BRAZIL'S CONGRESS CONTINUES TO DELIBERATE

UNCLAS SECTION 01 OF 02 BRASILIA 003262 SIPDIS SENSITIVE DEPT FOR WHA/BSC, WHA/EPSC USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEM/ADRISCOLL/MWAR D USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON USDA FOR JB PENN, U/S, FFAS NSC FOR SCRONIN E.O. 12958: N/A TAGS: ETRD PGOV BR SUBJECT: BRAZIL'S CONGRESS CONTINUES TO DELIBERATE PARAMETERS FOR TRADE NEGOTIATORS REF: A) BRASILIA 3185 B) 03 BRASILIA 2967 ¶1. SENSITIVE BUT UNCLASSIFIED ¶2. (SBU) Summary. In a bid to exert greater control over trade policy, Brazil's Congress continues to weigh legislation to establish parameters for the country's trade negotiators. While some provisions would pose challenges for the U.S., it is unclear whether final passage will be in a timely fashion and if so, to what extent Brazilian negotiators would actually be bound by its provisions. Post is sending this follow-up report given recent movement of the legislation in the Brazilian Chamber of Deputies and mention of the pending legislation by local deputies during Codel Hyde's visit to Brasilia in early December. End Summary. ¶3. (SBU) Brazilian legislators continue to evince an interest in exerting greater influence over the country's trade policy. They are increasingly present as part of Brazil's official negotiating delegations, including for the WTO Hong Kong Ministerial, and have sought to keep alive draft legislation to define parameters for trade negotiators. The bill was mentioned by Brazilian Congressional leaders in conversations with Codel Hyde on December 2 (ref A). ¶4. (U) The legislation currently under review in the Chamber of Deputies was initially conceived in 2003 in the midst of the contentious debate in the hemisphere over the future of FTAA negotiations, and has since continued to slowly wind its way through Congress. As reported in ref B, the bill is the brainchild of Sao Paulo Senator Suplicy (PT), former chair of the Senate Foreign Relations and National Defense Committee, although it was significantly cleaned up by the bill's rapporteur Senator Marcelo Crivella (PMR) before clearing the Senate in October 2004. On November 30, 2005, the Chamber of Deputies' Committee for Economic Development, Industry and Trade approved the bill, now PL 4291/2004, without amendment, before passing it to the Chamber's Foreign Relations and National Defense Committee. The bill will also have to clear the Chamber's Constitution and Justice Committee before gaining final approval by the Chamber. ¶5. (U) Although the local press refers to the bill as Brazil's TPA-like legislation, it varies markedly from U.S. Trade Promotion Authority. The Brazilian legislation is designed to provide some general guidance to negotiators so they may have a sense of Congress' disposition on certain issues, but it's provisions are not binding on negotiators, nor is Congress bound to use an abbreviated or expedited approval process should negotiators conform with its guidance. There is no provision for an up or down vote, thus leaving intact the Brazilian legislature's ability to press the executive branch for changes after the negotiation's conclusion. The proposed legislation applies to all of Brazil's trade negotiations, including intra-Mercosul discussions, and has no expiration date. ¶6. (SBU) The bill lays out some straightforward objectives for negotiators, such as expanding Brazil's export markets and productive sectors and shifting the composition of Brazil's exports toward greater value-added products. It also identifies some specific outcomes negotiators should aim for, which in an FTAA or bilateral context would pose challenges for the U.S., including the confinement of issues described as systemic or regulatory, such as IPR, government procurement, investment and services, to the WTO, Mercosul or negotiations with other developing countries; rejection of commitments on labor and environment; equal treatment of all four modes in services negotiations; elimination of the excessive use of antidumping and countervailing duty laws; and apparent rejection of investor-state provisions. The bill also prompts negotiators to preserve Brazil's right within GATT provisions to treatment as a developing country for the purposes of infant industry protection and cases of balance of payment problems, and in securing special and differential treatment broadly. Consistent with the GoB's current negotiating stance, negotiators are tasked with seeking the accelerated reduction/elimination of export and production subsidies for agricultural products. While negotiators are directed to seek commitments for restraining the exportation of counterfeit goods, they are also tasked with seeking protection for phyto-genetic resources and securing proper compensation for there commercial use. Comment -------------- ¶7. (SBU) Although the bill's recent approval by the Economic Development,Industry and Trade Committee, after one year of deliberation, signals a continuing interest in the project, it is less than clear that it will gain final approval in a timely fashion given the other matters preoccupying the Chamber, or that once passed it would impact significantly Brazil's negotiations with the United States in the context of the WTO or elsewhere. The bill is not very well-written and a number of provisions seem to reflect the less-than-full understanding that many Brazilian Congressional members have of technical trade issues. The rather open introductory language extolling negotiators "to aim" for certain outcomes, would also seem to give the Foreign Ministry significant leeway should it choose to use it. Nonetheless, former Ambassador to the United States Rubens Barbosa recently criticized what he characterized as the Brazilian Legislature's attempt to duplicate the control exercised by the U.S. Congress over trade matters by shifting responsibility for trade negotiations from the Executive to the Congress, a move he said is inconsistent with Brazil's Constitution. Criticism notwithstanding, Brazil's Congress likely sees the bill as an important vehicle if not to pre-determine negotiating outcomes, at least to force Brazilian negotiators to consult more frequently and in more depth than past tradition, in order to secure eventual approval of future trade accords. Post will continue to monitor the bill's progress. Chicola