US-Brazil Trade and FDI: Enhancing the Bilateral Economic Relationship



Abrão Neto, Ken Hyatt, Daniel Godinho, and Lisa Schineller With Roberta Braga | ApexBrasil and the Atlantic Council

Scan the global horizon today and one can’t help but note the trends that are fundamentally reshaping the world order. New global players are taking center stage, as countries reconsider their approaches to collaboration and cooperation. Changes in technology are evolving at unprecedented speeds—changes that have brought forward a fourth industrial revolution that has generated new questions about how best to solve global challenges not confined by borders.

These transformative trends are affecting the world, and the marketplace. But, change also brings immense opportunity. In this environment, the United States and Brazil are uniquely positioned to advance momentum for a more robust bilateral economic relationship.

As the United States and Brazil look at delivering on such a goal, the Atlantic Council’s Adrienne Arsht Latin America Center, alongside intellectual partners in both countries, lays out the benefits that a closer economic relationship may offer. The goal: provide new ideas and reinforce momentum for deepening the bilateral relationship at a time of great synergy between the countries’ leadership.

This paper, authored by two US and two Brazilian experts, showcases the scope for the United States and Brazil of deepening trade and FDI ties. In particular, it highlights the institutional hurdles and opportunities for lowering trade barriers and enhancing convergence in the near term, while articulating the benefits of a comprehensive free trade agreement in the long term, as well as what the two countries can do to achieve even stronger investment ties.

To highlight the potential benefits of a stronger US-Brazil partnership and increased investment in different sectors of the economy, this paper, from a bilateral and non-partisan perspective, proposes short-term and long-term approaches to seizing on opportunities for greater engagement. It also highlights, through call-out boxes, the authors’ perspectives on key themes and opportunities for particular industries.

Throughout 2020, the United States and Brazil have the chance to focus on key, practical, short-term wins that could pave the way for next steps toward a comprehensive long-term free trade agreement.

In the areas of trade, recommendations include a multi-chapter trade enhancement agreement that could encompass bilateral rules on customs administration and trade facilitation, good regulatory practices, technical barriers to trade, and digital trade, among other areas.

Working closely with the private sectors of the two countries, the United States and Brazil should continue to identify specific bottlenecks to reduce trade uncertainty, and work to finalize a mutual recognition agreement between national trusted traders or Authorized Economic Operator (AEO) programs. Key to short-term success will be expanding digital documentation in bilateral trade and expanding upon sharing good regulatory practices, including conducting impact analyses and public consultations, and implementing a whole-of-government approach.

The two countries should work to move beyond the pilot program to establish a full-fledged Global Entry Program for pre-approved Brazilian travelers entering the United States, start negotiations to avoid double taxation, and consider the implementation of a high-level mechanism at the vice presidential level to oversee the bilateral relationship (in coordination with existing dialogues and groups). The United States and Brazil can also increase policy cooperation in third countries and international fora in areas of investment and trade policy coherence.

The United States should continue to support Brazil’s process of accession to the Organisation for Economic Co-operation and Development (OECD), which would energize and consolidate important economic domestic reforms in Brazil.

Beyond 2020, and using momentum of short-term progress, the United States and Brazil should work toward launching and concluding negotiations for a comprehensive free trade agreement (FTA) and bilateral investment treaty (BIT).

An open, transparent, inclusive, and international rules-based bilateral trading system is key to sustainable growth and prosperity for the United States and Brazil. By articulating the spillover effects of stronger ties from a bilateral approach, this paper provides a new perspective on the benefits of closer trade and investment linkages between the two countries. The moment to catapult the joint relationship to the next level is now.


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