Brazil kicks off complex US trade deal talks

Brazil's Economy Minister Paulo Guedes said the United States was eager for a deal and the chance to sell Latin America's largest economy more goods, including ethanol.
Brazil's Economy Minister Paulo Guedes said the United States was eager for a deal and the chance to sell Latin America's largest economy more goods, including ethanol.PHOTO: AFP

BRASILIA (REUTERS) - Brazil has begun negotiating a trade agreement with the United States, the South American country's economy minister said on Wednesday (July 31), kicking off knotty talks between longstanding competitors whose leaders want closer commercial ties.

Speaking in Brasilia after meeting with US Commerce Secretary Wilbur Ross, Economy Minister Paulo Guedes said the United States was eager for a deal and the chance to sell Latin America's largest economy more goods, including ethanol.

Brazil and the United States compete in key areas like agriculture, making it likely the trade talks will be fraught and long-lasting.

Brazil is also part of South America's Mercosur customs union, which would have to be involved in any tariff reductions.

Yet far-right President Jair Bolsonaro, along with Mr Guedes and his team, have pledged to bring down trade barriers, open up the economy and make Brazilian business more competitive.

Since his election last year, Mr Bolsonaro has sought to build close ties with US leader Donald Trump, an ideological ally who favours bilateral commercial pacts over multilateral deals.

After meeting with Mr Ross, Mr Bolsonaro echoed his concerns over potential "pitfalls" in a trade deal recently struck between the European Union and the Mercosur bloc that includes Argentina, Uruguay and Paraguay.

On Tuesday, Mr Ross said the trade deal between Mercosur and the European Union, reached in principle last month, should avoid "poison pills" that would obstruct a possible US accord.

 
 

Mr Marcos Troyjo, Brazil's deputy economy minister for foreign trade, said it would be possible to negotiate a trade accord with the United States that does not include changes to tariffs, adding that negotiations will begin with non-tariff areas.

Brazil is considering renewing in September a zero-tariff quota for 600,000 tonnes of ethanol imports per year that has been filled almost entirely by US supplies, Mr Troyjo said.

Brazil is also committed to establishing an import quota for 750,000 tonnes of US wheat a year without tariffs, he said.

Mr Ross on Tuesday reaffirmed US support for Brazil to join the Paris-based Organisation for Economic Cooperation and Development, a club of the world's leading market economies.

Membership in the OECD would give Brazil a seal of approval that many institutional investors need to invest in the country, Mr Troyjo said.