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 002146 
 
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STATE PASS USTR FOR LEZNY/YANG 
NSC FOR CRONIN 
STATE PASS TO FED BOARD OF GOVERNORS FOR ROBITAILLE 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON 
TREASURY FOR DAS LEE AND F.PARODI 
 
E.O. 12958: DECL: 08/11/2015 
TAGS: EFIN ETRD ECON PREL BR
SUBJECT: SECRETARY SNOW'S AUGUST 1-3 MEETINGS IN BRAZIL - 
TRADE THEMES 
 
Classified By: Charge d'Affaires Patrick Linehan, reasons 1.5 
(b) and ( 
d) 
 
¶1.  (C) Summary:  During his bilateral meetings in Brasilia 
and the Group for Growth (GfG) session in Rio de Janeiro, 
U.S. Treasury Secretary Snow emphasized the importance of 
trade liberalization to increasing productivity and economic 
growth.  Brazilian and U.S. businesses which participated in 
a breakfast session of the GfG with the Secretary and Finance 
Minister Palocci likewise called for greater trade 
integration and a reenergizing of the Free Trade Area of the 
Americas (FTAA) negotiations.  In their private meeting and 
then later with President Lula, Palocci emphasized the 
importance he places on increased trade as an engine for 
growth.  Indeed, in the meeting with Lula, Palocci offered to 
head an effort to give new momentum to trade talks, 
particularly in the financial services area, in an apparent 
move to prod the Foreign Ministry into a more pro-active 
negotiating stance.  Lula, however, demurred.  End Summary. 
 
¶2. (U) Background:  Treasury Secretary Snow visited Brazil 
July 31 to August 3, 2005, to participate in the fourth 
session of the bilateral Group for Growth, an outgrowth of 
the 2003 Summit between Presidents Bush and Lula.  Secretary 
Snow held bilateral meetings August 1 in Brasilia with 
Central Bank President Henrique Meirelles, Finance Minister 
Palocci and President Lula, in addition to meeting with 
Brazilian venture capitalists.  In Rio de Janeiro on August 
2, the Secretary participated in Group for Growth meetings 
(including a business breakfast), gave a speech sponsored by 
the Brazilian Council on Foreign Relations (CEBRI), and held 
a round-table discussion with representatives of the 
financial services sector.  On August 3, in Vitoria, the 
capital of the Brazilian state of Espirito Santo, the 
Secretary emphasized the themes of private sector 
 
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infrastructure investment and the importance of good 
governance in visits to the port of Tubarao and in a working 
lunch with Governor Hartung and local business.  The 
Secretary concluded his stay in Vitoria with a visit to a 
 
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favela (poor neighborhood) that benefited from an 
Inter-American Development Bank (IDB)-financed basic services 
project, aimed at providing running water, sewage hook-ups 
and paved streets.  This cable reports on the trade-related 
portions of the discussions; macro-economic and financial 
will be reported septel. 
 
Business Wants Trade Liberalization 
----------------------------------- 
 
¶3. (SBU) Business representatives urged a renewed focus on 
trade negotiations during the GfG August 2 breakfast, 
attended by the Secretary and Palocci.  Benny Parnes (a 
former Central Bank director) of Banco BGM urged greater 
commercial integration between the U.S. and Brazil, 
specifically noting the advantages that Mexico obtained from 
NAFTA.  Roger Agnelli of mining giant CVRD observed that 
Brazil and the U.S. have complementary economies that would 
stand to gain substantially from integration.  Nelio Weiss of 
Price Waterhouse Coopers added that many of his Brazilian 
clients had just begun to invest in Central America in order 
to obtain greater access to the U.S. market under the 
recently-approved CAFTA. 
 
Secretary Snow/Minister Palocci 
 
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------------------------------- 
 
¶4. (C) During their bilateral meeting August 1, the Secretary 
noted the importance of trade liberalization for fostering 
growth.  He declared that the recent U.S. congressional 
approval of CAFTA showed that the USG still could muster the 
political strength necessary to maintain a pro-free trade 
policy.  The USG wants, the Secretary said, to take that 
momentum both to the FTAA negotiations and the WTO Doha 
Round.  With respect to the latter, he expressed 
disappointment that there had been limited response to the 
call for trade liberalization in the financial services arena. 
 
¶5. (C) Palocci averred that conditions were ripe for a 
renewed liberalization push both in the WTO and FTAA 
contexts.  President Lula, Palocci said, has an open vision 
on trade and the Secretary,s visit could help renew 
momentum.  Brazilian Ambassador to the U.S., Roberto Abdenur 
(who participated in most of the Secretary's meetings) 
restated the (well-worn) GoB position that it is ready to 
jump to four plus one (Mercosul-U.S.) market access 
negotiations given the current lack of progress on the FTAA. 
 
Snow/Lula 
--------- 
 
¶6. (C) During the Secretary's meeting with President Lula, 
Palocci reported on the substance of their earlier meetings. 
Palocci argued again that conditions were ripe to restart the 
trade agenda and offered to spearhead a GoB interagency 
effort to rebuild momentum in trade negotiations, 
particularly in financial services.  Lula did not respond 
specifically to Palocci's offer. 
 
¶7. (C) Comment: Palocci's request for a presidential mandate 
to advance the trade agenda, which continues to be the 
exclusive domain of the foreign ministry, was likely 
motivated by a desire to find ways to spur productivity 
growth in the economy.  With the microeconomic reform agenda 
completely stalled in the scandal-obsessed congress, pushing 
for trade liberalization is one of Palocci's few remaining 
reform options.  That Lula did not oblige likely speaks in 
equal measure to Itamaraty's entrenched position and to 
Lula's distraction with the corruption scandal. 
 
¶8. (U) This cable was cleared by Treasury. 
 
LINEHA