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