VZCZCXRO2452
RR RUEHRG
DE RUEHBR #1819/01 2671513
ZNR UUUUU ZZH
R 241513Z SEP 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 0020
INFO RUEHRG/AMCONSUL RECIFE 7158
RUEHSO/AMCONSUL SAO PAULO 0853
RUEHRI/AMCONSUL RIO DE JANEIRO 5146

UNCLAS SECTION 01 OF 03 BRASILIA 001819 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS TO E FOR TOM PIERCE 
STATE FOR WHA/EPSC LISA KUBISKE 
STATE FOR S/P WILLIAM MCILHENNY 
STATE FOR EEB/CIP, EEB/TRA 
 
E.0. 12958: N/A 
TAGS: ECON ETRD ECIN EAIR ECPS TSPA BR
SUBJECT:  BRAZIL: UNDER SECRETARY JEFFERY LEADS ECONOMIC DISCUSSION 
WITH GOB COUNTERPART AZEVEDO 
 
BRASILIA 00001819  001.2 OF 003 
 
 
¶1. (U) Summary:  Following up on a March conversation between the 
Secretary and Foreign Minister Amorim, Under Secretary Jeffery, 
 
SIPDIS 
along with Ambassador Sobel and State Department officers, in an 
August 20 discussed with Brazilian Ministry of External Affairs 
(MRE) Under Secretary Roberto Azevedo and his economic team possible 
topics for deeper economic engagement between the State Department 
and MRE.  Both sides agreed that an over-arching theme for dialogue 
between State and MRE should be rising to the challenges of 
globalization.  Azevedo suggested that discussions might be most 
useful if they focused on a positive agenda and did not try to 
resolve issues, such as a tax treaty, that are already under 
discussion in different fora or have gone unresolved for some time. 
He proposed topics he had discussed with Foreign Minister Amorim, 
including what Brazilian membership in the OECD might entail; the 
Millennium Challenge Account Program; private sector engagement; the 
investment climate; civil aviation cooperation; and financial 
inter-connectivity of markets in a global economy.  The GoB did not 
rule out including some form of telecommunication discussion in 
future economic meetings.  Both sides agreed to consider these ideas 
(and any others) as a possible agenda for a dialogue.  Azevedo 
suggested we work quickly toward an initial agenda so that we could 
report to Secretary Rice and FM Amorim before their next meeting, as 
yet unplanned. End summary. 
 
¶2.  (U) On August 20, Under Secretary Reuben Jeffery III, along with 
Ambassador Sobel and State Department officers from E, S/P and WHA, 
discussed with Brazilian Ministry of External Affairs (MRE) Under 
Secretary Roberto Azevedo and his economic team possible topics for 
 
SIPDIS 
deeper economic engagement between the State Department and MRE. 
Under Secretary Roberto Azevedo opened the meeting by espousing a 
focus on a new and positive agenda, in lieu of readdressing topics 
that have gone unresolved for years (such as double-taxation) or 
issues that are covered in other bilateral forums.  He noted that, 
although the USG and GoB have a close relationship, there is no 
ongoing (broad-ranging) economic discussion between the Department 
of State and the MRE.  Under Secretary Jeffery suggested that these 
economic discussions could serve to formalize economic issues at the 
policy level with a view towards moving forward existing issues in 
some areas.  Ambassador Sobel pointed out that we should not 
discount the positive influence of our respective foreign ministries 
and used Foreign Minister Amorim's influence on double taxation as 
an example. 
 
¶3.  (U) The under secretaries agreed that rising to the challenges 
of globalization is important to both countries and that a dialogue 
between the foreign ministries could help develop consensus on 
various economic issues within the respective governments and 
facilitate progress.  Azevedo said that the GoB had many ideas, but 
was not sure which would work best.  He called for engaging the 
private sector in the economic discussion to the extent possible 
(using the governments as "catalysts"). 
 
¶4.  (U) Under Secretary Jeffery suggested that both countries remain 
open to bilateral issues and to U.S. - Brazil cooperation in third 
countries, if appropriate areas could be identified.  Azevedo noted 
that FM Amorim would favorably view this type of bilateral 
cooperation, especially in Africa and in areas in which both 
governments shared a common approach and complementary technologies. 
 Ambassador Sobel pointed to HHS Secretary Leavitt's health 
initiatives in Africa as an example. 
 
-------------------------- ------------------------------- 
Organization for Economic Cooperation & Development (OECD) 
-------------------------- ------------------------------- 
 
¶5.  (U) On the basis of a conversation with FM Amorim, Under 
Secretary Azevedo offered several suggestions.  The first concerned 
 
SIPDIS 
the Organization for Economic Cooperation and Development (OECD). 
Azevedo noted that Brazil had been invited to deepen its cooperation 
with the OECD at the organization's May meeting.  He said Foreign 
Minister Amorim thought it would be helpful for the USG and GoB to 
discuss expectations for Brazil's involvement in the OECD, including 
such issues as what membership entails.  Azevedo added that 
constructive U.S. - Brazil cooperation had made possible the recent 
OECD agreement on civil aircraft.  (Comment: In an earlier meeting, 
Finance Ministry officials indicated to Under Secretary Jeffery that 
such bilateral discussion in the civair area had been productive and 
indeed led to an agreement that Brazil joined as a signatory.  They 
added that the GoB now would like to work with OECD on a 
topic-by-topic, committee-by-committee basis for now in order to see 
if Brazil was comfortable subscribing to the norms of each OECD 
item.  Within a couple of years, working in this fashion, Brazil 
would probably be ready to join.  End Comment.) Jeffery noted that 
the OECD was indeed committed to enhanced engagement with Brazil and 
 
BRASILIA 00001819  002.2 OF 003 
 
 
thought the GoB's idea might be a worthwhile topic. 
 
--------- 
Sectorals 
--------- 
 
¶6.  (U) Azevedo pointed out that Foreign Minister (FM) Celso Amorim 
was concerned about the challenges of an increasingly globalized 
world economy for traditional sectors such as textiles, steel and 
footwear.  He suggested that the MRE and the Department of State 
facilitate a meeting between U.S. and Brazilian industries in these 
areas so that the private sector groups together might find areas of 
mutual cooperation.  Perhaps, he suggested, the GoB and USG could 
offer some assistance, such as facilitation of joint ventures or 
market studies.  All of this assumed, of course, that the industries 
themselves were interested, Azevedo noted.  Jeffery agreed that such 
discussion must be demand driven.  Ambassador Sobel suggested that 
the automobile industry might, for example, be included in these 
discussions. 
 
¶7.  (U) Referring to the April visit to Brazil by the Governor John 
Engler, President of the National Association of Manufacturers 
(NAM), Azevedo said one by-product of the visit was identification 
by U.S. and Brazilian companies of possible areas for cooperation. 
He said the MRE would like to approach Brazilian industry about 
this. 
 
---------------------------- 
Millennium Challenge Account 
---------------------------------- 
 
¶8.  (SBU) Azevedo also raised the Millenium Challenge Account.  The 
GoB would be interested in hearing an explanation of the MCA 
indicators and process.  Brazil might like to emulate this idea, or 
perhaps become a partner with the USG in offering the Millennium 
Challenge Account in third countries.  Under Secretary Jeffery 
replied that the USG would welcome the opportunity to exchange 
knowledge about the program. 
 
---------------- 
Other Key Issues 
---------------- 
 
--Infrastructure Investments 
 
¶9.  (U) Azevedo said the GoB was interested in working with the USG 
to explore ways to maximize funds, technology and managerial skills 
in infrastructure projects in the country, or possibly for the two 
countries' entities to invest in third countries.  He suggested that 
both governments work together on implementation as well as 
financing.  To that end, he proposed a possible "tripod format" 
(GoB, Brazilian company, US company) for encouraging infrastructure. 
 
 
--Investment Promotion 
 
¶10.  (U) Azevedo was interested in discussing what steps Brazil 
could take to create a more attractive investment environment.  He 
advised avoiding discussions within the State-MRE context of 
investment agreements - specifically bilateral investment treaties 
(BITs) - since there were other channels for those discussions.  He 
added that there was a lack of support for investment agreements in 
the Brazilian congress, where 14 BITs were on hold. 
 
--Civil Aviation 
 
¶11.  (U) The GoB expressed openness to exploring a possible civil 
aviation agenda.  Azevedo said this was a top priority in Brazil and 
the GoB would like to find areas in which both countries could work 
together and establish a positive agenda.  He indicated that the MRE 
would need to further explore this with the Ministry of Defense 
(which oversees civil aviation in Brazil).  Under Secretary Jeffery 
noted that civil air cooperation has proven fruitful in the past 
and, given transportation difficulties in the hemisphere, there was 
an opportunity to make a difference in this area. 
 
--Telecommunications 
 
¶12.  (U) Under Secretary Jeffery asked whether the MRE might be 
interested in telecommunications.  Azevedo said that the GoB was 
interested in discussing telecommunications issues and observed that 
the challenge would be to find out what areas were open to 
discussion.  He cautioned that, as with other objectives of the 
economic discussions, both governments should avoid conflicting 
 
BRASILIA 00001819  003.2 OF 003 
 
 
agendas and look for areas of agreement. 
 
-- Financial structure as it relates to the inter-connectivity of 
markets in a global economy 
 
--------------- 
The Way Forward 
--------------- 
 
¶13.  (U) Both sides agreed to consider further these ideas, and to 
engage in outreach as needed (e.g., Brazil with its private sector). 
Azevedo suggested working quickly toward an initial agenda so that 
there would be progress to report to Secretary Rice and FM Amorim 
before they next meet.  Azevedo agreed each side could remain open 
on the level at which a dialogue should be held (Under Secretary or 
Assistant Secretary), but suggested that under secretary involvement 
might be needed at times. 
 
¶14.  (U) This cable was cleared by Tom Pierce in E. 
 
Sobel