BRAZIL: INDUSTRIAL AND TRADE ASSOCIATIONS PUSH FOR GREATER

1. Summary: At a March 10 meeting held at the Sao Paulo
headquarters of the Federation of Industries of the State of Sao
Paulo (FIESP), Brazilian industrialists presented USTR Ambassador
Susan Schwab with a joint statement issued by eight Brazilian
industrial and trade associations that calls for closer USG-GOB
collaboration in trade negotiations, double taxation issues, and
biofuels cooperation. The eight associations sent copies of the
statement to Brazilian Foreign Minister Amorim and Ambassador
Schwab, and asked that it be forwarded to POTUS. It remains to be
seen what effect the joint statement will have on GOB trade policy,
although clearly it focuses even greater attention on industry's
desire for increased engagement with the U.S. End Summary.



2. The statement, issued collectively by FIESP, the National
Confederation of Industry (CNI), the Federation of Industries of the
State of Rio de Janeiro (FIRJAN), the Brazil - United States
Business Council, the American Chamber of Commerce in Brazil (AMCHAM
Brazil), the Brazilian Center of International Relations (CEBRI),
the Brazil Competitive Movement (MBC), and the Institute for
International Trade Negotiations (ICONE), underlined the inefficacy
of existing bilateral cooperative mechanisms in strategically
enhancing economic relations between Brazil and the U.S.



3. Instead, the communique called for aligning U.S. - Brazil
bilateral economic interaction along the same strategic lines the
USG currently has with India and China, and recommended that both
governments concentrate their efforts on areas where both the U.S.
and Brazil have the possibility to obtain a "win-win" outcome.



4. These industrial and trade organizations stressed the importance
of USG and GOB cooperation to a successful Doha Round outcome and
said both governments should look to complementary bilateral or
hemispheric trade negotiations. The communication also emphasized
the need for both countries to negotiate an agreement on double
taxation to enhance investment flows and to cooperate closely on
biofuel programs, which, in their eyes, would include a reduction in
biofuel tariffs.



5. Full text of the English translation of the statement provided
by the group to Ambassador Schwab follows:

Begin text of Joint Statement:

- Federation of Industries of the State of Sao Paulo (FIESP)
- National Confederation of Industry (CNI)
- Federation of Industries of the State of Rio de Janeiro (FIRJAN)
- Brazil - United States Business Council
- American Chamber of Commerce in Brazil (AMCHAM Brazil)
- Brazilian Center of International Relations (CEBRI)
- Brazil Competitive Movement (MBC)
- Institute for International Trade Negotiations (ICONE)

Joint Statement

Brazil-United States economic relations have become varied and
complex. This is due to the growth in trade and investment between
the two countries, to technological innovation in several areas of
knowledge and to the evolution of the political and economic context
at hemispheric and global levels.

However, mechanisms for bilateral cooperation have not kept up with
these developments and have been insufficient to serve and enhance,
from a strategic perspective, the relations between Brazil and the
United States.

In recent years, many initiatives have been launched at the
bilateral level. Despite their relevance, they were not able to
promote an upgrade in the bilateral relations and to foster
significant actions in the public and the private sectors.

We advocate the importance of adopting, in the Brazil-US relations,
a strategic view comparable to those established between the United
States and other important emerging countries, such as China and
India.

We believe that both governments must adopt a more ambitious agenda,
concentrating their cooperative efforts in selected strategic issues

SAO PAULO 00000251 002 OF 002


where Brazil and the United States are relevant players and where it
is possible to reach win-win solutions. Such an agenda must
necessarily include the following issues:

- Trade negotiations: Brazil and the United States play a
leadership role at the WTO and should join efforts for the success
of a balanced and ambitious agreement at the Doha Round.
Cooperation in the WTO must be complemented by bilateral or
hemispheric preferential trade negotiations with the aim of granting
market access in goods and services, promoting investments,
competitiveness, innovation and property rights.

- Agreement to avoid double taxation: the negotiation and
ratification of an agreement to avoid double taxation is justified
by the intensity and quality of the bilateral relations and, mainly,
by the growth of Brazilian investments in the United States. The
legal security derived from an agreement on this issue is critical
to promote new and increased investment flows between the two
countries.

- Biofuels: Brazil and the United States are aware of the
importance of biofuels to their hemispheric and bilateral agendas as
well as to multilateral trade, energy and environmental agendas.
The memorandum of understanding to be signed by both countries is a
first step towards the establishment of a cooperation program that
must include: research and development in the agricultural and
industrial production phases, establishment of global standards and
regulations for the products, bilateral investments in third
countries, infrastructure and market access through the reduction of
tariff barriers to the biofuels trade flows.

The presidential meetings provides (sic) the opportunity to stress
the importance of developing a strategic relation that contributes
not only to an expressive increase in bilateral trade and investment
flows, but also to joint hemispheric and global initiatives, taking
into consideration the particularities of each nation.

The Brazilian private sector intends to play a pro-active role in
this process, formulating proposals and participating in the
existing public-private mechanisms as well as in those to be created
to support the accomplishment of these complex and important
objectives.

End Text of Joint Statement.



6. Embassy Brasilia contributed to this cable, which was cleared by
Embassy Brasilia prior to transmission.

McMullen