VZCZCXRO3271
RR RUEHRG
DE RUEHBR #2066/01 3031926
ZNR UUUUU ZZH
R 301926Z OCT 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 0291
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 5318
RUEHSO/AMCONSUL SAO PAULO 1056
RUEHRG/AMCONSUL RECIFE 7271

UNCLAS SECTION 01 OF 02 BRASILIA 002066 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:N/A 
TAGS: ECON ETRD BR
SUBJECT: BRAZIL: DOC Secretary Gutierrez and MDIC Jorge meeting 
October 10, 2007 
 
 
¶1. (U) SUMMARY:  Commerce Secretary Gutierrez and Brazilian Minister 
of Development, Industry and Trade (MDIC) Miguel Jorge met October 
10 in Brasilia to discuss the CEO Forum, trade and investment 
challenges in Brazil, and specific trade problems encountered by 
American firms.   The meeting was collegial.  Both sides were 
encouraged that ANVISA, the FDA-equivalent Brazilian regulatory 
agency, had agreed to participate in a Commercial Dialogue working 
group session for the first time.   Jorge committed to ensure 
Mattel's continuing difficulties with Brazilian customs and 
un-notified, un-published regulatory standards were addressed.  END 
SUMMARY 
¶2. (U) MDIC Minister Jorge genially remarked in opening the meeting 
how different he found government work from the private sector - 
"It's been seven months; it feels like seven years!"  He commented 
that the CEO Forum was an important first step to enhance US-Brazil 
relations, that though there was a long way to go and many important 
issues to discuss, he hoped the dialogue would eventually lead to 
increased American trade and investment in Brazil.  He noted that 
Spanish companies had just won six out of seven road construction 
concessions (a Brazilian company won the seventh), that Spain was 
the second largest investor (behind Portugal) in Brazil, and that no 
American companies had wanted to bid for the roads. 
¶3. (U) Jorge predicted (though admitted he was optimistic) five 
percent GDP growth for 2007.  He noted 14 consecutive quarters of 
growth indicated sustainability.  Jorge said the rising import level 
did not worry him since the trade balance was still good (he quoted 
usd 46 bn) and the import component was mainly capital goods such as 
machinery and equipment rather than consumer goods.  Jorge was 
pleased Brazilian industry was "using the weak dollar" to invest in 
capital equipment.  He said automotive sector production was up 3 or 
4 percent from last year, nominal capacity was currently 3.5 million 
units and increasing investment would increase capacity over the 
next five years.  Jorge was pleased with rising consumption 
patterns, claiming that some states' consumption was up sixteen 
percent over last year, a phenomenon never before seen in Brazil. 
Jorge noted that a continuing challenge for businesses in Brazil is 
insufficient supply of workers with technical expertise. 
¶4. (U) Secretary Gutierrez asked about "Bolsa Familia," Brazil's 
social support program.  Jorge admitted that, as a non-PT party 
member and a former private sector leader, he had been very against 
this program.  However, he now saw its benefits - children were 
staying in school longer, eight million families had been able to 
"graduate" from the need for public assistance, and the university 
scholarship element of the program was educating potential 
contributors to the economy who otherwise would not have had any 
prospects.  Jorge noted that "Bolsa Familia" recipients were 
concentrated in the Northeast of Brazil and the program would now be 
expanded to cover assistance to families with children up to age 17, 
vice 14.  He noted there had been elitist objections to the 
university scholarship program from those who felt the scholarship 
candidates would take the place of those with more academic merit, 
but in fact, in fourteen majors, the scholarship recipients had been 
the top performers. 
¶5. (U) Secretary Gutierrez turned to specific trade concerns. 
Regarding ATA carnet (for importing trade show samples as well as 
certain other temporary imports), MDIC staff updated that Receita 
Federal was sending proposed legislation to facilitate such imports 
forward to Itamaraty and to Congress.  On express delivery, 
Secretary Gutierrez underlined US concerns with restrictions on 
 
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service and expressed hope that MDIC would continue to support 
important reforms to this sector. Turning to medical devices, 
Secretary Gutierrez drew attention to problems with Brazil requiring 
 
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business sensitive information and devising onerous ever-additional 
requirements.  Gutierrez was encouraged that ANVISA had therefore 
agreed for the first time to come to the Commercial Dialogue to hear 
business concerns.  Jorge was similarly encouraged, believing that 
ANVISA benefited by "feeling the tenor of the dialogue" and 
understand better US procedures to ensure health and safety without 
unnecessarily impeding trade.   DOC DAS Walter Bastian offered to 
follow up if ANVISA would be interested to send representatives to 
meet with FDA.  Secretary Gutierrez suggested we might invite FDA to 
the next Commercial Dialogue with Brazil.  Jorge agreed and 
suggested NIST and INPI should also participate. 
¶6. (U) Secretary Gutierrez raised Mattel's problems.  Jorge said the 
history of problems with Mattel pre-dated his arrival as Minister, 
but that given the "big headlines" in Brazil, the country had to 
initiate an investigation on product safety grounds.  Currently, the 
overall pattern of all toy imports from all countries was being 
analyzed and a report is to be ready in two or three weeks.  Jorge 
said, "We have a problem, because they brought a lawsuit against 
us."  However, he welcomed that Mattel had changed its negotiating 
approach "to clean the tubes; the tubes were very dirty with us" 
(note, as in "clear the air").  He specifically welcomed Mattel's 
hiring a former Brazilian ambassador who is well known and liked to 
negotiate on Mattel's behalf.  Jorge stated, "I was very clear to my 
people that Mattel should not lose Christmas, since they already 
lost Children's Day." 
¶7. (SBU) COMMENT:  Jorge was warm and forthcoming, clearing seeing 
himself and our Secretary as similarly bringing valuable private 
 
BRASILIA 00002066  002 OF 002 
 
 
sector experience into their public roles.  The one off-note was 
Mattel, where, though promising to do the right thing from the 
business point of view, Jorge made clear he felt the company had 
burned some bridges in resolving its legitimate issues.  END 
COMMENT 
¶8. (U) Delegation cleared this message.