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TO RUEHC/SECSTATE WASHDC 5840
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RUEATRS/DEPT OF TREASURY WASHDC
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UNCLAS SECTION 01 OF 05 BRASILIA 001245 
 
SIPDIS 
 
STATE PASS USTR:MSULLIVAN 
DOE FOR GWARD/SLADISLAW 
NSC FOR FEARS 
USDOC FOR 3134/USFCS/OIO/WH/SHUPKA 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
STATE PASS OPIC FOR MORONESE, RIVERA, MERVENNE 
STATE PASS EXIM FOR NATALIE WEISS, COCONNER 
STATE PASS USTDA FOR AMCKINNEY 
TREASURY FOR OASIA:DDOUGLASS 
AID/W FOR LAC/AA 
 
SENSITIVE 
SIPDIS 
 
CORRECTED COPY (NEW PARA 13) 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KIPR EINV ENRG BEXP BR
SUBJECT: COMMERCE SECRETARY GUTIERREZ MEETS WITH PRIVATE SECTOR 
DELEGATIONS - RIO DE JANEIRO AND SAO PAULO, BRAZIL 
 
 
¶1. (SBU) Summary.  During Secretary Gutierrez's June 4 - 8 policy 
visit to Brazil, the Secretary and his team - OPIC President Robert 
Mosbacher Jr., USDOC A/S David Bohigian, State DAS Patrick Duddy, US 
Patent and Trademark Office Deputy Director Steve Pinkos, Charge 
Phil Chicola, TDA, Western Hemisphere Regional Director, Al Angulo, 
Senior Commercial Officer John Harris, and DOC OLAC Director John 
Andersen - met with representatives of a number of private sector 
institutions, including the AACLA Executive Board and National 
Presidents, the Brazil-U.S. Business Council, the Peru/Colombia 
AMCHAM and Presidents of FIESP, CIESP, and the Sao Paulo AMCHAM. 
The first two meetings focused on private sector priorities for the 
hemisphere and the soon to be launched U.S.-Brazil Informal 
Commercial Dialogue.  The Peru/Colombia AMCHAM meeting focused on 
the situation in Peru, the recent Peruvian presidential election and 
next steps that both Peru and Colombia planned to take in light of 
the FTA negotiations with the United States.  During the FIESP, 
CIESP, and the Sao Paulo AMCHAM, the Secretary focused on the 
opening the Commercial Dialogue and follow-up to that event to 
ensure that the launch would be followed by meaningful agreements to 
boost U.S.-Brazilian commercial relations in each of the areas dealt 
with in the Dialogue. 
 
¶2. (SBU) During the latter discussion, Brazil's Ambassador to the 
U.S. Abdenur noted that Brazil was awaiting a response from a letter 
it had sent to the incoming USTR Schwab dealing with the FTAA and 
noted Brazil's continued interest in moving forward on 4 plus 1 
discussions with the United States. The Secretary promised to 
follow-up on the former issue and reiterated the long-standing U.S. 
position on the latter.  End Summary 
 
--------------------------------------------- 
AACLA Executive Board and National Presidents 
--------------------------------------------- 
 
¶3. (SBU)  In a friendly discussion, the Secretary noted that a 
number of commentators are focused on the negative trends in the 
hemisphere, especially the emergence of a new breed of leftist 
leaders.  The Secretary noted that despite the emergence of a few 
outliers, most leaders in the hemisphere were committed to sound 
economics and improving commerce.  He stressed the role of the 
private sector in this processes, noting that they were the answer 
to ensuring the overall competitiveness of the hemisphere and for 
improving economic and social conditions in each of their countries. 
 The Secretary described the Department's goals in the soon to be 
launched U.S.-Brazil Commercial Dialogue, particularly its role in 
improving commerce between the two nations.  He stated that the 
U.S.-Brazil commercial relationship, although strong, could be much 
improved given the fact that we trade less on a per capita basis 
with Brazil than we do with many of its neighbors. He further noted 
that we all had to do a better job of advertising the fact that the 
private sector was not part of the problem, but was in fact, the 
only solution. 
 
¶4. (SBU)  AACLAA members agreed with the overall thrust of the 
Secretary's message on recent trends, noting that early returns from 
 
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Peru indicating a Garcia victory were another positive development. 
Several voiced concern with the implementation phase of recently 
completed FTAs, indicating that the USG needed to do more to ensure 
that the FTAs were indeed trade creating.  The Secretary agreed, 
stating that he had led a mission to Central America last October to 
 
BRASILIA 00001245  002 OF 005 
 
 
highlight the opportunities arising from the CAFTA-DR agreement. 
OPIC President Mosbacher stated that he had just come from a series 
of meetings in Central America where OPIC had signed agreements in 
excess of $100 million in new investment.  The Secretary also noted, 
when queried about the Panama FTA, that he was mystified at the 
seeming inability of Panama to conclude the negotiations, as the 
potential in his view for both nations, and especially Panama was 
immense.  Finally, the Secretary asked AACLAA members for their 
assistance in a joint ITA-AACLAA project to produce a series of fact 
sheets by country, which will include data demonstrating the 
positive impact that the USG and U.S. companies have on the economic 
prosperity of countries in the region. 
 
---------------------------- 
U.S.-Brazil Business Council 
---------------------------- 
 
¶5. (SBU) Mark Smith, Executive VP of the U.S. Section of the Council 
served as moderator.  (Minister Luiz Furlan was a last minute 
scratch due to a last minute professional commitment.) Council reps 
noted that they had three priorities.  First, under the Commercial 
Dialogue's Business Facilitation work group, they hoped that the 
primary outcome would result in changes to a number of Brazilian 
Customs' practices that impeded both imports and exports.  Second, 
that the Secretary's visit would give impetus to the conclusion of a 
U.S.-Brazil Bilateral Tax Treaty.  And third that the U.S. and 
Brazil could find a way to cooperate on biofuels, especially 
ethanol, for the good of both countries.  Selected Council 
representatives provided additional details on each of these 
priorities. For example, UPS, FEDEX, GM reps reiterated their hope 
to invite Ministry of Development, Industry and Trade officials, 
along with representatives from Recita Federal to their facilities 
in the U.S. during September to gauge first hand how U.S. businesses 
were able to work with U.S. Custom's officials to expedite business 
shipments. 
 
¶6. (SBU) Secretary Gutierrez outlined the Department's Commercial 
Dialogue goals, stressing the need for real substance in the 
business facilitation work group particularly with respect to 
Custom's issues.  He noted that as a first step, we planned to 
invite MDIC officials and their Recita Federal colleagues to visit 
U.S. facilities in the U.S. in an effort to make them better aware 
of best practices.  The Secretary promised to raise the bilateral 
tax treaty issue with his Brazilian counterparts and noted that DOC 
officials would follow-up with U.S. Treasury personnel at the end of 
the trip.  Finally, on biofuels, the Secretary noted that President 
Bush has stressed the need to promote greater energy independence 
through the use of renewable energy sources like biodiesel and 
ethanol, and that the Secretary would discuss this issue with 
Secretary of Energy Bodman upon returning to Washington.  He also 
 
SIPDIS 
stated that the issue would likely come up in all of his bilateral 
meetings and that the working group on standards included a proposal 
to work on developing common standards for biofuels as one of its 
objectives. 
 
------------------------------- 
Peru/Colombia AMCHAMS 
------------------------------- 
 
¶7. (SBU)  Peru Senior Commercial Officer Margaret Hanson-Muse, 
 
BRASILIA 00001245  003 OF 005 
 
 
accompanied by representatives of the Peru and Colombian AMCHAMs met 
briefly with the Secretary and his team to discuss the recent 
election in Peru, Peruvian plans to move forward on ratifying the 
FTA and likely next steps concerning the U.S.-Colombia FTA.  SCO 
Hanson-Muse provided a detailed political and economic overview of 
Peru, beginning with news that Alan Garcia had indeed prevailed in 
Sunday's Peruvian presidential election.  The AMCHAM noted that 
Garcia was a supporter of the FTA, but would have to rely on a 
coalition government to govern.  As a consequence, the current 
Toledo Administration was intent on gaining Congressional 
ratification of the agreement within Peru before it leaves office. 
AMCHAM reps asked the Secretary to use his influence to place the 
Peruvian FTA before the U.S. Congress prior to its August recess. 
The Secretary agreed to carry this message back to Washington.  The 
lone Colombian AMCHAM representative noted that there were still 
issues impeding progress on that agreement, but that they hoped the 
Colombian government would make sufficient progress during President 
Uribe's upcoming visit to the U.S. to quickly settle outstanding 
issues. 
 
-------------------------------------- 
FIESP, CIESP, and the Sao Paulo AMCHAM 
-------------------------------------- 
 
¶8.  (SBU) The AMCHAM was represented by Fernando Tigre, Vice 
Chairman of the Board of the Amcham, Antonio Pargana, CISA Trading, 
¶S. Peter Dam, Colgate-Palmolive, Mario Grecco, Brystol-Myers Squibb, 
and Charles Wortman, JP Morgan.  CIESP (Center of Industries of Sao 
Paulo - Centro das Industrias do Estado de Sao Paulo) was 
represented by Claudio Vaz, President, Humberto Barbato, Managing 
Director, Luis Carlos Galvao, Juridical Director and Marco Aurelio 
¶A. Rodrigues, Director.  FIESP (Federation of Industries of the 
State of Sao Paulo - Federagco das Industrias do Estado de Sao 
Paulo) was represented by Roberto Giannetti da Fonseca, 
International Business Director.  Brazil's Ambassador to the U.S. 
Abdenur was also in attendance. 
 
¶9.  (SBU) The Secretary began the discussion with a brief 
description of the Commercial Dialogue, followed by his analysis of 
the overall U.S.-Brazil commercial relationship.  He noted that 
although it is positive, and the U.S. is pleased to be both Brazil's 
single largest trading partner and single largest investor, that it 
could be better.  He reiterated a comment made throughout the trip, 
that the U.S. actually traded more on a per capita basis with many 
of Brazil's neighbors.  He concluded by noting that this was a time 
for the two of us, as well as other nations within the hemisphere to 
pull together, and to increase both our commercial ties and regional 
competitiveness to compete better with the rest of the world.  The 
Secretary reminded the representatives that the reality of today's 
 
SIPDIS 
world was that with the emergence of the People's Republic of China 
and India there were not only 2.3 billion new customers, but also 
2.3 billion new competitors.  And, he stated, that unless we worked 
together to increase our ties and improve our competitiveness we, 
and especially the nations of South America, would find it 
increasingly difficult to compete in this new commercial reality. 
 
¶10.  (SBU)  The AMCHAM opened the discussion, with a series of 
issues that it felt needed to be addressed by both Brazil and the 
U.S.  These included the need for more efficient and modern Customs 
at Brazil's major ports of entry and progress by both country's on 
 
BRASILIA 00001245  004 OF 005 
 
 
improving business VISAs.  The AMCHAM noted that graduating Brazil 
from the Special 301 Priority Watch List would send a positive 
signal of the important relationship between our nations.  Referring 
to the recent extension of GSP benefits, they stated that GSP for 
Brazil covered 3300 products, valued at $4.3 billion in exports and 
was supported by a host of major U.S. companies and associations. 
The AMCHAM also stated that removing the 54-cent per gallon U.S. 
surcharge on ethanol would be another important symbol for 
U.S.-Brazil relations.  This also would boost investment in Brazil 
and had the support of many U.S. firms.  And finally, the ACHAM 
supported cooperation between the U.S. Patent and Trademark Office 
and INPI.  For its part, CIESP agreed wholeheartedly with the 
AMCHAMs remarks and added three additional concerns - the need for 
greater U.S. investment, agreement on a bilateral tax treaty and the 
hope for a continued strong U.S. economy.  FIESP reiterated a number 
of the same concerns, but added that they had agribusiness issues, 
including beef, poultry and tobacco that they hoped would be 
addressed. 
 
¶11.  (SBU)  The Secretary noted that business VISAs were affected by 
tighter requirements promulgated in the U.S. following September 11, 
but reminded the groups that the U.S. only had 4 offices in country 
trying to deal with both tourist and business VISAs and that 
business VISAs had priority.  He welcomed any ideas the AMCHAM had 
to expedite the process.  On GSP, the Secretary stated that Congress 
is undertaking an evaluation of the program.  He noted that one of 
the questions they would have to consider was whether the conditions 
were still right for all countries for GSP eligibility, given the 
fact that the program was designed to serve as a bridge to move 
developing toward developed status.  The Secretary noted that this 
would be done in a thoughtful, straightforward manner.  On ethanol, 
the Secretary agreed that, following the President's State of the 
Union message, there was need to look at all alternatives.  He also 
agreed that the U.S. and Brazil needed to look at further 
cooperation, and mentioned standards was one area where we had 
agreed to cooperate.  He noted that biofuels in general promised a 
long-term solution to our common energy problems.  The Secretary 
promised to talk with Treasury regarding the prospects for a 
bilateral tax treaty and urged Brazilian officials to do likewise. 
The Secretary also promised to follow-up on FIESP's agriculture 
requests, but noted that the best way forward was to conclude an 
ambitious Doha Agreement and look for ways where we could better 
integrate in the Americas.  In conclusion, the Secretary reviewed 
the facts of the U.S. economy, emphasizing especially the 12 
consecutive quarters of U.S. GDP growth and the lowest unemployment 
in 4 decades. 
 
¶12.  (SBU)  At this point ambassador Abdenur reiterated Brazil's 
concerns with GSP, stating that he would do his best to bring this 
issue to congress' attention.  He also expressed concerns that the 
recent FTAs that the U.S. had negotiated meant that brazil would be 
losing ground in the U.S. relative to its competitors.  The 
Ambassador reiterated Brazil's call for four plus one negotiations, 
stating that they would ensure market access for goods in services 
in both the U.S. and Mercosul markets.  He noted that the U.S. had 
signed FTAs with norms and disciplines that "Brazil and Mercosul can 
never accept." The Ambassador noted that as co-chair of the FTAA, 
Brazil had renewed its commitments to the FTAA and looked forward to 
the timely resumption of that dialogue.  He complained that U.S. had 
yet to respond to Brazil's letter to then USTR-designate Susan 
 
BRASILIA 00001245  005 OF 005 
 
 
Schwab requesting a meeting to discuss how the U.S. and Brazil could 
move the FTAA forward.  The Secretary noted that he would look into 
this issue, but reminded those present of the commitment taken in 
the Mar del Plata agreement where 29 of 34 countries stated their 
goal of concluding the FTAA as soon as possible. 
 
¶13. (Note:  Brazil's FTAA lead, Amb. Eduardo Felicio, did indeed 
dispatch a letter to Amb. Schwab proposing a Co-Chair letter be sent 
announcing themselves as the new Co-Chairs.  However, Amb. Schwab 
responded to Felicio and raised two other issues as well: i.e., the 
Secretariat's future and the need to send another letter to FTAA 
 
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countries providing a readout of the Co-Chair meeting.  USTR has not 
heard back to Amb. Schwab's letter.  End Note.) 
 
¶14. (U)  This cable was cleared by the Gutierrez delegation prior to 
transmission. 
 
Chicola