Summary: A Conversation on the U.S.-Brazil Relationship Ahead of Rousseff's Visit

Panelists:

• Shannon Herzfeld, Vice President, Archer Daniels Midland Co.
• Monica de Bolle, Visiting Fellow, Peterson Institute for International Economics
• Brian Winter, Vice President, AS/COA and Editor-in-Chief, Americas Quarterly
• Eric Farnsworth, Vice President, COA (moderator)

Summary

On June 24, AS/COA hosted a discussion ahead of Brazilian President Dilma Rousseff’s upcoming visit to Washington, DC. The conversation focused on current economic and political challenges in Brazil, the state of U.S.-Brazilian relations, and the expected agenda and potential outcomes for the presidential visit. COA’s Eric Farnsworth moderated the panel of U.S.-Brazil experts that featured the new editor-in-chief of AS/COA’s flagship publication Americas Quarterly Brian Winter, Peterson Institute economist Monica de Bolle, and Archer Daniels Midland's VP of Government Relations Shannon Herzfeld.  

President Rousseff’s visit comes at a pivotal moment in Brazil

Two years after a cancelled state visit as a result of a controversy over spying by the U.S. National Security Agency, Rousseff’s trip to Washington, DC comes at a time when the Brazilian economy is mired in recession, as well as corruption scandals at the state-owned oil company. As a result, Winter said that the issues on the visit’s agenda are “more important now than they were two years ago.” De Bolle’s description of Brazil’s current economic situation—an increasing inflation rate, high unemployment, a weak labor market, increasing interest rates, and a negative public mood that could derail an important fiscal adjustment package—highlight the importance of the trip for Rousseff. In that context, De Bolle said the visit provides an “opportunity to reevaluate the long-run agenda,” especially in regards to infrastructure and trade.

Herzfeld emphasized the urgency of new infrastructure projects within Brazil in an effort to maximize the economic potential of getting agricultural products to markets. U.S. private-sector investment can be leveraged through improvements in ports and transnational river transportation regulations to open the Brazilian economy.

Expectations for the visit’s outcome

Herzfeld, on the heels of returning from the U.S.-Brazil CEO Forum in Brasilia, offered a perspective ripe with private-sector enthusiasm as well as signs of positive feedback from public officials on both sides. New areas for public-private cooperation on trade initiatives such as transfer pricing and workable dispute resolutions, energy strategies, aviation defense collaboration, and primary education improvements all appear promising.

Despite these upsides, the panelists agreed that broad changes in the bilateral trade relationship likely remain beyond the scope of the scheduled meeting between Rousseff and President Barack Obama. Winter and de Bolle noted that, as the “most closed economy in the Americas” with only a handful of free trade agreements, Brazil’s ability to integrate itself into the global value chain of production remains a significant obstacle to near-term trade liberalization. Moreover, the panelists stressed that trade-integration agreements remain susceptible to slow-moving and contentious national legislatures in both countries.

While the visit may produce small steps towards a better trade relationship between the hemisphere’s two largest economies, Winter echoed the sentiment of many in identifying climate change as the issue for which tangible progress is most likely. Farnsworth added his hope that Obama and Rousseff make joint messages on regional and global issues to indicate shared international interests and democratic values.

The panel analyzed the outcomes necessary for the trip to be called a success. Winter advised that Rousseff needs to leave feeling better about her ability to improve the Brazilian domestic environment.  In echoing de Bolle’s point that the visit should bring “signals of greater proximity” between the two countries, Herzfeld expressed hope that all channels within the public and private sector would receive a message that this is the moment for closer U.S. engagement with Brazil.