm Odebrecht,s earnings come from abroad.


4. (C) Dirceu commented that the FTAA framework agreed to
in the 2003 Miami Ministerial was a good basis for
negotiating and that the lack of progress in the current
talks was due to the Foreign Ministry,s desire to further
its regional integration goals at the expense of business
concerns. What was needed to clear the logjam, he said, was
to give the talks a political push. Dirceu stated that he
had previously talked to Finance Minister Palocci about this
issue, and that he would resume this discussion when the
latter returned from his current trip to New York.
Thereupon, the two of them would approach President Lula in
May to argue in favor of resuming FTAA negotiations. Getting
the Ministry of Agriculture and influential business groups
(i.e., the National Confederation of Industries and the Sao
Paulo State Industrial Federation) involved in the process
was key, he added.


5. (C) Dirceu did note that there were practical problems
ahead. Agriculture was a complex issue for both sides,
though if an agreement could be reached in the WTO limiting
agricultural subsidies that would certainly help, he said.
Dirceu recalled that in his previous conversation with the
Secretary in Washington he had pointed out that hot-button

SIPDIS
topics like cotton and sugar needed to be treated as
commercial issues, not political ones. What would really
send a bad signal &pessimo sinal8 to the GOB, he thought,
was any rejection by the US Congress of CAFTA.


6. (C) Florida delegation members had varying reactions to
Dirceu,s remarks. One participant in the meeting felt that
Dirceu,s interest might provide newfound impetus to the
stalled talks. Another felt that Dirceu might have been
seeking to find a way forward should the scheduled May 21
U.S.-Brazil Co-chair discussions fail or position Brazil as
the party not responsible for any impasse.


7. (C) Later that day, the Florida delegation met with
Foreign Ministry Director of International Trade Negotiations
Regis Arslanian, the GOB policymaker directly responsible for
the FTAA talks. (It appears that, at Dirceu,s request, the
level of the Foreign Ministry meeting was bumped up
from Office Director to Assistant Secretary) When asked by
Cobb what he expected Minister Amorim to raise concerning the
FTAA with Secretary Rice during their April 26 meeting,
Arslanian said no doubt the Minister would push Brazil,s 4 1
Mercosul-U.S. FTA proposal. Arslanian reiterated Foreign
Ministry opposition to the idea of the GOB accepting any IPR
enforcement commitments in the context of the FTAA.


8. (C) Comment. While Dirceu,s statements are certainly
welcome, as noted above they are subject to interpretation.
For instance, notwithstanding his general comments, Dirceu
did not make any mention of GOB flexibility on issues at the
heart of the current impasse on FTAA. In addition, Dirceu,s
emphasis on market access was consistent with Arslanian,s
statements that the GOB had not
given up on its 4 1 market access proposal. Also unclear is
the timing of any possible Dirceu intervention into the GOB
decisionmaking process (i.e., before or after the scheduled
May 12 U.S.-Brazil Co-chair meeting) and whether Dirceu (or
Dirceu and Palocci together) could make the
President and ForMin Amorim budge on FTAA. Indeed, Lula was
recently quoted in the overseas press as follows: &(On the
subject of the FTAA),the United States only wants to
negotiate on matters that serve its interests, such as
services. It does not want to negotiate on matters that
are in our interests, such as agricultural produce. . . .
Brazil is a key negotiator in the FTAA negotiations, and we
will continue to negotiate as long as it takes to achieve
what is required.8


9. (SBU) Finally, Ambassador raised with Dirceu the USG's
concern that the GOB might break off negotiations with U.S.
pharmaceutical companies and seek compulsory licenses for
these firms' HIV/AIDs antiretroviral drugs. Dirceu noted
that he planned to raise this issue with Health Minister
Costa on April 19, and that whatever decision the GOB took
would come from President Lula himself. Dirceu pointed out
that the GOB found itself in a difficult situation given the
rising cost of anti-AIDS pharmaceuticals and its desire to
keep its world-class AIDS treatment program going.
Nevertheless, he concluded, prior to coming to any final
decision, the GOB would be in touch with the USG to hear our
views.

Danilovich