VZCZCXRO8404
OO RUEHRG
DE RUEHBR #1523/01 3291827
ZNR UUUUU ZZH
O 241827Z NOV 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2979
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 6920
RUEHSO/AMCONSUL SAO PAULO 3116
RUEHRG/AMCONSUL RECIFE 8744

UNCLAS SECTION 01 OF 03 BRASILIA 001523 
 
SIPDIS 
SENSITIVE 
 
STATE PASS USTR FOR KDUCKWORTH 
STATE PASS EXIMBANK 
STATE PASS OPIC FOR DMORONSE, NRIVERA, CMERVENNE 
DEPT OF TREASURY FOR LTRAN, BONEILL 
NSC FOR MICHAEL SMART 
DOC FOR MAC/ANNE DRISCOLL 
 
E.O. 12958: N/A 
TAGS: ECON EINV EFIN ETRD BR
SUBJECT: Brazil: Economic Partnership Dialogue meetings 
 
REF: A) BRASILIA 1418 B) BRASILIA 1482 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (SBU) SUMMARY:  Brazilian External Relations Ministry (MRE) U/S 
Mendonca welcomed the continuation of the Economic Partnership 
Dialogue (EPD) in the October 30 meeting with WHA A/S Tom Shannon 
and EEB A/S Dan Sullivan.  The EPD agreed to expanded substantive 
cooperation in third countries on development and social inclusion 
goals.  The group welcomed the civil aviation agreement, the 
CPSC-INMETRO import safety MOU, and joint coperation in areas 
including infrastructure, indstry sectors, and Haiti.  Participants 
discussedinvestment, OECD, and innovation issues, reported rogress 
on distinctive products (cachaca and bouron), and agreed to explore 
a way forward on a posible telecommunications equipment mutual 
recogntion agreement.  END SUMMARY 
 
STRATEGIC OVERVIEW 
 
¶2. (SBU) A/S Shannon confirmed the Economic Parnership Dialogue has 
been a productive forum for positive cooperation on economic issues. 
 A/S Sullivan underlined the Dialogue had accomplished much in a 
short time, with an emphasis on concrete action.  Sullivan noted GOB 
and USG are working together bilaterally to address global 
challenges and now are expanding cooperation in third countries. 
 
DEVELOPMENT/SOCIAL INCLUSION COOPERATION 
 
¶3. (SBU) Participants welcomed a deeper partnership between the US 
and Brazil in development assistance in third countries, 
particularly in Haiti and Portuguese-speaking Africa.  GOB welcomed 
proposals to expand cooperation in areas such as health projects in 
Mozambique and food security in Haiti, drawing on both sides' 
experiences and expertise to explore trilateral projects.  The USG 
welcomed Brazilian participation in country-specific donor 
coordination meetings.  MRE proposed further cooperation on forced 
labor, particularly child labor, issues as well as on advancing 
Millennium Development Goals.  Both sides welcomed the US-Brazil 
Joint Action Plan to promote racial equality.  As a former 
Ambassador to Mozambique, U/S Mendonca particularly welcomed the 
value of cooperation with the United States on development 
assistance in Africa. In general, this topic generated palpable 
excitement on the Brazilian side, as the country moves toward a 
broader role as a donor country.  Emphasizing assistance programs 
have to be more collaborative and have to include social 
inclusion/social justice aims, A/S Shannon underlined the value in 
working with partners experienced in addressing the latter to build 
institutions in less developed countries.  Both sides agreed that 
USG-GOB cooperation on biofuels assistance in third countries has 
been excellent and serves as a model for increased bilateral 
cooperation in assistance to developing countries. 
 
AGRICULTURE 
 
¶4. (U) Both sides expressed satisfaction with the USDA/Ministry of 
Agriculture Consultative Committee on Agriculture (CCA) recent 
discussions.  Sullivan noted significant common interests and 
potential for expanded agricultural cooperation between the United 
States and Brazil, including in the Doha Round and biofuels.  He 
suggested cooperative work on increasing agricultural productivity 
could be helpful in addressing food price spikes.  Shannon agreed 
that working together on food security issues could be an important 
element of social inclusion cooperation.  MRE took the opportunity 
to reiterate its proposal that CODEX centralize meetings in Geneva, 
rather than in committee-chair countries, to facilitate developing 
country participation.  FAS attach noted the United States also 
wishes to ensure effective developing country participation in CODEX 
and will co-host, with Mexico, a November CODEX workshop to develop 
recommendations to address this issue.  MRE confirmed GOB would 
participate in the workshop and noted perhaps a "co-hosting" model 
could address some of the budget implications of its proposal. 
 
INFRASTRUCTURE 
 
¶5. (U) MRE affirmed GOB continued commitment to the Program to 
Accelerate Growth (PAC) infrastructure investment program, briefing 
that President Lula strongly supports infrastructure investment's 
counter-cyclical effects at a time of global financial crisis as a 
way to stimulate tangible investment and countercapital flight. 
MRE confirmed GOB does not inten to impose significant GOB 
budgetary constraintson PAC spending.  MRE noted GOB plans further 
inrastructure roadshows in the United States, with the next sector 
to be determined.  MRE would also welcome a US trade mission to 
 
BRASILIA 00001523  002 OF 003 
 
 
Brazil, focused for example on oil drilling equipment or on 
information technology products related to infrastructure 
development. 
 
SECTORAL COOPERATION 
 
¶6. (U) Following the textiles sectoral cooperation seminar last 
spring bringing together industry and government representatives, 
MDIC (Commerce Ministry) would like to propose a similar event 
focused on the software industry.  MDIC, in cooperation with 
Brazilian industry, has developed a "Forum for Software 
Competitiveness" and proposes to invite USG to join their efforts to 
promote Brazilian software in the United States.  MDIC indicated the 
idea is still in development.  MRE also indicated an 
aviation-related sectoral seminar idea is also being developed. 
Sullivan confirmed there would be US interest in an aviation-related 
cooperative initiative. 
 
AVIATION 
¶7. (SBU) Participants welcomed the June civair bilateral agreement. 
A/S Sullivan noted the agreement's excellent potential for both 
countries' companies and for the development of Brazil's northeast 
region.  Looking ahead, he expressed USG interest in eventually 
reaching an Open Skies agreement with Brazil.  MRE noted GOB is 
approaching consideration of Open Skies with caution given that US 
companies so far are using expanded routes more than Brazilian 
companies, and Brazilian industry has difficulties competing, but 
that industry and negotiators are becoming more interested over time 
in considering exploring the possibility. 
 
HAITI HOPE II 
 
¶8. (SBU) MRE indicated GOB is interested in exploring if Brazil can 
take advantage of HOPE II rules of origin to stimulate productive 
investment in Haiti that could help that country reach development 
objectives.  MRE accepted DOC invitation to come to Washington in 
December to explore the idea further.  MRE further indicated it is 
exploring the feasibility of a Brazilian HOPE-equivalent program. 
Noting it might be able to offer such a program unilaterally to 
Haiti, or with Mercosul partners if the program is created in 
negotiation with Haiti, MRE emphasized a Brazilian HOPE-style 
program enjoys strong, concrete Brazilian textile industry support. 
A/S Sullivan confirmed USG interest in continuing this dialogue as 
the GOB proposal becomes more concrete. 
 
IMPORT SAFETY 
 
¶9. (U) MRE noted with satisfaction the continuing bilateral 
cooperation in this area, citing the September 5th import safety 
discussions held in Washington and the recently signed Memorandum of 
Understanding on October 22 between Brazil's National Institute of 
Metrology, Standardization and Industry Quality (INMETRO) and the 
U.S. Consumer Product Safety Commission (CPSC).  MRE proposed 
establishing a bilateral work group of experts tasked with 
researching past product recall procedures in order to streamline 
the process.   MRE proposed that State and MRE take the lead on 
overseeing future import safety cooperation, while the U.S. side 
noted that USG procedures do not permit the State Department to take 
the lead on the work of other agencies. 
DISTINCTIVE PRODUCTS 
 
¶10. (SBU) MRE confirmed that Agriculture Ministry will be able to 
remove the current GOB definition of bourbon and can proceed to 
identify bourbon and Tennessee whisky as uniquely of U.S. origin. 
TTB noted that rulemaking on reclassifying cacheca as a Brazilian 
origin product without the "rum" identifier is moving quickly and 
will be ready soon for public comment.  Both sides emphasized the 
importance of the rulemaking process moving in parallel in both 
Brazil and the United States to manage industry sensitivities. (see 
ref B for complete discussion of October 29 technical meetings) 
 
INNOVATION 
¶11. (U) Over lunch, OES Bruce Howard offered a presentation on 
fostering innovation, emphasizing in particular the importance of 
intellectual property rights protection and noting OECD work on 
innovation.  MRE noted the Joint Commission on Science and 
Technology (JCM) would discuss innovation cooperation in meetings 
the next day, including IPR.  Participants welcomed Brazilian DCM 
Abreu's suggestion that the EPD review the results of JCM, CEO 
Forum, and Council on Competitiveness/MBC private sector work on 
innovation cooperation and decide in the future whether EPD can add 
value to other ongoing processes. 
 
 
BRASILIA 00001523  003 OF 003 
 
 
INTERNET GOVERNANCE/TELECOMMUNICATIONS MUTUAL RECOGNITION AGREEMENT 
 
¶12. (U) MRE reiterated GOB view that the ICANN MOU does not provide 
a sufficient international role.  A/S Sullivan noted the Internet 
Governance Forum meetings have been productive.  A/S Shannon noted 
USG concerns that any stakeholder-driven process not serve to 
constrain the internet or inhibit freedom of expression.  Turning to 
the potential for a US-GOB Mutual Recognition Agreement (MRA) on 
telecommunications/information technology products explored in 
previous EPD meetings, A/S Sullivan affirmed continued USG and 
industry interest as a "win-win" for consumers and manufacturers. 
MRE noted that Brazilian legislation in general requires 
certification tests to be performed in Brazil, but some exceptions 
exist for telecommunications/information technology products. 
Possibilities therefore for MRA coverage may therefore be limited; 
MRE committed to provide a paper laying out what products 
potentially could be covered under a MRA. 
 
INVESTMENT/TAX TREATY 
 
¶13. (U) MRE noted the investment technical session October 29 (see 
septel) was productive.  MRE proposed holding another technical 
discussion on the margins of the next EPD, expressing particular 
interest in learning more how USG approaches disputes under NAFTA 
Chapter 11 and how USG manages foreign investment under CFIUS.  A/S 
Sullivan noted the importance Brazilian and US industry attaches to 
reaching a bilateral investment agreement as well as a bilateral tax 
agreement.  MRE welcomed progress in tax discussions to date. 
 
OECD 
 
¶14. (SBU) Emphasizing the OECD needs to reflect the diversity of the 
21st century's global economy, A/S Sullivan welcomed Brazil's 
enhanced engagement and contribution of its expertise in areas such 
as biofuels and other energy issues.  Noting sensitivities remain 
among some in Brazil regarding the OECD, MRE welcomed increasing 
developing country participation.  MRE noted GOB has reviewed 
interagency all the committees of the OECD and has identified 
further committees Brazil can engage in that are "not too sensitive 
for us."  One MRE participant noted that Brazil has contributed 
biofuels-related data that OECD chose not to incorporate, which does 
not help convince internal nay-sayers of the value of the 
organization. 
 
COMMENT 
 
¶15. (SBU) The EPD meeting served to affirm the value USG places in 
this forum to foster concrete positive cooperation on economic 
issues with GOB.  The new Economic Undersecretary equally underlined 
the value of the EPD for MRE.  On the margins of the meeting, MRE 
emphasized that FM Amorim remains strongly committed to and 
interested in this Dialogue.  The tangible progress on deepening 
cooperation on development and social inclusion issues in third 
countries was a particular highlight of this session.  MRE interest 
and commitment to working with the USG to expand this cooperation in 
Africa and Haiti was evident.  Mission believes the EPD has been 
instrumental in achieving tangible successes in the economic area 
with Brazil and strongly supports continuation of this Dialogue in 
the new Administration. END COMMENT 
 
¶16.  (U) This cable was cleared by the delegation. 
 
KUBISKE