This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 001067 
 
SIPDIS 
 
STATE PASS USTR 
NSC FOR SHANNON, BREIER, AND RENIGAR 
 
E.O. 12958: DECL: 04/19/2012 
TAGS: ETRD KIPR SOCI BR FTAA
SUBJECT: PRESIDENTIAL CHIEF OF STAFF OF DIRCEU ON FTAA AND 
POTENTIAL COMPULSORY LICENSING OF PHARMACEUTICALS 
 
REF: BRASILIA 1017 
 
Classified By: AMB. DANILOVICH BASED UPON REASON 1.4(B) 
 
¶1.      (C)  Summary.   On April 18, Ambassador and a 
visiting delegation from the State of Florida met with 
Presidential Chief of Staff Jose Dirceu to discuss Miami,s 
bid to become the permanent FTAA secretariat site.  Dirceu 
took the opportunity to state his desire that the FTAA talks 
move forward, repeatedly declaring that Brazil should export 
at least four times more to the U.S. than it currently does 
(USD$20 billion).  Adding that he has already spoken to 
Finance Minister Palocci about the Foreign Ministry,s 
inflexibility on FTAA issues, Dirceu said that next month 
both he and Palocci would seek to talk to President Lula 
about this.  Florida delegation members had varying reactions 
to Dirceu,s performance, with some seeing his remarks as a 
way to jump-start the stalled talks and others interpreting 
his statements as providing cover (i.e., that Brazil has 
earnestly sought to bridge the impasse) should the May 12 
U.S.-Brazil Co-chair meeting fail to produce results. 
Dirceu barely touched upon Brazil,s stance with respect to 
key issues of concern to the U.S., such as treatment of IPR 
within the FTAA common set.  (In a subsequent conversation 
later 
that day, the GOB,s Chief FTAA policymaker Regis Arslanian 
told the delegation that Foreign Minister Amorim planned to 
push Brazil,s 4 1 Mercosul-U.S. FTA proposal in the 
Minister,s April 26 meeting with the Secretary in Brasilia.) 
 Ambassador took the occasion to raise with Dirceu USG 
concerns regarding potential GOB compulsory licensing of 
HIV/AIDS antiretroviral drugs produced by U.S. firms;  Dirceu 
said that the GOB would consult with the USG prior to any 
decision by President Lula.   End Summary. 
 
¶2.      (SBU)   On April 18, Ambassador accompanied a 
visiting State of Florida delegation to a meeting with 
Presidential Chief of Staff Jose Dirceu.   The delegation 
(consisting of Florida Secretary of State Glenda Hood, 
Florida FTAA Chairman and former Amb. Charles Cobb, and 
Florida FTAA President Jorge Arrizurieta) sought to argue the 
case for Miami as the site of any permanent FTAA Secretariat. 
 From the Brazilian side, Dirceu was accompanied by Special 
Advisor Americo Fontenelle.  The meeting, scheduled to last a 
half-hour, instead went for twice that time. 
 
¶3.     (C)    After the Florida delegation spoke about 
prospects for CAFTA ratification and the substantial trade 
links between Florida and Brazil, Dirceu briefed on his 
views.  Brazil currently exports about US$20 billion to the 
U.S., though it should be exporting at least four times that 
amount, he said.  Because of the FTAA stalemate, Brazil was 
losing a historic opportunity to gain access to the U.S. 
market, something he termed &a scandal.8   To sustain 
growth of 5 to 7 percent per year, Brazil needed to increase 
the percentage of GDP devoted to investment to 25 percent 
(versus 21.5 percent now) and generate 2 million jobs per 
year.  An FTAA agreement, he declared, would help bring this 
badly-needed investment to Brazil, further stimulate the 
country,s highly-competitive agro-industry sector, and help 
Brazil increase its service sector exports.  Dirceu claimed 
Brazil could become a major player in the services sector, 
noting that currently 60 percent of the Brazilian 
construction firm Odebrecht,s earnings come from abroad. 
 
¶4.  (C)    Dirceu commented that the FTAA framework agreed to 
in the 2003 Miami Ministerial was a good basis for 
negotiating and that the lack of progress in the current 
talks was due to the Foreign Ministry,s desire to further 
its regional integration goals at the expense of business 
concerns.   What was needed to clear the logjam, he said, was 
to give the talks a political push.  Dirceu stated that he 
had previously talked to Finance Minister Palocci about this 
issue, and that he would resume this discussion when the 
latter returned from his current trip to New York. 
Thereupon, the two of them would approach President Lula in 
May to argue in favor of resuming FTAA negotiations.  Getting 
the Ministry of Agriculture and influential business groups 
(i.e., the National Confederation of Industries and the Sao 
Paulo State Industrial Federation) involved in the process 
was key, he added. 
 
¶5.  (C)   Dirceu did note that there were practical problems 
ahead.  Agriculture was a complex issue for both sides, 
though if an agreement could be reached in the WTO limiting 
agricultural subsidies that would certainly help, he said. 
Dirceu recalled that in his previous conversation with the 
Secretary in Washington he had pointed out that hot-button 
 
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topics like cotton and sugar needed to be treated as 
commercial issues, not political ones.  What would really 
send a bad signal &pessimo sinal8 to the GOB, he thought, 
was any rejection by the US Congress of CAFTA. 
 
¶6.  (C)   Florida delegation members had varying reactions to 
Dirceu,s remarks.  One participant in the meeting felt that 
Dirceu,s interest might provide newfound impetus to the 
stalled talks.  Another felt that Dirceu might have been 
seeking to find a way forward should the scheduled May 21 
U.S.-Brazil Co-chair discussions fail or position Brazil as 
the party not responsible for any impasse. 
 
¶7.   (C)  Later that day, the Florida delegation met with 
Foreign Ministry Director of International Trade Negotiations 
Regis Arslanian, the GOB policymaker directly responsible for 
the FTAA talks.  (It appears that, at Dirceu,s request, the 
level of the Foreign Ministry meeting was bumped up 
from Office Director to Assistant Secretary)  When asked by 
Cobb what he expected Minister Amorim to raise concerning the 
FTAA with Secretary Rice during their April 26 meeting, 
Arslanian said no doubt the Minister would push Brazil,s 4 1 
Mercosul-U.S. FTA proposal.   Arslanian reiterated Foreign 
Ministry opposition to the idea of the GOB accepting any IPR 
enforcement commitments in the context of the FTAA. 
 
¶8.   (C)  Comment.  While Dirceu,s statements are certainly 
welcome, as noted above they are subject to interpretation. 
For instance, notwithstanding his general comments, Dirceu 
did not make any mention of GOB flexibility on issues at the 
heart of the current impasse on FTAA.  In addition, Dirceu,s 
emphasis on market access was consistent with Arslanian,s 
statements that the GOB had not 
given up on its 4 1 market access proposal.  Also unclear is 
the timing of any possible Dirceu intervention into the GOB 
decisionmaking process (i.e., before or after the scheduled 
May 12 U.S.-Brazil Co-chair meeting) and whether Dirceu (or 
Dirceu and Palocci together) could make the 
President and ForMin Amorim budge on FTAA.  Indeed, Lula was 
recently quoted in the overseas press as follows:  &(On the 
subject of the FTAA), the United States only wants to 
negotiate on matters that serve its interests, such as 
services.  It does not want to negotiate on matters that 
are in our interests, such as agricultural produce. . . . 
Brazil is a key negotiator in the FTAA negotiations, and we 
will continue to negotiate as long as it takes to achieve 
what is required.8 
 
¶9.  (SBU)  Finally, Ambassador raised with Dirceu the USG's 
concern that the GOB might break off negotiations with U.S. 
pharmaceutical companies and seek compulsory licenses for 
these firms' HIV/AIDs antiretroviral drugs.  Dirceu noted 
that he planned to raise this issue with Health Minister 
Costa on April 19, and that whatever decision the GOB took 
would come from President Lula himself.  Dirceu pointed out 
that the GOB found itself in a difficult situation given the 
rising cost of anti-AIDS pharmaceuticals and its desire to 
keep its world-class AIDS treatment program going. 
Nevertheless, he concluded, prior to coming to any final 
decision, the GOB would be in touch with the USG to hear our 
views. 
 
Danilovich