BRAZILIAN INTEREST GROUPS DUG IN ON WTO DOHA ROUND ISSUES

UNCLAS BRASILIA 000628 SIPDIS SENSITIVE SIPDIS STATE PASS TO USTR FOR MSULLIVAN/KLEZNY NSC FOR SUE CRONIN DEPT OF TREASURY FOR FPARODI USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D USDOC FOR 3134/USFCS/OIO/SHUPKA E.O. 12958: N/A TAGS: ETRD WTRO EAGR PGOV PREL BR SUBJECT: BRAZILIAN INTEREST GROUPS DUG IN ON WTO DOHA ROUND ISSUES ¶1. (U) Over the past week two sets of high-level visitors, CODEL Grassley and representatives from the Brazil-U.S. Business Council, have raised WTO Doha Round issues with GOB cabinet members and private sector interest groups. The week of March 20 CODEL Grassley met with Foreign Minister Amorim, Agriculture Minister Rodrigues, and Trade Minister Furlan in Brasilia, and in Sao Paulo saw officials from the powerful Sao Paulo State Industrial Federation (FIESP) and Marcos Jank, head of the influential trade NGO ICONE. (See septels.) Subsequently, a lobbying delegation from the Brazil-U.S. Business Council, a coalition of U.S. multinationals that do business in Brazil, met with FIESP on March 28 and Minister Rodrigues and Lula Chief of Staff Rousseff on March 29. ¶2. (SBU) In nearly all these conversations, our Brazilian interlocutors strongly resisted entreaties to move forward on issues such as services and Non Agricultural Market Access (NAMA). The one exception was the Codel Grassley meeting with Furlan, in which the Minister acknowledged that Brazil needs to be less defensive on services and open up its markets to industrial goods - although he was very adamant that none of this could happen until Brazil saw real progress on the agricultural side and removal of U.S. ag subsidies. Industry contacts were even more entrenched. In its session with the Council, FIESP reps said that they would pressure the Foreign Ministry (Itamaraty) if it appeared that GOB diplomats were going to cede on services and NAMA. (Comment. In the past, in other contexts, the Foreign Ministry has proven impervious to FIESP lobbying. End Comment.) Meanwhile, Rodrigues told Council members that after attending the recent London meeting he was pessimistic about chances for a breakthrough. ¶3. (SBU) Nor did much come from the Council's meeting with Rousseff. To break the current impasse, Council member Bob Vastine, President of the Coalition of Service Industries, urged the GOB to submit a revised offer on services which at least bound Brazil's current level of opening. Rousseff, who clearly was relying upon prepared talking points, initially did not understand the proposal - viewing it as a request for Brazil to abandon its agricultural ambitions for nothing in return. Once the concept was further clarified, however, her response was that the burden of moving forward should rest with the developed countries and not a G-20 nation such as Brazil. Rousseff opined that these issues should best be left to Itamaraty negotiators though she did acknowledge that failure to reach an agreement would hurt both Brazil and the U.S. ¶4. (SBU) Comment. What we conclude from all this is that given the deference GOB decisionmakers accord Itamaraty on WTO issues and the unwillingness of domestic manufacturers to view the big picture, engaging the Brazilian interagency community or Sao Paulo industrialists on Doha Round issues will likely not be particularly fruitful. Our best interlocutors (and the key decisionmakers) on these matters will be Foreign Minister Amorim and President Lula. Linehan