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Reference ID	Created	Released	Classification	Origin
07CARACAS2363	2007-12-18 15:59	2011-07-11 00:00	CONFIDENTIAL	Embassy Caracas

VZCZCXRO4673
RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHNG RUEHNL
RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #2363 3521559
ZNY CCCCC ZZH
R 181559Z DEC 07
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 0316
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEBAAA/DEPT OF ENERGY
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RHEHNSC/NSC WASHDC

C O N F I D E N T I A L CARACAS 002363 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/12/2017 
TAGS: ECON ETRD ENRG EINV VE BR
SUBJECT: LULA: TOUCH AND GO IN CARACAS TO DISCUSS TRADE 
IMBALANCE 
 
REF: A. 2006 CARACAS 03561 
 
     ¶B. CARACAS 01816 
 
Classified By: ECONOMIC COUNSELOR ANDREW BOWEN, FOR REASON 1.4 (D) 
 
¶1.  (U) SUMMARY: Brazilian President Lula Da Silva, 
accompanied by approximately 130 Brazilian business leaders 
paid a five-hour visit to Caracas on December 13, and met 
with President Chavez and other senior BRV officials.  Nine 
agreements were signed in the areas of health, agriculture, 
energy, industry and food.  Brazilian presidential spokesman, 
Marcelo Baumbach, stated the focus of the meeting was on 
commercial trade and finding ways to make trade more 
balanced.  Chavez said that he was not concerned about the 
current trade imbalance.  From January to October 2007, 
Brazil sold USD 3.8 billion of goods to Venezuela while 
Venezuela sold just USD 296 million of goods to Brazil.  END 
SUMMARY. 
 
--------------------------- 
Meetings every three months 
--------------------------- 
¶2.  (U) During the meeting the two leaders formalized 
agreements reached September 20, in Manaus, Brazil. 
Agreements signed included the provision of GOB technical 
assistance to strengthen BRV food safety and inspection, 
programs to improve sanitary controls for Venezuelan food 
production, exchange programs for public health, and 
Brazilian technical assistance for the production of coffee, 
citrus fruits and yucca.  There was also a petrochemical 
agreement to establish a joint company in Venezuela to 
produce plastic resins.  Supplementary agreements to further 
the construction of two hydro electric projects in 
Uribante-Caparo, Venezuela were also signed.  An agreement 
was also signed on moving forward with the Petrobras-PDVSA 
USD 2.5 billion Abreu de Lima joint oil refinery construction 
project, located in Pernambuco, Brazil, which is scheduled 
for completion in 2010.  Chavez also proposed creating a 
joint investment fund in 2008 but no details were provided. 
Lula and Chavez are scheduled to meet again in Pernambuco in 
March 2008. 
 
------------------- 
Presidents' Remarks 
------------------- 
¶3.  (SBU) Lula underscored the obligation of wealthier South 
American countries to help smaller and weaker countries.  He 
also emphasized his goal of improving Venezuela's bilateral 
trade balance with Brazil.  According to ABN, the BRV news 
agency: from January to October 2007, Brazil sold USD 3.8 
billion of goods to Venezuela; an increase of 29 per cent 
from the previous year.  During the same period, Venezuela 
only sold USD 296 million of goods to Brazil; a decrease of 
44 percent from the previous year.  Lula also reiterated his 
support for Venezuela's full Mercosur membership.  Chavez 
stressed South America unity:  "We are molding a South 
American Pole, a body of strength, a body of knowledge, a 
political force."  He added that he was not concerned about 
the current trade imbalance with Brazil and that it would 
eventually improve once Venezuela started shipping crude to 
the Pernambuco refinery. 
 
¶4.  (C) Comment:  The lucrative Venezuelan market continues 
to grow for Brazil (Ref A), and provides Lula with ample 
incentive to maintain friendly relations with the mercurial 
Chavez.  This may be the reason PDVSA and Petrobras were able 
to reach an agreement for the joint refinery project in 
Pernambuco despite previous reports that negotiations had 
stalled.  The Brazilian Ambassador to Venezuela had 
previously predicted that Brazil will shortly eclipse 
Colombia as Venezuela's second largest trading partner after 
the US (Ref B). 
 
DUDDY

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Viewing cable 07CARACAS2363, LULA: TOUCH AND GO IN CARACAS TO DISCUSS TRADE