Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
Remarks at the American Chamber of Commerce
Sao Paulo, Brazil

Thank you, Alex, for the very kind introduction. Good morning to everyone. It is always a pleasure to be back in Sao Paulo, speaking with the business community. I always get a lot out of being here.

I’d like to begin by congratulating the Brazilian women's soccer team on reaching the finals at the World Cup in China. It was a tough loss for the American team in the semi-finals, but Brazil played brilliantly.

Thank you for the work you do: in building business, and creating wealth, creating jobs and creating opportunity. It is the business community – the private sector – that creates the jobs, that puts up the money, that puts up the capital, that takes the risks.

President Bush and President Lula recognize that a strong and dynamic commercial relationship will benefit both of our countries.

We share common values based on our democratic, multi-cultural and multi-ethnic societies. We share an entrepreneurial spirit. And we believe that we should do more business together.

To strengthen the economic ties between our countries, the United States and Brazil have established the U.S.-Brazil CEO Forum.

I'm pleased to announce that the first meeting of the U.S.-Brazil CEO Forum is being held tomorrow in Brasilia.

The Forum is made up of business leaders from both countries, and it will add an important private-sector voice on ways to grow our trade and investment.

There are nine U.S. CEOs who have traveled with me, and they have been in discussions with an equally impressive group of Brazilian business leaders.

We have asked what our governments can do to advance economic prosperity for the people and for both our countries.

Jointly, they are going to present their recommendations on promoting trade and investment and removing impediments to expanding our economic relationship.

We are totally committed to this process. We believe in this process. We want to strengthen our economic partnerships.

Merchandise trade between the United States and Brazil totaled over $45 billion last year, an increase of 15 percent from 2005. The United States is proud to be Brazil's largest single trading partner. But we believe we have opportunities that are being left on the table. We can do so much more together.

With a population of 187 million people, and a gross domestic product of over $1 trillion, Brazil is one of the great economies of the world. Brazil also has one of the most advanced industrial sectors in Latin America and a diverse and sophisticated services industry. Brazil undoubtedly and unquestionably is a major player in the global economy.

Virtually all of the Brazilian companies on the CEO Forum have substantial U.S. investment. Among these:

• Brazilian-owned steel company, Gerdau Ameristeel, has grown rapidly since its launch in 1999 to become the fourth-largest steel producer in the U.S.;
• Odebrecht Construction has completed projects in the United States worth a total of more than $2 billion, and is the most active contractor in the expansion of the Miami Airport.

Ten or 20 years ago, major multinationals were here in Brazil primarily to serve the Brazilian market. Today, many U.S. companies invested here use Brazil as an export platform.

The ability to move goods cheaply and quickly across borders has become increasingly important to business growth and economic development. This growing integration is cause for reflection about the economic and trade relations between our countries. It's also an incentive to think about where we want to go in the 21^st century, and what policies we need to get us there. What is the environment that we would like to have to be able to take our relationship to its full potential, knowing that today we are nowhere near what this relationship can be?

According to a recent survey, 57 percent of executives expect extremely strong growth this year for their companies in Brazil.

Many U.S. companies have invested heavily here. The stock of U.S. direct investment in Brazil is over $45 billion. It was $32 billion in 2005, so it has grown substantially. And that supports thousands and thousands of jobs. That number should be larger because we still have opportunities. We believe there should be more U.S. investment in Brazil, and we believe that U.S. companies should play a bigger role in creating jobs and adding to the prosperity of the Brazilian economy.

We also have opportunities in the U.S. And I’m sure that Brazilian companies can point out areas where we should be able to improve our environment in the U.S. And we believe, as you well know, that Brazil also has opportunities. Let me give you some examples:

• The complexities of Brazil's business environment still create substantial obstacles for U.S. investors and U.S. exporters. That serves as a barrier to additional investment.
• Companies doing business frequently face high tariffs, a difficult customs system, a heavy and unpredictable tax burden and a legal system that is overloaded and slow to enforce business law.

I don’t think that I’m telling you anything that you do not know. We hear often about the so called "Custo Brasil," as you have felt so often.

On a per capita basis – and this is important – the United States has significantly more merchandise trade with the countries of Central America and the Dominican Republic and Chile than with Brazil. That’s incredible to think about and to recognize.

What may be even more surprising is this: let me give you some other numbers that I think will surprise you. Per capita, we trade more with Colombia and with Peru than we do with Brazil. This is trade in goods, not services. So, any way that you look at the numbers, it suggests that one of the biggest opportunities in this region, and perhaps in the world, is for the U.S. and Brazil to do more business together.

Through the U.S.-Brazil CEO Forum, we will be getting recommendations from business leaders on a broad range of ways we can work together to clear the path to more trade and more investment.

I hope to hear from the CEOs about ways to grow investment in both countries. Last year, for the first time, Brazil's investments abroad were greater than investments in Brazil by foreign firms -- $28 billion compared to almost $19 billion.

There are very few countries in the world where there are truly global companies – very few countries that have companies that are truly competing and succeeding in the global marketplace. Brazil is one of those countries. This reflects the role of Brazil as an engine for economic growth around the world. This reflects the confidence of Brazilian companies to compete in the international market place. It also reflects Brazil's role as an economic leader and a major player in international trade and investment.

We need to put in place the framework that will allow the U.S. and Brazilian companies to grow, to compete and to prosper.

We want companies to improve their competitiveness through innovation. Innovation requires the protection of intellectual property rights and the disruption of the international supply chain of pirated goods.

We should also open our economies even more so that companies will increase their investments and create jobs and drive growth.

Developing nations that significantly lowered tariffs in the 1990s saw their per capita income grow about three times faster than other developing countries.

There is no better opportunity for economic growth around the world than the Doha round. It’s the biggest idea that exists today to do something significant, to make a big move for the whole world – Doha is the biggest opportunity we have.

One study estimates that the Doha round will take 500 million people around the world out of poverty. It is too big to let go. It’s too big to let it pass. This is the time: we need to work together to show leadership, because the legacy of Doha will live on for many, many years. It will do good – for Brazil, for the U.S., for the region, but perhaps more importantly, for the world at large.

That is why President Bush is committed to a successful Doha Round in the WTO that opens markets and spurs new trade flows. We are also encouraged by President Lula’s comments on the Doha negotiations.

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.

Unless major developed and developing countries indicate now, publicly, their willingness to negotiate on the basis of texts that are on the table in Geneva we face losing a potential deal. And again, this is too big, it’s too important, and it’s right within our grasp.

The U.S. has stated that we will negotiate on the basis of the texts, including on the key issue for Brazil of U.S. domestic agricultural support. So, it’s time now for Brazil to make the same commitment and to use its significant influence – the influence that Brazil has around the world – countries look to Brazil for leadership, especially the group of developing countries. Brazil can persuade other advanced developing countries to do the same.

A successful Doha agreement is the single biggest opportunity we have to drive worldwide growth and to lift millions of people out of poverty. It would be a shame to let it slip away.

We in the Americas need to continue building strategic partnerships and regional economic frameworks to remain competitive. The U.S. has been implementing an aggressive agenda, opening markets with Chile, with Central America, with the Dominican Republic, and we now have completed agreements with Peru, with Colombia and with Panama.

On Friday, I'm taking a Congressional delegation to Colombia. This will be the second in a month – and part of an unprecedented outreach effort by the Administration.

Clearly, the United States is focused on Latin America, and on South America specifically: more than half of the FTAs that we have signed are with countries in the Americas.

My encouragement to everyone is that we think of ourselves as all Americans. I believe we all have a stake in making the Americas more competitive, more vibrant and more prosperous.

Our mutual vision for the Western Hemisphere should be one of growth and prosperity, where everyone has an opportunity to succeed.

In creating the U.S.-Brazil CEO Forum, Presidents Lula and Bush are strengthening economic and social ties between our countries. A stronger partnership between the U.S. and Brazil will strengthen the whole hemisphere.

As partners, the U.S. and Brazil can enable market forces to expand economic opportunities and reduce hunger and poverty. We can offer steady, positive leadership throughout our region.

I can think of nothing better for our people, our countries and our hemisphere.

I thank you very much for your attention. It’s a pleasure to be here.