Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
Brazil-U.S. Business Council
Washington, D.C.

Good morning. Last week I was in Colombia, Brazil and Uruguay, where I visited leaders in business and government who are committed to building a stronger, more competitive hemisphere. I’m glad to again be among leaders who feel the same way.

My trip made it clear to me that in order to make real progress, the U.S. and Brazil must work together. And what I saw and experienced on the ground, left me with an incredibly positive outlook for the future.

Both our economies are undoubtedly and unquestionably major players in the global economy. Together, we can achieve much for the people of our hemisphere.

We must continue to find ways to build hemispheric competitiveness. One of the ways we are doing that though the U.S.-Brazil Commercial Dialogue.

Your agenda for the rest of the morning reflects much of what was discussed on my visit to Brazil, including trade facilitation, regulatory issues and improving the investment climate.

We’re also working to improve intellectual property protection, trade and investment protection and cooperation on standards.

As we move forward, we’re committed to working closely with you. Thank you for your support of our efforts.

Presidents Bush and Lula recognize the benefits of a strong and dynamic U.S.-Brazil commercial relationship. Since the beginning of the Administration, President Bush has made strengthening hemispheric ties a top priority. This council has been an important advocate of that vision.

Now is the time for those who believe in real social justice and greater prosperity in our hemisphere to be heard. The choices we make now can build upon what we’ve accomplished, or cut short opportunities for future growth and cooperation.

One direction is protectionism and isolationism. By building barriers to trade and investment, and saying no to the four Free Trade Agreements now pending before Congress, we’ll be telling the world we’re not ready to compete, lead and be part of the global economy.

We’ll be telling those that make false promises and engage in populist rhetoric— those in the hemisphere who suppress people, ideas, debate and stifle free enterprise—that we are not committed.

The other direction is open, competitive markets, equal opportunity and the free enterprise system. That’s our vision for the hemisphere. Seven of the 12 countries we’ve implemented FTAs with are in Latin America, and three of the four now pending with Congress are in Latin America—Peru, Colombia and Panama.

I’ve been to Colombia twice this fall and I have to tell you that it’s the most impressive turnaround of a country I’ve ever seen.

Each of these Latin American countries has been inching toward a future of hope, growth and opportunity—these FTAs will help speed them on their journey.

As essential as these agreements are, dialogues between two key trading partners like Brazil and the U.S. are also critically important. On my trip to Brazil I was able to discuss our relationship with government and business leaders. This Administration is totally committed to this process and to improving the relationship between our two countries.

Nine U.S. CEOs, who are all members of the Brazil Business Council, helped me launch the U.S.-Brazil CEO Forum on this trip. Our CEOs and those from Brazil were excited and optimistic about the potential relationship and the ability of the Forum promote growth.

The CEOs made insightful recommendations, including important proposals for a bilateral tax treaty that will energize us as we seek to strengthen our trading and investment relationship.

Improving the Environment for U.S.- Brazil Investment

For the first time, Brazil’s investments abroad were greater than investments in Brazil by foreign firms—$28 billion in outward investments compared to $19 billion in foreign direct investment in Brazil last year.

This reflects the confidence of Brazilian companies who now are competing in international markets. It also reflects Brazil’s growing role in international trade and investment.

This is good news, but there is more potential for growth. Compare Brazil’s inward investment last year, which was about $102 per person, with other countries. For example, Chile attracted about $462 per person last year, while Singapore attracted more than $1,000 per person in U.S. investment alone.

Although U.S. companies now have more than $32 billion invested in Brazil, there are opportunities being missed, and we must go after them.

We need to put in place a framework that reflects the competitive, global market for capital and allows the U.S. and Brazilian economies to grow.

A recommendation of the CEOs from both our countries was the strengthening of intellectual property rights and disrupting international supply chains of pirated goods.

These steps will help attract more of the high-tech, innovation-intensive investment Brazil wants. Also a bilateral tax treaty, along the lines of the CEO Forum’s recommendations is another important step we can take to promote investment ties.

When it comes to trade, there are policy changes we can take that will help us expand our relationship.

Although the U.S. is Brazil’s largest trading partner, on a per-capita basis, Brazil lags behind much of Latin America in trade with us. It’s lower than CAFTA-DR countries and Chile. It’s also surprisingly lower—by a lot—than Peru and Colombia.

Trading with and doing business in Brazil requires intimate knowledge of the local environment. Foreign businesses frequently face high tariffs, a difficult customs system, heavy and unpredictable tax burdens, and an overloaded legal system that’s slow to enforce business law.

One area where there is tremendous potential for bilateral trade and investment is in infrastructure development. We’re interested in working with you to increase private investment in infrastructure projects.

Over the coming months, government and business should explore ways to improve the environment for public-private partnerships to meet Brazil’s infrastructure needs.

Success at Doha Requires Brazil’s Leadership

The best way to lower tariffs and spur new trade flows on a global basis is through a successful Doha Round in the WTO. The U.S. is committed to this outcome, and these negotiations are at a critical juncture.

The stakes could not be higher, especially for Brazil, which has much to gain from an ambitious Doha agreement that creates new global market opportunities in agriculture, manufacturing and services.

The United States has stated that we will negotiate on the basis of the texts on the table in Geneva—including on the key issue for Brazil of U.S. domestic agricultural support.

It’s time for Brazil to make the same commitment and to use its significant influence to persuade other advanced developing countries to do the same.

As partners, the United States and Brazil can help enable the market forces that increase trade and investment, create new jobs and expand opportunities to do business.

My trip last week was eye-opening and encouraging. We have much to gain from one another and I anticipate many good things in our future.

By continuing to strengthen our partnership, we will provide the steady, positive leadership and growth our hemisphere needs. Your leadership will be necessary as we seek to fulfill this vision and develop policies that will help our economies and our citizens prosper.