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INFO RUEHRI/AMCONSUL RIO DE JANEIRO 5855
RUEHSO/AMCONSUL SAO PAULO 1686
RUEHRG/AMCONSUL RECIFE 7755
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UNCLAS SECTION 01 OF 02 BRASILIA 000288 
 
SIPDIS 
 
DEPT PASS USTR FOR KATE DUCKWORTH 
DEPT PASS DOC/ITA/MAC/WH/OLAC ANNE DRISCOLL 
DEPT PASS TREASURY IA LUYEN TRAN 
DEPT PASS NSC GARY TOMASULO 
 
SENSITIVE 
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E.O. 12958:N/A 
TAGS: EINV ETRD ECON EFIN BR
SUBJECT: Brazil: CEO Forum Members meetings Feb 20 
 
 
¶1. (SBU) SUMMARY: CEO co-chair Tim Solso (CEO Cummins) and Brazilian 
CEO Forum representatives Jorge Gerdau (CEO, Gerdau SA) and Flavio 
Leite (representing Josue Gomes da Silva of Cotaminas) met with 
Embassy staff and MRE visas chief Mitzi Gurgel the morning of 
February 20 to discuss progress on CEO Forum priorities.  They were 
joined by Marco Antonio Stefanini (CEO Stefanini IT Solutions), APEX 
President Alessandro Teixera, MDIC staff and the Ambassador for 
further discussion at lunch.  The group, joined by Embraer CEO 
Mauricio Botelho, moved to Casa Civil for an afternoon discussion 
with Casa Civil Dilma Rousseff and MDIC Minister Miguel Jorge.  On 
behalf of the CEOs, Tim Solso underlined the need for demonstrated 
progress by the April 28 CEO Forum in Washington and identified six 
possible priority action areas:  1) transmission of a letter signed 
by the 20 CEOs to both governments identifying Doha priorities; 2) 
moving a GOB legislative proposal to revise Brazilian 
visa/immigration law forward to the congress; 3) Brazilian 
ratification of the TIEA and intensified discussions regarding a 
bilateral tax treaty; 4) initiating exploratory USG/GOB talks on a 
bilateral investment treaty/announcing the start of a negotiating 
process; 5) advancing civil aviation negotiations; and 6) a CEO 
initiative (no government assistance requested) to develop a 
corporate social responsibility fund.  Dilma Rousseff encouraged 
CEOs to concentrate on "achievable successes" rather than a full 
bilateral tax treaty, was receptive to bilateral investment treaty 
discussions while cautioning that inclusion of an international 
arbitration mechanism would be extremely difficult, believed 
progress on civil aviation seemed achievable while underlining Sao 
Paulo's infrastructure challenges were real and significant, 
welcomed a positive Doha outcome, and did not react regarding visas. 
 END SUMMARY. 
 
¶2.  (SBU) In the morning session, ECON and FCS provided updates on 
CEO Forum matrix priorities.  CON briefed the group on on-going 
efforts to address backlog and accelerating demand for visas to the 
United States, explaining that the number of visas adjudicated 
annually had more than doubled in the past three years, that the 
consular sections were in the process of expanding staff by almost 
40 percent, and that more resources would be committed until the 
backlog was brought down. MRE's Mitzi Gurgel noted a legislative 
proposal to update Brazilian immigration law currently awaited Casa 
Civil approval and transmission to congress for consideration.  If 
passed as proposed, the legislation would permit Brazil to offer 10 
year visas and eliminate the requirement that Brazilian visas must 
be used within 90 days of issuance.  MRE is also exploring a way to 
eliminate its visa processing fees (including the sixty dollar fee 
on business visas).  Gurgel cautioned, however, that new legislation 
would not be in place before 2010 at the earliest and may be 
significantly changed by the congress.  CEOs emphasized the need for 
demonstrable progress on Forum priorities by the April 28 event if 
the Forum is to maintain CEO interest in participation. 
 
¶3. (SBU) In the CEOs' meeting with Dilma Rousseff and Miguel Jorge, 
Rousseff emphasized that unless it can be demonstrated how "revenue 
losses under a bilateral tax treaty can be stopped, we are not going 
to be able to do one" with the United States.  She stated GOB 
believes there is a "lack of balance" between gains to the United 
States and to Brazil under a BTT.  Rousseff indicated that in the 
coming weeks, GOB will "assess the format of the possible, the 
structure that will allow us to negotiate without losses."  She 
added that GOB "can not ignore segments harmful to parts of our 
economy; the challenge is to find win-win" areas.  CEO Gerdau noted 
CEOs are paying for a survey to examine cost-benefit and believe 
"the balance is there between our two countries."  Stefanini 
emphasized that "if we want to have a first-world economy," GOB must 
support mechanisms like a BTT and a bilateral investment treaty that 
will help companies expand and grow.  CEO Solso noted that companies 
like Cummins would invest more if a BTT were in place and smaller 
companies would be encouraged to invest - so revenue would in fact 
increase.  Rousseff agreed and said she had to be able to show that 
to the Finance Ministry and Receita Federal.  MDIC Jorge said CEOs 
needed to present a concrete, detailed proposal.  CEO Gerdau agreed. 
 
 
¶4. (SBU) Dilma Rousseff underlined that progress on international 
arbitration mechanisms beyond the 1996 international arbitration law 
would be difficult.  While MDIC Jorge indicated that perhaps 
international arbitration merited further discussion and 
consideration within GOB, and Rousseff encouraged further 
discussions with MRE and MDIC regarding possibilities for a 
bilateral investment treaty, Rousseff said twice she did not believe 
an agreement could include an international arbitration provision. 
Rousseff believed that dispute resolution clauses built into 
specific contracts were adequate and effective.  As an example, she 
pointed to successes she felt she had achieved during her Petrobras 
 
BRASILIA 00000288  002 OF 002 
 
 
tenure in resolving disputes with foreign countries based on 
contract provisions. 
 
¶5. (SBU) COMMENT:  Continued engagement directly by the Forum 
members, as well as USG, with GOB will be essential to seeing 
short-term progress on issues such as moving visa legislation to the 
Congress and encouraging rapid ratification of the TIEA. In 
addition, CEOs, particularly on the Brazilian side, must concretely 
articulate the benefits to Brazil of a bilateral tax agreement and 
an investment agreement that includes international arbitration. 
Mission continues to press hard on these issues.  Ultimately, CEOs 
showing why these initiatives help them and help Brazil will be a 
crucial element in achieving medium-term progress.  Post was 
encouraged that Dilma Rousseff explicitly stated Brazil wants the 
money and sense of entrepreneurship that US companies bring to 
Brazil's economy, yet GOB clearly needs to be convinced more fully 
that agreements like a BTT or BIT that would encourage more American 
involvement in the Brazilian economy are truly a "win-win" in 
Brazil's economic interest as its own companies expand their trade 
and investment relationships.  END COMMENT 
 
SOBEL