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UNCLAS SECTION 01 OF 04 BRASILIA 000117 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR H, WHA/BSC 
DEPT PLEASE PASS TO USTR FOR KLEZNY/MSULLIVAN 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON ETRD BR
SUBJECT: CODEL MCCONNELL MEETS BRAZILIAN POLICYMAKERS 
 
¶1. (SBU) Introduction.  During a January 9 stop in Brasilia, 
a congressional delegation led by Senator Mitch McConnell met 
with Brazilian government leaders.  The meetings were 
positive and covered a range of issues, including trade, the 
MINUSTAH peacekeeping mission to Haiti, Venezuela's entry 
into Mercosul, the outlook for a Morales presidency in 
Bolivia, and general Brazilian security issues.  Separate 
summaries of the meetings follow.  End Introduction. 
 
¶2. (SBU) During a January 9 visit to Brasilia, a CODEL led by 
Senator Mitch McConnell (KY), Majority Whip and Chairman of 
the State, Foreign Operations and Related Agencies 
Subcommittee of the Appropriations Committee, met with the 
Acting Minister of Development, Industry and Trade Mario 
Mugnaini, Minister for Institutional Security General Felix, 
and Foreign Minister Celso Amorim.  In addition to Senator 
McConnell, the CODEL included: 
- Senator Mel Martinez (FL); 
- Senator Richard Burr (NC); and 
- Senator John Thune (SD). 
 
MINISTRY OF DEVELOPMENT, INDUSTRY AND TRADE 
 
¶3. (SBU) The McConnell CODEL met with Acting Minister of 
Development, Industry and Commerce (MDIC) Mario Mugnaini Jr. 
and Special Assistant Aloisio Gomes Neto to discuss how 
Brazil and the US might further their trade relationship. 
Mugnaini was mostly in talking mode, wanting to explain the 
current Brazil/US trade relationship and where he would like 
to see it going.  The GOB is currently unsatisfied with last 
year's 12 percent increase in trade with the US (which is 
well below Brazil's average increase with trading partners in 
Latin America).  Both sides agreed that the US is still 
Brazil's single most important trading partner. 
 
Looking to Increase Exports and Imports 
--------------------------------------- 
 
¶4. (SBU) While currently exports make up 16 percent of 
Brazilian GDP and exports and imports combined make up 25 
Percent, MDIC would like for exports alone to make up 25 
percent of the Brazilian GDP.  Mugnaini said Brazil is 
looking for a 5 percent increase in imports to, and exports 
from, the US. When pressed, Mugnaini said the sectors the 
Ministry sees the most room for growth are services (with a 
caveat that more negotiations in the WTO are needed), capital 
goods, electronics, mechanical equipment, and chemicals for 
medicine manufacture and fertilizer production.  High quality 
fertilizer from the US would help Brazil increase 
agricultural production and therefore exports, he said. 
 
Agriculture, An Age Old Problem 
------------------------------- 
 
¶5. (SBU) Brazil and US agricultural aims are often in 
conflict and therefore complicate the import/export picture, 
according to Mugnaini.  When Senator Thune pointed out that 
Brazil's agricultural exports to the US outweigh US 
agricultural exports to Brazil by 10 to 1, Mugnaini 
complained of a high effective tariff Brazil pays to export 
sugar to the US (presumably referring to the over quota 
tariff rate).  Mugnaini also mentioned US cotton subsidies 
and a lack of satisfactory movement by the USG to comply with 
the WTO panel ruling. Senator Thune said the issue is in the 
process of being resolved.  Senator Martinez suggested that 
joint marketing of orange juice to Asia is one area that 
would benefit both Brazil and US producers. 
 
US FTAs Everywhere; How about With Mercosul? 
-------------------------------------------- 
 
¶6. (SBU) Mugnaini pointedly asked why the US has recently 
completed so many free trade agreements with other countries 
in the hemisphere while no movement has been seen on the FTAA 
or a bilateral agreement with Mercosul.  Brazil is willing, 
he said, to move forward on bilateral agreements, but will 
not abandon the FTAA.  Senator McConnell said that in spite 
 
BRASILIA 00000117  002 OF 004 
 
 
of its co-chairmanship of the FTAA, Brazil has not 
demonstrated the same level of commitment to a trade 
agreement that countries like Peru, etc. have shown.  Senator 
Martinez added that the recent inclusion of Venezuela (with 
its open animosity towards the FTAA) into Mercosul further 
complicates the equation.  Mugnaini admitted that negotiating 
a bilateral trade agreement would be difficult given Brazil's 
Mercosul obligations.  He opined that Venezuela will not be 
easily integrated into Mercosul and he does not see full 
inclusion for well over a year. 
 
¶7. (SBU) The senators repeated their overall point: if Brazil 
would like to continue FTAA negotiations, set a date for 
talks, take a leadership role.  The senators questioned the 
political will of the current Brazilian administration to 
continue with free trade negotiations -- bilateral or 
multilateral -- given upcoming elections.  Mugnaini expressed 
similar concerns in light of the upcoming end of Trade 
Promotion Authority and said that Brazil's leadership in 
Latin America warrants a deepened relationship between our 
two countries, especially in the area of trade.  He suggested 
that perhaps a deepening of private/public fora on free trade 
in both countries would be a way to continue the discussions. 
 
MINISTRY OF FOREIGN AFFAIRS 
 
¶8. (U) In his meeting with the CODEL, Foreign Minister Amorim 
was joined by Under Secretary for Political Affairs Antonio 
de Aguiar Patriota, as well as Paulo Alvarenga from 
Itamaraty's US Desk. 
 
Brazil as Global Power 
---------------------- 
 
¶9. (SBU) Amorim greeted the CODEL with a comprehensive 
presentation on Brazilian foreign policy, recapping Brazil's 
priorities and accomplishments under the Lula administration. 
 Amorim described the current Brazilian vision of a 
multi-polar world, taking exception to a statement that 
described Brazil as a regional, rather than global, power. 
Amorim described US-Brazil relations as good to great, noting 
his friendship with Secretary of State Rice and between 
Presidents Bush and Lula. 
 
Haiti - Brazil in for the Long-Haul 
----------------------------------- 
 
¶10. (SBU) The CODEL opened a discussion on Haiti by extending 
condolences for the January 7 death of General Urano Teixeira 
da Matta Bacellar, the Brazilian general who had led the 
MINUSTAH peacekeeping mission in Haiti since August 2005. 
Amorim avoided discussing the specifics surrounding General 
Bacellar's death, but reiterated public statements he had 
made indicating that Brazil is committed to continuing the 
mission in Haiti.  While noting that preserving law and order 
is essential, Amorim voiced concern that without jobs, 
improved infrastructure, and industrial development, it will 
be difficult to make fundamental changes in Haiti's situation. 
 
Bolivia - Urging Moderation 
--------------------------- 
 
¶11. (SBU) In response to a question by Senator Martinez, 
Amorim shared his view that Bolivian president-elect Evo 
Morales had rightly chosen to work through the democratic 
process.  Amorim recounted that he and President Lula had met 
with Morales on a number of occasions since 2002, always 
encouraging him to work for change following a democratic 
course.  Amorim expressed surprise that Morales had been 
successful so quickly on the electoral front.  Despite his 
general support for Morales, Amorim acknowledged that 
unchecked nationalism on the part of Morales could be 
problematic; noting substantial Brazilian investments in 
Bolivia and the countries' 3200 kilometer shared border. 
Amorim emphasized the need for Morales to govern in a 
moderate manner that encourages investment and trade. 
 
 
BRASILIA 00000117  003 OF 004 
 
 
Another Pitch for Mercosul-US Negotiations 
-------------------------------------------- 
 
¶12. (SBU) In the upteenth time within the last couple years, 
Amorim made a pitch that the US negotiate a bilateral free 
trade agreement with the Mercosul trade bloc.  Amorim drew a 
distinction between Mercosul and other US FTA partners, 
claiming the levels of industrial development in Brazil and 
Argentina denote interests which require negotiation of a 
different type of agreement than that which the US has 
pursued with other countries, such as El Salvador.  He stated 
that the US position on agricultural subsidies in the WTO 
Doha negotiations was helpful, both in terms of the Doha 
round and for possible bilateral negotiations. Providing some 
insight into Mercosul dynamics, Amorim at one point said that 
on many issues, he doesn't even need to consult his Mercosul 
colleagues, because "he knows what they think." 
 
¶13. (SBU) Visibly uncomfortable when Senator Martinez 
wondered how such a bilateral deal would be possible with 
Venezuela in Mercosul, Minister Amorim responded that many 
questions "remain unanswered" regarding Venezuela's Mercosul 
membership, adding that "at this stage, Venezuela in Mercosul 
is more of a political desire than a reality." 
 
THE PLANALTO 
 
¶14. (SBU) The Presidency's Minister for Institutional 
Security, General Jorge Armando Felix, opened his meeting 
with the CODEL with a briefing on the functions of his 
office, the Institutional Security Cabinet (GSI) of the 
Presidency.  He explained the GSI's roles in overseeing 
Brazil's intelligence service (ABIN), interfacing with the 
armed forces, coordinating the national drug prevention 
program and planning for and facilitating interagency 
management of a range of crises, from natural disasters to 
major land invasions.  Felix was accompanied by senior GSI 
officials with responsibilities in these areas. 
 
The Tri-Border Area 
------------------- 
 
¶15. (SBU) Senator Burr asked Felix for his views on US-Brazil 
cooperation in intelligence and security, and whether changes 
in the US intelligence community (IC) had impacted Brazil. 
Felix responded that bilateral cooperation is very good, with 
long-standing and successful operational cooperation between 
Brazilian security services and US counterparts, including in 
monitoring activities in the Tri-Border Area (TBA).  He 
indicated changes in the US IC had not negatively affected 
cooperation, praised his reception during a recent working 
visit to US agencies, and said it was imperative that nations 
work closely together in facing threats that cross borders. 
Elaborating on the TBA question, Felix noted that the region 
is a fulcrum for a range of illegal activities, including 
smuggling, narcotrafficking, product piracy and money 
laundering, but that there is "no evidence" currently of 
operational activities by terrorist cells.  But Brazil, he 
continued, is "attentive" to any potential terrorist threats, 
and has also mounted a major interagency enforcement effort 
in the TBA over the past year aimed at interdicting smuggling 
and other illegal cross-border activities. 
 
¶16. (SBU) Senator McConnell pressed Felix on his assertion 
that there is no indication of terrorist activities in the 
TBA.  Felix stressed the use of the term "evidence" and 
hastened to add that the GOB understands and concerned that 
cells are present in the area, and is actively monitoring 
them.  He went onto explain changes in the last two-plus 
decades in Middle Eastern immigration into Brazil, noting the 
traditional majority of Christians from Syria and Lebanon 
settled in greater Sao Paulo, followed in recent years by an 
increase in Muslims from Lebanon moving especially into the 
TBA.  But the GOB is resistant to characterizations that 
could "stigmatize" entire ethnic groups, and hence is careful 
in its assessments and statements regarding terrorism, he 
added. 
 
BRASILIA 00000117  004 OF 004 
 
 
 
Bolivia 
------- 
 
¶17. (SBU) In response to questions from Senator Thune and 
Martinez, Felix noted that other threats from the TBA and 
other frontier areas with Bolivia include arms trafficking 
(he noted the preponderance of weapons are of U.S. and 
Eastern European origin) and, especially, narcotrafficking. 
With regard to the recent electoral victory in Bolivia of Evo 
Morales, Felix noted that Morales is making a rhetorical 
distinction between growth of coca leaf for traditional 
applications, which Morales supports, and narcotrafficking, 
which Morales says he will combat.  The GOB is watching this 
closely and has outlined its concern to Morales, including in 
a recent meeting between Morales and Lula.  The length of 
Brazil's border with Bolivia and the influx of cocaine 
products into Brazil make this a crucial issue, Felix said, 
but Brazil is approaching the question calmly.  There is 
focus within the GOB on finding ideas and channels for 
investment and development in Bolivia that can ameliorate the 
extreme poverty that makes cocaine trafficking so attractive 
to many growers, Felix added. 
 
¶18. (U) This cable was cleared by CODEL McConnell prior to 
transmission. 
 
CHICOLA