VZCZCXRO7369
RR RUEHRG
DE RUEHSO #0528/01 2761617
ZNR UUUUU ZZH
R 021617Z OCT 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 8566
INFO RUEHBR/AMEMBASSY BRASILIA 9698
RUEHRG/AMCONSUL RECIFE 4212
RUEHRI/AMCONSUL RIO DE JANEIRO 8874
RUEHBU/AMEMBASSY BUENOS AIRES 3263
RUEHAC/AMEMBASSY ASUNCION 3510
RUEHMN/AMEMBASSY MONTEVIDEO 2786
RUEHSG/AMEMBASSY SANTIAGO 2510
RUEHLP/AMEMBASSY LA PAZ 3923

UNCLAS SECTION 01 OF 02 SAO PAULO 000528 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
 
STATE for BSC 
 
E.O. 12958: N/A 
TAGS: PGOV PREL KPAO BR
SUBJECT: Senator Hagel Meets Sao Paulo Business/Political Leaders 
 
¶1.  Summary:  Senator Chuck Hagel visited Sao Paulo September 2-3, 
during which time he met with a variety of interlocutors, including 
local business representatives as well as foreign policy experts and 
the Sao Paulo State Governor (foreign policy and Serra discussions 
Septel).  Business contacts were excited about Brazil's potential as 
an energy producer and expressed an eagerness to partner with the 
U.S.  They wanted trade conflicts managed carefully to avoid damage 
to a fundamentally good bilateral relationship.  They also hoped 
that the U.S. would remove its tariff on imported ethanol.  End 
Summary. 
 
Economic Breakfast: Business Leaders Laud Brazil's Potential 
 
¶2.  Senator Hagel met over breakfast with key representatives from 
Brazil's private sector during his September 2 visit to Sao Paulo. 
Guests in attendance were:  Mrio Marconini (President, Manatt Jones 
Marconini Global Strategies, representative of Brazil's private 
sector in recent Doha free trade negotiations); Josu Gomes da 
Silva, President Coteminas and Brazil Chair of the US-Brazil CEO 
Forum; Keith Martin, General Manager for Institutional Relations and 
Policy Analysis for mining giant Vale do Rio Doce; Maurcio Novis 
Botelho, President EMBRAER; Jos Carlos Grubisich, President of ETH 
Bioenergia; and Roberto Rodrigues, former Minister of Agriculture. 
 
¶3.  Former Agricultural Minister Rodrigues described how 
"agro-energy" could transform developing countries, by turning many 
poor, "third world" sugar cane producers into energy exporters 
through ethanol.  Jos Carlos Grubisich spoke optimistically about 
"green plastics," the idea that future plastics could be fashioned 
from agricultural inputs.  Observers praised the present state of 
the U.S.-Brazil relationship, which they said was closer than ever. 
 
 
¶4.  While the general discussion was highly positive, interlocutors 
noted that there was still work to do, both in promoting development 
in Brazil and U.S.-Brazilian relations.  Former Agricultural 
Minister Rodrigues lamented that Brazil lacked a strategy to 
complement its potential.  He indicated that agricultual output 
could be doubled simply by reducing land dedicated to pasture. 
Gomes da Silva added, to general agreement, that the Brazilian state 
remains too big and aborbs capital that should go into investment. 
Finally, while observers lauded Ambassador Sobel's success in 
engaging Brazil at the highest levels, they observed that other 
countries' trade with Brazil (most notably China) was growing faster 
than that with the U.S. 
 
Senator Hagel Meets with American Chamber of Commerce 
 
¶5.  The Sao Paulo American Chamber of Commerce (AmCham) held a 
Roundtable on the Business Climate and Biofuels for Senator Chuck 
Hagel on September 2, 2008.  The following from the Brazilian 
business world attended:  Joseph Tutundjian, Managing Director, 
Rodobens Comercio International and Winner/Comex; Mickey Peters, 
President Duke Energy; Regina Nunes, President Standard and Poors; 
Roberto Pasqualin, Partner, Pasqualin Advogados; Plinio Nastari, 
President Datagro; Fernando Ribeiro, ETH Bioenergia ; Peter Dam, 
Colgate-Palmolive; Ricardo Ramos, Colgate-Palmolive; Manfred Wefers, 
Coimex; Joel Velasco, UNICA (the organization of Brazilian sugar 
cane producers); Domingo Lasso, ADM; Gabriel Rico, President of the 
AmCham. 
 
¶6.  Plinio Nastari identified energy and climate changes as the two 
major issues facing humankind, and ethanol, he said, offers the U.S. 
and Brazil a chance to work together on both these problems.  Joseph 
Tutundjian added that Brazil is going to be an important petroleum 
producer.  He recommended that the U.S. and Brazil form a bilateral 
commission to look at both ethanol and oil together and to develop 
ways in which the two countries can cooperate on energy.  Ambassador 
Sobel thought that the biofuels-oil joint discussion was a good 
idea, but that any such effort had to include input from the US 
Congress. 
 
¶7.  UNICA's Joel Velasco commented that the GOB's perspective on 
economic and trade issues is starting to catch up with new global 
realities.  During the last Doha round, Brazil moved from its 
traditional, inwardly-focused approach to trade to the recognition 
that exports are critical to growth.  Velasco said that President 
Lula had recognized this reality well ahead of many members of his 
government.  Velasco criticized the subsidy on blending of 45 cents 
for firms in the US, while the import tariff remained at 54 cents 
for Brazilian ethanol. 
 
SAO PAULO 00000528  002 OF 002 
 
 
 
¶8.  In this connection, Manfred Wefers, Joel Velasco, and Mickey 
Peters all warned that Brazil and the U.S. had to manage carefully 
their trade disputes.  In Velasco's view, Brazil had won a moral 
"victory" in its recent WTO case against the US on cotton subsidies, 
but should not pursue cross-retaliation.  Velasco noted that the GOB 
had considered taking the U.S. to the WTO over U.S. ethanol 
subsidies, but that UNICA preferred that the GOB seek a negotiated 
settlement. 
 
Comment: Brazil Business Leaders Positive on U.S. Relations 
 
¶9.  Senator Hagel's vision impressed his Brazilian interlocutors and 
we have received a great deal of positive commentary since his 
departure.  Brazil's business leaders are enthusiastic about both 
their country's prospects and the state of the U.S.-Brazil 
relationship.  They see recent experience in the Doha round as a 
potential push for the GOB to become more pragmatic on trade.  They 
want trade conflicts to remain contained.  Finally, they clearly 
appreciated Washington's attention and hoped for its continuance. 
 
¶10.  This cable was coordinated/cleared by Senator Hagel's Staff and 
by Embassy Brasilia. 
 
WHITE