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Over the years, robust trade, strategic cooperation, and mutual efforts in global challenges have defined the relationship between Brazil and the US. With two-way trade valued at $120.7 billion in 2022 and U.S. direct investment in Brazil reaching $191.6 billion in 2021, their partnership is thriving. In this interview with US-Brazil Business Council’s Executive Director Cassia Carvalho we dive into how these relations might evolve in the next decade, highlighting key sectors for future collaboration.

1. Reflecting on the 200th anniversary of U.S.-Brazil diplomatic relations, what significant milestones have shaped the economic ties between the two countries over the years, and how do you envision these relations evolving in the next decade?

Reflecting on the 200th anniversary of diplomatic relations between the U.S. and Brazil, it is evident that numerous milestones have significantly shaped the economic ties between these two nations. Historically, these relations have been marked by robust trade and investment flows, strategic cooperation across various sectors, and a mutual commitment to addressing global challenges. Two-way trade in goods and services was valued at $120.7 billion in 2022, and the substantial U.S. foreign direct investment in Brazil totaling $191.6 billion in 2021, by far the largest investor in country, strategic sectors can be identified for
further enhancement of this economic partnership.

Over the decades, these relations have been reinforced through presidential and ministerial meetings, high-level dialogues, and the establishment of frameworks such as the Agreement on Trade and Economic Cooperation (ATEC), which saw further expansion with a protocol signed in 2020. Sector-focused dialogues have been crucial in enhancing bilateral trade and investment. Notably, the U.S.-Brazil Technology Safeguards Agreement (TSA) and the Defense Agreement focusing on Research, Development, Test, and Evaluations (RDT&E) have deepened cooperation in essential technological and defense areas.

Mercury Global Reports Interviews Cassia Carvalho of US-Brazil Business Council
Meeting with Rodrigo Pacheco, President of the Federal Senate of Brazil

Another significant milestone in U.S.-Brazil economic relations was the establishment and growth of the U.S. Chamber of Commerce’s Brazil-U.S. Business Council in 1976, which has been pivotal in fostering dialogue and cooperation between the business communities of both countries. This council has effectively advocated for policies that enhance bilateral trade and investment.

Trade remains a significant component of the economic relationship, with the U.S. being one of Brazil’s largest trading partners. Both countries benefit from substantial trade in goods and services, leveraging each other’s markets. U.S. investments in Brazil, particularly in capital-intensive manufacturing industries, have not only created numerous high-quality jobs but also provided opportunities for micro, small, and medium enterprises within various value chains.

As Brazil holds the G20 presidency during this bicentennial year, it highlights Brazil’s role in global leadership. This presidency offers the U.S. an opportunity to support Brazil’s priorities, including addressing food security, the energy transition, and sustainable development, especially for emerging and developing countries, as well as advancing global consensus on bioeconomy.

The 200th anniversary of U.S.-Brazil diplomatic relations celebrates past achievements and sets the stage for future cooperation that could transform the economic landscapes of both nations. This cooperation is particularly crucial as Brazil prepares to host the 30th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC COP 30) in 2025 in Belém do Pará, in the Amazon, a critical biome for combating climate change.

For U.S.-Brazil relations, it is essential to envision a strategic economic partnership, supported by political commitment from both governments. There is a compelling case for economic benefits and job creation through pursuing a comprehensive trade agreement and a tax treaty between the two nations. In the short term, continuing to work on new chapters under the ATEC Protocol, particularly a digital trade chapter, is vital.

2. Considering the current economic landscape, what key sectors or industries do you believe hold the most promise for fostering increased bilateral trade and investment between the United States and Brazil? How can the Brazil-U.S. Business Council facilitate collaboration in these areas?

In the current economic landscape, several key sectors and industries present significant opportunities for boosting bilateral trade and investment between the United States and Brazil. Both nations have a robust foundation in energy trade, with Brazil exporting crude oil to the U.S., which in turn supplies refined fuels and natural gas. There is considerable potential for growth in sustainable energy sectors, including investments in renewable sources such as solar and wind energy, sustainable aviation fuel (SAF), hydrogen, and biodiesel. These sectors align with global sustainability trends and the ecological transition
goals of both governments.

Manufactured and industrial goods form a cornerstone of U.S.-Brazil trade, with significant exchanges of aircraft, medical instruments, and industrial machinery. There is potential to expand these exchanges, especially in high-technology and advanced manufacturing sectors such as semiconductors and aerospace components.

Mercury Global Reports Interviews Cassia Carvalho of US-Brazil Business Council
GreenTech Mission to Brazil in Sao Paulo and Rio de Janeiro, Brazil

Brazil’s leadership in agriculture offers lucrative opportunities for U.S. investments in sustainable agricultural practices and technologies. Areas such as precision and regenerative agriculture, the bioeconomy, and the development of value-added products from Brazilian raw materials are ripe for bilateral cooperation.

With escalating global demand for critical minerals and semiconductors, Brazil’s rich deposits present significant investment opportunities. Enhancing the mining sector with U.S. technology and investment in processing and value addition could yield mutual benefits in the coming decade.

As digital transformation accelerates worldwide, substantial potential exists to expand bilateral trade and investment in IT infrastructure, connectivity solutions, and e-commerce platforms. A digital trade agreement between Brazil and the U.S. would streamline digital transactions and expand market access through harmonized e-commerce regulations and data protection standards, fostering innovation and reducing barriers.

The healthcare and biotechnology sectors also hold promise. The existing trade of medical instruments and pharmaceuticals is a key component of U.S.-Brazil trade relations. Investments in biotechnology, medical research, and healthcare infrastructure development could further enhance this sector.

Investments in infrastructure and logistics are essential to support industry growth in Brazil. The U.S. can play a significant role in modernizing Brazil’s infrastructure, particularly in transportation and logistics, to facilitate more efficient trade flows and market access.

Environmental technologies and carbon capture represent new industries to explore. As both countries aim to reduce their carbon footprints, technologies that support carbon capture and environmental management offer new avenues for collaboration and investment.

These sectors not only capitalize on the economic strengths and policy priorities of both nations but also provide avenues to address global challenges through bilateral cooperation. By focusing on these areas, the United States and Brazil can enhance their trade relationship, create jobs, and promote sustainable development.

The Brazil-U.S. Business Council plays a pivotal role in facilitating collaboration across these promising sectors. By leveraging its platform for industry dialogues, the Council showcases successful models and technologies in green industries, digital infrastructure, and healthcare solutions that can be adapted by businesses in both countries.

In recent years, Brazil has made strides in regulatory and economic reforms aimed at attracting foreign investment. From your perspective, what specific opportunities exist for U.S. businesses looking to expand into the Brazilian market, and what challenges should they be prepared to navigate?

Brazil has been actively pursuing economic and regulatory reforms that create a conducive environment for foreign investment. These reforms are opening several opportunities in new and expanding sectors, especially under Brazil’s ecological transformation plan and the digital transition, driven by Brazil’s commitment to sustainable and inclusive development.

Mercury Global Reports Interviews Cassia Carvalho of US-Brazil Business Council
GreenTech Mission to Brazil in Sao Paulo and Rio de Janeiro, Brazil

However, U.S. businesses looking to expand into the Brazilian market must be prepared to navigate several challenges. The Brazilian tax system is notably complex. Current deliberations on tax regulations underway in Brazilian Congress mark a significant step forward towards simplifying the convoluted tax system for consumption taxes across various sectors. But important questions remain regarding the specific implementation details, especially regarding equitable treatment across different industries and effectively managing the transition period.

Additionally, regulatory agencies such as Anvisa (National Health Surveillance Agency) and IBAMA (Brazilian Institute of the Environment and Renewable Natural Resources) are under-resourced, which can lead to delays in obtaining necessary licenses and approvals for business operations. Moreover, the overall bureaucracy in Brazil can be cumbersome.

Infrastructure and logistics also remain a significant challenge in Brazil, with some areas having poor connectivity and transportation facilities, which can impact the efficiency of supply chains and distribution networks.

In summary, while Brazil offers promising opportunities in sectors aligned with the ecological, energy and digital transformations, U.S. businesses must approach these opportunities with well-informed strategies to navigate in the Brazilian market.

4. Given the global shift towards sustainability and renewable energy, how do you see Brazil and the United States collaborating to capitalize on opportunities in clean energy, environmental conservation, and sustainable development? What role can the Brazil-U.S. Business Council play in advancing these efforts?

Brazil’s immense potential in nature-based solutions, renewable energy and critical minerals can be fully realized through appropriate government policies and market signals. Under the right conditions, Brazil should be well-positioned to become an important global supplier of clean energy. Toward this aim, the business community can be helpful by providing examples of regulatory best practices and pioneering technologies, as Brazil is considering introducing and expanding the incentives for establishing renewable energy industries and gaining a competitive advantage.

The Brazil-U.S. Business Council advocates for high-level strategic partnerships between Brazil and the United States, which include the active collaboration of the business community in the government dialogues.

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