Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
Remarks to the American Chamber of Commerce in Rio de Janeiro
Rio de Janeiro, Brazil

Thank you. I am pleased to be back in Brazil. As Secretary of Commerce I have had the privilege of traveling the world, often meeting with American Chambers of Commerce at each stop.

AmChams are one of the most powerful voices for strengthening America’s commercial partnerships around the globe. So, thank you for all that you do.

I’d like to start by making some observations about what is happening in the global economy:

• The problems in the credit market were a shock to our economy and will have an impact for some time.
• President Bush and the U.S. Congress acted decisively.
• They took a bold step—but it will take time to work through the markets.
• We’ve now seen the aftershocks around the world.
• This is a global credit crisis, so it’s crucial that the actions taken in each economy are effective and well understood by other nations.
• In the long term, we must stay engaged globally and work together to face this challenge. Now is not the time for economic isolation.
• It is the time for further openness.

More than ever trade is critical In fact; trade is the bright spot of the U.S. economy. Last year, the U.S. exported a record $1.6 trillion dollars. Exports are an increasingly important part of our economic growth, accounting for more than 50 percent of the 2.8 percent growth we saw in the second quarter.

Clearly, global economic engagement is central to our economic prosperity—much like it has been for Brazil.

Brazil has become a powerful symbol of globalization and growth. Since 2005:

• Brazil’s real GDP has increased by 15 percent; and
• Bilateral trade has increased by nearly 60 percent.

Now, during challenging economic times, Brazil, much like the next U.S. Administration and other countries throughout the world, will have to set policy for the future. Will we continue on our path of openness and global engagement? Or will we retreat into economic isolationism?

These are difficult choices. I hope Brazil, the U.S. and countries throughout the world stay open and engaged.

Under this Administration, our relationship has blossomed. President Bush and President Lula have met nine times, and President Bush has said that “Brazil is a very powerful, very important country in our neighborhood.”

With a population of 190 million people, and a GDP of more than $1.3 trillion, Brazil is a key player in the world economy and a leader in the Western Hemisphere.

And, there is more we can do to create jobs and prosperity in both our countries. I have looked on with admiration at the steps Brazil has taken to meet growing energy demands.

Brazil is increasing its energy independence by developing alternative fuels, such as ethanol, while continuing to invest in offshore exploration and development. The U.S. can learn from Brazil’s example.

Last year merchandise trade between the United States and Brazil totaled more than $50 billion, and through July, U.S. exports to Brazil are up almost 35 percent this year.

Yet, while we are Brazil’s largest single trading partner we know there are opportunities being left on the table.

That is why we are taking steps to address a wide range of issues, including barriers to trade and investment between our two countries through many cooperative mechanisms. For example:

• The U.S.-Brazil Commercial Dialogue will deliver its fourth report tomorrow to Minister Jorge and me.
• Under the Commercial Dialogue the Commerce Department has worked with INMETRO to develop greater global compatibility on fuel quality standards for ethanol and bio-diesel.
• And, our Patents and Trademark Office has worked with INPI to improve Brazil's capacity to process new patent and trademark applications.
• The U.S.-Brazil Economic Partnership, which is led by the State Department on our side will meet later this month.
• And tomorrow, I will be in Sao Paulo for the third meeting of the U.S.-Brazil CEO Forum, a significant public-private partnership.

Brazil and India are the only countries in the world that have established a CEO Forum with the United States.

The business community’s involvement and recommendations are absolutely critical. Much of the integration that is taking place in the world today is being led by the private sector, not by governments.

CEOs from both countries have stressed the need for integration and have set out a number of recommendations. Both governments have welcomed the recommendations and we can now achieve real results.

Let me highlight a few of our successes since the Forum’s inauguration last year:

The new aviation agreement will increase the number of passenger flights by nearly 50 percent over the next four years.

Beginning next month, U.S. airlines such as Delta and American Airlines will now be able to bring more tourists and business people to the Brazil’s beautiful northeast.

And thousands of Brazilians will now be able to fly direct to the U.S. rather than flying south to Rio de Janeiro or Sao Paulo to connect to a flight in Miami or Atlanta.

Another area of progress has been visas. We know that travel barriers can be more than just a headache for international travelers—they can sometimes stifle business opportunities.

The U.S. Embassy has set a goal of reducing wait times for visa processing in Brazil to 30 days. And Brazil has agreed in principle to consider expanding visa validity from five to 10 years. We are also working with Brazil to combine our business and tourist visas without additional fees.

These are important steps that will encourage more tourism and business travel.

For the first time in 40 years we have had real ongoing negotiations for a U.S.-Brazil bilateral tax treaty. These discussions are making important progress.

We are looking at ways to strengthen the U.S.-Brazil investment relationship and infrastructure is one of the areas on which we have focused.

Our government helped support a “road show” in the United States which highlighted Brazil’s infrastructure projects.

Education has been another area of collaboration. The CEOs are leading by example through their commitment to Corporate Social Responsibility. For example, Motorola has provided a $100,000 grant for the “Enter Jovem” program which gives training to disadvantaged youth in Brazil.

Corporate Social Responsibility is an important effort by U.S. companies around the globe, and I am proud of the programs that U.S. companies have implemented in Brazil.

These are just a few of the successes of the CEO Forum. Good governance and good partnerships are about delivering results. That is what we are doing, and we know there is a lot more we can do together.

There are very few countries in the world that have truly global companies competing and succeeding around the world. Brazil is one of those countries.

We need to develop a framework to allow U.S. and Brazilian companies to continue to grow, to compete and to prosper.

It is vital for Brazil to participate in the development of a bilateral investment treaty. Brazil’s BRIC colleagues, India and China, have already recognized the importance of investment protections and have launched bilateral investment treaty negotiations with the United States.

Bilateral investment treaties improve investor confidence by creating more open and transparent investment regimes. A BIT with the United States would help Brazil attract more investment, including in sectors or geographic areas that have not seen significant increases in foreign direct investment.

We are currently engaged with Brazil on better understanding each other’s approach to investment protection and hope to make progress on this issue.

Ten or 20 years ago, major multinationals were here in Brazil primarily to serve the Brazilian market. Today, many U.S. companies use Brazil as an export platform. In order to continue, both Brazilian and American companies need the protections and assurances that an investment treaty provides.

Your voice is important in this process. You are the ones that make investments, create jobs and drive growth in our economies.

And there is work to be done in the area of intellectual property protection. According to a recent study by Brazil's institute for Applied Economics, there are 1,200 Brazilian companies capable of competing domestically and internationally in terms of innovation and product differentiation instead of price.

But innovation requires the vigorous protection of intellectual property rights in order to thrive. Entrepreneurs and producers of creative material and innovative products need to be rewarded for their risk-taking.

I believe together we also have the potential to expand economic opportunities for all members of our societies and to continue to offer steady, positive leadership for our region, and for the world.

Through the Doha round of World Trade talks there is tremendous opportunity to enhance global economic growth. Brazil has been an important leader in those talks, and we appreciate the constructive role Brazil played at the July ministerial. I hope that Brazil and the U.S. continue to have the will to achieve a good agreement.

So far, some have not been willing to do enough on industrial goods and services. We must continue to lead others to an agreement; hundreds of millions of people in developing markets will benefit.

Let me close by saying that this Administration continues our longstanding commitment to the Hemisphere’s success. We’ve opened markets with Chile, with Central America, with the Dominican Republic, with Peru and we have completed agreements with Colombia and with Panama.

We are proud of the progress we have made with our partners in strengthening economic opportunities and growth in the Western Hemisphere, and we are proud of our relationship with Brazil.

This is the last time I’ll be in Brazil as Secretary of Commerce. But I am confident that the next President and his Secretary of Commerce will rely on the advice and counsel of your organization and the AmCham’s around the hemisphere.

I know they will deeply appreciate your support as much as we have. Thank you for all you do for Brazil, for the United States and for the strength of our relationship.