I want to start by thanking Dean Judy Olian and the UCLA Anderson School of Management and LBA organizers for inviting me to speak about US-Brazil bilateral relations and to join such a distinguished group of speakers at this Conference on “Latin America; Leadership, Society and Globalization”.
During the past week I have visited San Fransisco, Silicon Valley, San Diego and Los Angeles and as I look at the audience this afternoon I see many of those who have shared with me their own experiences or aspirations of working and doing business in Brazil. I want to thank you for sharing your interests and the challenges of working in Brazil.
The broad themes of our bilateral relations with Brazil can be framed along three themes: (1) to advance initiatives that will expand prosperity and economic growth in our two countries, (2) to promote people-to-people engagements that will increase understanding between our citizens, and (3) to promote partnerships among our public and private entities that will strengthen bilateral relations.
Let me start by highlighting why it is important to consider Brazil when looking for partners.
Brazil in the Latin American and Global Context
- World’s seventh largest economy and second largest in the Western Hem.
- The country has half of the population of South America. It is a population that is very diverse, and thus very similar to that in the US (it has received large migrations from Italy, Japan, Africa and Lebanon).
- Major Destination for Immigration (Haiti, Syria, South America and China)
- Largest Afro-descendent population in world outside of Africa (second only to Nigeria)
- World leader in agricultural production – Brazil and the United State are the two world food producers and therefore have great responsibility in food security around the world (Soybeans, Chicken, Beef, Pork, etc.)
- Brazil is among the World’s Top Five Global Destination for FDI ($62 – 65 billion per year)
- Brazil is the first nation to achieve a global leadership position entirely through “Soft Power”
These are positive features that make Brazil a strategic partner of choice for the United States. BUT… these are challenging times ahead…
President Rousseff started her second administration January 2015 and she faces a complicated year ahead.
- The country’s economic growth has slowed to near zero in 2015 and inflation is above target (7.0+%)
- President Rousseff named a market-friendly Economic Team which has been very well received. This team has implemented a series of fiscal austerity measures which will require some belt-tightening which may generate reactions from certain sectors.
- The new and expanded middle class is demanding more and better public services and has gotten frustrated with the quality and quantity of services provided such with transportation, education, and health care.
- The post-election period has resulted in increased political maneuvering and a less cohesive governing coalition. Garnering support for the President’s agenda will be challenging.
- The full extent of the impact of the Petrobras scandal/ the “Lava-Jato” corruption case on the economy and the way infrastructure projects will be implemented is still not clear.
- The country has also been hit by energy and water shortages that have been caused by a drought in the southern part of the country which is key for growth.
- And… Low oil prices and lower commodity prices will have an impact on the economy.
US-Brazil Relations: A Broad Agenda
The NSA Disclosures lowered the intensity of the Government to Government engagement significantly in 2014 and caused the State visit to be postponed. This visit intended to raise the platform of our strategic engagement to a higher level and entail a series of high-level engagements that covered a robust agenda.
During President Rousseff’s inaugural ceremony January 1st, Vice President Biden met with the President and she asked that we put the relationship back on track and asked that we re-engage on a political level, particularly in (1) commerce, trade and investment, (2) innovation, science and technology, and (3) defense industry.
So both the USG and GOB are resuming engagement at the policy level with an eye towards achieving short term deliverables that can usher in more longer-term initiatives. During the tense period in our relations at the policy level, engagements continued on people to people activities, such as education exchanges, travel between our two countries and commercial relations.
Governments can facilitate relations, but people continue to engage on their own. We saw this in a big way in Brazil. Our two countries are already very connected because we share the same democratic values and passion for technological innovations.
- Scientific Mobility Program (SSF) and 100,000 Strong in the Americas
- US is hosting 26K BZ students so far – most of any host country.
- We continue to received the support from many US companies through their collaboration in programs such Internships/Mais Unidos/Youth Ambassadors.
- We currently have 4,000 students from the US studying in Brazil and are working to see this grow.
- Institutional linkages between US and Brazilian Universities are growing
- There is a UCLA Anderson’s New International MBA that Focuses on Brazil and Latin America
Science, Technology and Innovation
- Brazil and its neighboring country Argentina have strong Science and Technology Sectors with which US organizations work very closely. This was evidenced by a visit by NASA Director Bolden to both countries In late February.
- Brazil’s Scientific Mobility Program is a game-changer aimed at Turbocharging S&T Development.
- 70+ US companies have established R&D Centers in Brazil which focus on different research areas such as energy, oil and gas, health, etc.
- Another strong sign of People to People collaboration is the growth of Tourism in both directions
- Brazil now accounts for over 2 million tourists that spend $9Billion in the United States. We see an expanded Middle Class that is anxious to travel with to the US.
- US Embassy Processed 1.3 million visas in 2014 with an approval rate of 96% .
- We saw the US as one of the largest sources of attendees at a successful World Cup in June 2014
- The rapidly growing number of flights between the US and Brazil is increasing connectivity
- We now see a California that is the second most important destination after Florida
- Brazil will be hosting the Summer Olympic Games in 2016 in Rio de Janeiro. US Embassy is actively working with US companies to identify business opportunities presented by the Rio 2016 and Paraolympic Games. US firms are participating in the preparations for the games and we hope to see more working on security and safety of the games.
- We expect that 10,500 athletes from 205 countries in 42 sports. 200K Americans will be visiting Rio for the Olympics and we are collaborating broadly with the Olympic authorities.
Trade & Investment
- Brazil is the 8th largest export market for the US with over $100 Billion in two-way trade in goods and services
- The U.S. is the largest source of total FDI in Brazil. To support this we have an American Chamber of Commerce of Brazil which is the largest in world with 14 Offices and 5K corporate members.
- American Chamber in Rio de Janeiro is oldest in WH and will be celebrating 99 years this year.
- US-Brazil collaboration on Trade and Investment is ongoing and both countries are committed to working to expand our mutually beneficial trade and investment which contributes to enhancing our global competitiveness.
- Last Month I had the pleasure of accompanying newly installed Minister of Development Industry and Commerce Armando Monteiro on his first official international trip to Washington for meetings with Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman to discuss trade and investment policy priorities. Our discussions covered a wide range of issues from regulatory cooperation, to agriculture, to sectors of interest for future G2G engagement, and we are on track for scheduling future meetings of the U.S. Brazil Commercial Dialogue and the U.S.-Brazil CEO Forum.
- These will focus on facilitating trade and investment, regulatory cooperation, etc. and prioritize initiatives which our two governments should take to improve trade and investment and promote stronger competitiveness and job creation.
- I will also be leading a delegation of 50 Brazilian business people to the Select USA Investment Summit being organized by Secretary of Commerce Pritzker later this month to explore opportunities to expand their operations in the United States and leverage our country to ensure their robust participation in global value chains. Brazil is already the number one investor among the BRICs in the U.S. with a total stock of investment conservatively estimated at $15B generating over 76K jobs.
U.S. Embassy Here to Serve
- The U.S. Embassy in Brazil includes representation by 15 federal agencies demonstrating the wide range of issues and initiatives that we undertake to advance our very robust relationship.
- In addition to the Embassy in Brasilia, we also have Consulates General in Recife in Northeastern Brazil, Rio de Janeiro and Sao Paulo, and we are preparing to open new Consulates in Belo Horizonte and Porto Alegre.
- Our Public Affairs Section has specialists that promote studies in the US and the institutional linkages between universities and institutions. Our US &Foreign Commercial Service has five offices in Brazil, including one in Belo Horizonte already, where its 11 Commercial Diplomats and 17 Commercial Specialists work with hundreds of U.S. and Brazilian companies every year to deepen our commercial relations focusing on 30 growth sectors where U.S. firms are global leaders. These priority areas range from Health Care, to Telecommunications and Information Technology, to Agricultural Equipment and Technology, to Oil and Gas Equipment and services.
- Every year we organize delegations totaling more than 2,000 people to participate in leading U.S. trade shows, many of which take place here in California.
- We welcome more California and US firms in Brazil.
- Despite the challenges Brazil is facing, we see the opportunities for engagement now.