VZCZCXYZ0125
OO RUEHWEB

DE RUEHSO #0120/01 0501536
ZNR UUUUU ZZH
O R 191535Z FEB 10
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0365
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHAC/AMEMBASSY ASUNCION
RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA
RUEHBU/AMEMBASSY BUENOS AIRES
RUEHCV/AMEMBASSY CARACAS
RUEHLP/AMEMBASSY LA PAZ
RUEHMN/AMEMBASSY MONTEVIDEO
RUEHPE/AMEMBASSY LIMA
RUEHRG/AMCONSUL RECIFE
RUEHRI/AMCONSUL RIO DE JANEIRO
RUEHSO/AMCONSUL SAO PAULO

UNCLAS SAO PAULO 000120 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON PGOV PREL EAGR BR
SUBJECT: BRAZIL: COTTON -PRIVATE SECTOR OFFERS IDEAS AND CONCERNS 
 
REF: BRASILIA 172; POPP-CRAFT/KKALUTKIEWICZ EMAILS 02-19-2010 
 
¶1. (SBU) Summary:  Brazilian private sector representatives have 
expressed their increasing concern about perceived potential 
negative impact on bilateral trade if GOB moves forward with 
retaliation in the cotton dispute.  Representatives of two of 
Brazil's most influential business associations have approached 
post in recent days with interest in finding a constructive, 
trade-enhancing solution to the dispute.  Both AmCham and FIESP are 
in the process of refining concrete ideas to suggest a constructive 
way forward and perceive a window of opportunity for resolution 
amid upcoming senior visits between now and mid-March.  End 
Summary. 
 
 
 
AmCham Worried 
 
-------------- 
 
 
 
¶2. (SBU) On the eve of Brazil's Carnival holiday week, Sao Paulo 
American Chamber of Commerce Executive Director Gabriel Rico 
contacted Sao Paulo Consul General February 12 to share the 
Chamber's growing concerns regarding potential Brazilian government 
retaliation in the WTO Cotton.  Rico emphasized that AmCham Sao 
Paulo, the largest bilateral American Chamber of Commerce in the 
world, was increasingly worried that the GOB would move forward 
with retaliation against U.S. products under the WTO cotton dispute 
decision.  Rico said that retaliation would not only financially 
hurt companies providing listed products, but also had the 
potential to set a more negative tone in the bilateral trade 
relationship that could affect issues such as the extension of 
Generalized System of Preferences (GSP) benefits for Brazil. 
Information technology and pharmaceutical company members of AmCham 
are particularly concerned by the prospect of cross-retaliation on 
intellectual property-based products, including impeding/taxing 
royalties or issuing of compulsory licenses.  In recent separate 
conversations, the Sao Paulo Federation of Industries (FIESP) has 
emphasized similar concerns. 
 
 
 
Finding a Trade Enhancing Solution 
 
---------------------------------- 
 
 
 
¶3. (SBU) Rico said AmCham would like to assist in finding a 
constructive resolution to the WTO Cotton dispute between the 
United States and Brazil.  He said that from his conversations with 
Trade Minister Miguel Jorge and CAMEX Director Lydia Spindola, both 
want to avoid worsening trade relations if at all possible.  Rico 
suggested that a goodwill gesture by the United States to promote 
trade would likely give the Brazilian government the political 
space it needs to avoid retaliation.  FIESP International Trade 
Director Roberto Gianetti Fonseca separately confirmed to us the 
political importance of any gesture toward resolution that the USG 
can make.  Gianetti also agreed that Brazilian industry and most of 
the GOB want to find a constructive solution that avoids 
retaliation. 
 
 
 
¶4. (SBU) In an effort to offer concrete recommendations, Rico told 
the Consul General that AmCham had commissioned a study from the 
Brazilian consulting firm Prospectiva to find market access 
concessions that might provide a basis for proposing a 
trade-enhancing solution. .  This consultant's report suggests 
increasing  market access for Brazilian textile products.  [NOTE: 
Per ref B, Post has emailed copies of the report to EEB and USTR. 
END NOTE] 
 
¶5. (SBU) FIESP has told us they are also exploring with Brazilian 
industry associations (particularly beef, ethanol, and cotton) 
potential U.S. market access requests that potentially could be 
proposed as a compensation package.  MDIC and CAMEX interlocutors 
in Brasilia have confirmed they support FIESP working with other 
industry associations to identify specific ideas that could 
potentially form a basis for compensation.  As with AmCham, FIESP 
believes the GOB would very likely accept a compromise compensation 
as a resolution to the cotton case.  Rico told the Consul General 
that AmCham and FIESP are in contact about their respective efforts 
and that AmCham was pressing to focus market-access proposals on 
cotton and textile-based sectors. 
 
 
 
Window of Opportunity 
 
--------------------- 
 
¶6. (SBU) AmCham and FIESP both believe with upcoming senior USG 
visits to Brazil, including the planned March 8-9 U.S.-Brazil CEO 
Forum, there is an important window for discussion on finding a 
resolution to the dispute.  In the meantime, some AmCham member 
companies from the IT and pharmaceutical industries are planning to 
visit Washington February 24-26 to lobby stakeholders for a 
constructive solution along the lines of the Prospectiva study. 
 
 
 
¶7. (SBU) Over the longer term, FIESP has told us they plan to 
continue efforts to deepen the bilateral economic relationship.  As 
part of that effort, FIESP President Paulo Skaf plans to lead a 
senior-level business delegation to Washington before June 30 to 
encourage a positive economic agenda and hopes to be received at 
senior levels in the White House and USG agencies including the 
State Department and USTR. 
 
 
 
COMMENT 
 
 
 
¶8. (SBU) Local industry interlocutors have made clear that they 
want to see the cotton dispute resolved in a way that avoids 
retaliation.  They also want to ensure that the bilateral trade 
relationship is not defined by this dispute and that both sides 
continue to pursue deeper positive economic cooperation.  In this 
vein, industry interlocutors, like GOB officials, have separately 
been extremely supportive of developing a Trade and Investment 
Framework Agreement between the United States and Brazil as a means 
to further deepen and broaden the positive bilateral trade and 
investment relationship, and welcome upcoming high level visits as 
a means to ensured continued forward momentum on positive 
cooperation.  END COMMENT. 
 
 
 
¶9.  (U) Cable was cleared/coordinated with Embassy Brasilia. 
Popp