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Doing Business in Brazil: Political and economic landscape

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Minister of Foreign Affairs travels to the US to prepare Bolsonaro’s visit next month

Brazil’s Minister of Foreign Affairs, Ernesto Araújo, traveled this week to the United States (US) to prepare for Jair Bolsonaro’s official visit next month.

Following Secretary of State Mike Pompeo’s presence at the President’s inauguration, Araújo’s and Bolsonaro’s successive trips to the United States (US) confirm that the Brazilian government will follow a foreign policy focused on a strategy of closer cooperation with the US [Link].

Marcelo Camargo / Agência Brasil

Last week the Itamaraty published Araújo’s speech in Davos stressing Brazil’s support to the joint action of the US, the European Union (EU) and Japan to invert China’s unfair trade practices especially linked to subsidies, nationalization and appropriation and technology of private companies [Link]. Also, the US feels it can regain ground against China’s expansion in the subcontinent thanks to Brazil, and praised Brazil for defending its sovereignty from China’s “predatory” trade practices [Link].  

Araújo’s visit is viewed positively by Brazilian businessmen, as economic and trade relations should be the main point of Araújo’s meetings in the US [Link]. Brazilian exports could increase in at least 134 groups of products, in sectors like food, chemicals, automotive, wood, leather and footwear, if it were to sign a free-trade agreement with the US. Diego Bonomo, Executive Manager of Foreign Trade of the Brazilian National Confederation of Industry (CNI), the US is the main buyer of Brazilian industrial products, and the major part of Brazilian investments is concentrated in the US market. Insofar as Bolsonaro hopes to sign bilateral agreements with Trump next month, Araújo said this “new partnership” between Brazil and the US would “certainly include very strong economic initiatives” [Link].  

This visit should prepare the ground to improve Brazil’s relationship with the US. It is expected that the US government will announce its support of Brazil’s bid to join the Organization for Economic Co-operation and Development (OECD) during Bolsonaro’s meeting with the US President Donald Trump [Link]. In fact, US support to Brazil’s entry in the OECD is a “fundamental” priority, since Washington’s opposition is the main obstacle to Brazil’s request brought forward by Temer’s Government in May 2017 [Link].  

Also, the political instability in Venezuela is a factor of approximation between Brazil and the US, as closer ties with the US is an attempt to transform Brazil as a regional interlocutor [Link]. Both countries agreed to work together to “support the people of Venezuela, which is fighting against an oppressive regime” [Link]. On January 23rd, Brazil and the US rapidly recognized the “transition process” in Venezuela and its transition government under the command of Juan Guaidó, leader of the opposition and President of the National Assembly [Link]. Before travelling to the US, Araújo participated in a meeting of the Lima group in Ottawa on February 1st, during the course of which the member states’ Ministers of Foreign Affairs agreed to adopt financial sanctions against Nicolás Maduro’s regime [Link]. Brazil and the US are now discussing joint support to the interim President and the logistics to provide humanitarian aid to Venezuela [Link].

Discussions should also involve the use of the Alcântara base to launch US satellite, as well as the quotas and surtax imposed on US imports of steel [Link].