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Brazil Has Long Way to Go Before Wiping Out Piracy, Says the US

Brazil and the United States have a long history of strong relations, and we  share many things in common. We both have big and diverse economies with  diverse peoples. We share the same ideals of social justice and are partners in democracy.

We both are working hard to permanently reduce poverty and create  jobs in this Hemisphere. Both our nations want to make poverty a part of  history, not only here but around the world. It may not be simple, but it is  possible and essential.

Our strong relationship is important, not only for both our nations, but for  the entire Latin American region. We want to create the conditions for global  competitiveness, including a predictable business climate, and are pursuing  comprehensive trade agreements around the world and in this region.

São Paulo’s strong commercial and business environment makes it an engine of  Brazil’s economic growth and its trade expansion well beyond Brazil’s borders.

The robust U.S. and Brazil economic relationship is a key element of São  Paulo’s economic vitality. Many Fortune 500 companies are located here in São  Paulo, and U.S. investment in Brazil totals over US$ 30 billion again, much of  it right here in São Paulo.

But investment represents only a part of the U.S.-Brazil economic relationship. Our work with Brazil on trade, security, and energy also cultivates our mutual  economic prosperity. Of course, there are areas where we can also deepen our  relationship. But first, let me touch upon Brazil’s solid macroeconomic  performance and how competitiveness can help Brazil and other countries grow  economically and sustainably.

Macroeconomic Environment

Brazil has experienced a very stable macroeconomic environment in recent years. The government’s sound fiscal and monetary policies have helped produce  moderate growth with low inflation.

We supported the government’s decision to graduate from IMF programs in March  of last year. We are confident the government will continue to pursue wise policies.

To maintain positive momentum, it will be important for Brazil to continue to  reduce its level of debt, adopt more microeconomic reforms, and improve the  investment climate.

Competitiveness

On competitiveness, both Brazil and the United States have examined the  industrial competitiveness in our countries. We both considered ways to reduce  government bureaucracy and increase innovation. We believe that creating the  conditions necessary for economic growth also promote open markets, strengthen  education and retraining, and increase productivity.

In today’s global economy, manufacturers operate in one country, but source  from multiple countries. So clearing customs quickly and easily is vital to  staying competitive because time, as we all know, is money. This is all the  more important in today’s high-tech world, where so much moves in overnight  package deliveries. And we applaud the Brazilian industry’s advocacy for  customs and tax reform. A recent study showed that every day saved in shipping  time saves the equivalent of a 0.8% tariff on manufactured goods. That can add  up to a lot of money.

Today, free market reforms have made Brazilian products competitive and  respected throughout the world. Brazilian businesses are building and exporting airplanes, wireless communications, computer technology, and much more.  Brazil’s automotive industry is a world leader in using alternative energy to  improve our shared environment.

Trade

A key element of our economic relationship with Brazil is promoting freer  trade. This is critical to Brazil and this region’s economic successes and ability to not only remain competitive, but become more competitive.

Freeing trade:

Creates jobs, the fastest way to reduce poverty.

Pushes reforms needed to accelerate growth.

Encourages transparency and good government.

Provides opportunities for entrepreneurs and fosters social mobility.

Two-way trade between the U.S. and Latin America and the Caribbean was $427  billion in 2004, and this can grow substantially as we expand free trade.

At the Summit of the Americas in Mar del Plata last November, all countries  except Venezuela supported the overall goal of further freeing trade, with 29  countries supporting rapid progress. For its part, Colombia is conducting  informal consultations with all FTAA participants on how to move negotiations  forward. We look forward to participating in these consultations.

We work closely with Brazil on a number of trade areas, from agriculture and  intellectual property rights, to multilateral trade negotiations at the World  Trade Organization. I’d like to briefly discuss these important areas.

Agriculture

Together, agriculture and Brazil’s growing agribusiness sector account for 33%  of Brazil’s GDP and 36% of exports. The tremendous success of Brazil’s  agricultural sector demonstrates its potential in leading your country to  sustainable economic development.

An important element of Brazil’s agricultural sector is its biotech crops, particularly in soybean and cotton seeds. Brazil has taken helpful steps in  increasing its protection of intellectual property rights of those products.  Its educational campaign and new Brazilian biosafety law are also helpful  steps.

Brazilian farmers have the potential to increase their competitive edge  if they use biotech seeds. It can increase their crop yields and reduced input  costs. We hope Brazilian law and regulators will promote rapid access to legal  patented and safe seeds, while providing royalties to the developers of those  legal seeds.

The third meeting of partners of the Cartagena Biosafety Protocol just  concluded in Curitiba [Brazil]. As a major exporter of biotech crops, Brazil  must carefully consider how to implement the new Biosafety Protocol  documentation requirements so that agricultural exporters aren’t saddled with  undue burdens.

Unfortunately, the decisions taken in Curitiba will increase the cost of international trade without commensurate benefit to health or  environment. It’s worth noting that these decisions specifically exclude trade  between parties and non-parties, such as the U.S. and Argentina, your main competitors in soybean exports.

The competitiveness of Brazilian agricultural exports depends on timely and  relatively inexpensive shipping costs. If Brazil requires increased testing or  other measures, transportation costs will increase, shipments could be delayed, and Brazil’s competitive advantages in agriculture could be undermined.

Intellectual Property

No discussion of the U.S.-Brazil economic relationship could be complete  without touching on the important topic of intellectual property, or IP,  protection.

It will surprise no one if I say that countries, like people, act in their self interest, and protecting IP protecting innovation is in every nation’s self interest.

The vitality of a country’s intellectual property protection regime is one of  the key economic indicators investors look to when considering whether to  invest in another country. Without assurances that its IP will be protected,  investors are reluctant to put their most irreplaceable property at risk.

For that reason, countries that wish to attract international investment  and  what country in today’s tough global economy doesn’t? know it is in their  interest to vigorously protect IP in order to remain competitive.

Recognizing the reasons for protecting IP, last year Brazil took the important  decision to step up its protection of IP rights. In 2005, Brazil formed a  National Committee to Combat Piracy. The Committee adopted a vigorous program  to address IP crime and has made great strides in implementing it. Enforcement  actions are up, and, most recently, Brazil launched an aggressive public  awareness campaign to educate the public about the pitfalls of IP crime.

As a result, copyright piracy, which had reached record levels, has been  reduced.

IP concerns still remain, however. Despite the important progress made on the  copyright front, copyright piracy remains high and more work remains to be done, especially in the area of prosecutions. Likewise, strong patent  protection is key to fueling innovation in high-technology development.

The U.S. recognizes and appreciates the significant progress Brazil has made in improving IP protection. We applaud these important efforts and look forward to working with your government to facilitate continued improvements.

Telecommunications

I’d like to briefly discuss Brazil’s vibrant telecommunications industry. I  understand that President Lula is going to announce the selection of the  Brazilian digital TV standard soon.

Of the several options on the table, we believe the ATSC standard [Advanced  Television Systems Committee (the North American standard for digital TV,  including high-definition)] offers the best combination of economic, social,  and technical advantages. It has been adopted by the U.S., Canada, Mexico and  South Korea.

These countries that have adopted the ATSC standards are seeing a  rapid increase in the sales of high definition television products. Brazil’s  adoption of the ATSC standard will ensure a hemispheric standard, creating a  market of 800 million people for DTV products and services.

The U.S. no longer manufactures television sets. This poises Brazil to supply  high definition television sets, converter boxes, and transmission equipment  throughout the Hemisphere. Brazil’s potential role as a leading supplier will  help create high-paying, highly-skilled jobs and significant economic  development.

The U.S. Overseas Private Investment Corporation has set aside US$ 150 million for U.S. companies to invest in information technology development projects in Brazil. And U.S. companies have already expressed their intention of making  significant investments in ATSC-related manufacturing in Brazil.

ATSC’s open development process ensures Brazil a significant role in the  evolution of the standard. Evolving ATSC standards present great opportunities  for Brazilian-U.S. and Brazilian-South Korean collaboration and partnership.

World Trade Organization And Doha Round

I’d like to turn now to the trade negotiations that are currently underway at  the World Trade Organization (WTO), known as the Doha Development Agenda. These negotiations provide a once-in-a-generation opportunity to bring the benefits  of the global trading system to all regions of the world.

WTO members, including Brazil and the United States, are working hard to  achieve a successful Round. However, negotiations have reached a critical  juncture, and we need to see significant progress in the next few weeks if we  are to conclude an agreement by the end of this year that truly delivers on the goal of opening markets and fostering global economic growth and opportunity.

If the world fails to seize this moment, we may well miss the chance to  capitalize on a favorable confluence of factors that contribute to prospects  for a successful Doha Round including a relatively robust and growing global  economy and strong and committed leadership in many of the world’s major  markets.

Elections are scheduled later this year in a number of countries in  this region including Brazil, Colombia, Ecuador, and Peru and new  leadership is expected in Japan. And the trade promotion authority that the  U.S. Administration needs to implement trade agreements expires next summer and is not likely to be renewed in the near future.

Earlier this year, trade ministers recommitted to the two critical deadlines  and detailed work plan agreed at the WTO Hong Kong Ministerial last fall. The  first of those deadlines is little more than three weeks away. They also agreed to pursue negotiations as a single undertaking. Simply put, that means movement in each of the core negotiating groups (manufactured goods, agriculture, and  services) must be simultaneous.

Members are making incremental progress. But in order to break the logjam, the  EU must table a more ambitious proposal in agriculture. At the same time,  advanced developing countries, such as Brazil and India, need to agree to  reduce tariffs on manufactured goods and increase market access in services.  Everyone and especially larger WTO members – is accountable.

It is important to remember that all countries lose if Doha fails. WTO members  must show leadership and shoulder their respective responsibilities in order to bring all the pieces of the puzzle together. Now we need to undertake the  political will in each of our countries to get that done. Naturally, that  includes Brazil and the United States.

Brazil has a significant stake in the outcome of these negotiations. According  to a recent Carnegie Endowment study on a successful Doha outcome, Brazil  stands to benefit dramatically from agricultural liberalization, gaining some  US$ 250 million dollars in real income.

Indeed, Brazil is the world’s largest producer of sugar cane, coffee, tropical fruits, frozen concentrated orange  juice, and has the world’s largest commercial cattle herd (50% larger than the  U.S.). Brazil is also a significant manufacturer, whose future growth and  success is inextricably linked to global major growth markets, particularly in  developing country markets.

For our part, our Trade Ambassador Portman was in Brazil last weekend, working  with Minister Amorim and European Commissioner Mandelson to push the  negotiations forward. Although there were no major breakthroughs in the  meetings, we remain committed to working towards a successful outcome by the  end of 2006.

The United States has been a leader in pushing for an ambitious result. We have shown that ambition across all three of the major negotiating areas, and we are urging others to join us.

In manufacturing, the United States has backed a tariff-cutting formula that  would result in new trade opportunities for all countries by reducing the  highest tariffs the most. We can just look at your nation’s world-class  aviation industry to know that manufacturing is an area in which Brazil excels.

Yet Brazil still has a vast amount of untapped potential in the manufacture of  industrial goods. Brazil can capitalize on the benefits of innovation and  investment by making an ambitious offer in this area.

We have also presented the most progressive offer in agriculture. The U.S. Congress is keenly aware that our agriculture proposal has real consequences  for our farmers. But we will not be able to leave our proposal on the table if  others do not make comparable offers to open their markets and reduce their  subsidies and other trade distorting practices.

Similarly, in the area of services, the United States has consistently  advocated the biggest possible package of openings this includes areas such  as financial services, telecommunications, computer related services, and  express delivery.

Liberalization of the services sector has injected greater competitiveness into developing countries that have opened their services markets. It produces  needed improvements in terms of infrastructure, efficiency, and modernizing  their economies. So it’s not just something that’s important to the developed  countries. It’s also critical to the development objectives of the Round.

Security

Security is the foundation for success in all areas. We are working with our  Latin American neighbors on a broad front: on democracy and good governance,  social development, and efforts to reduce crime.

Our relationship with Brazil on security issues is good. Brazil is implementing a healthy anti-money laundering and counterterrorist finance regime.

Brazil is serving as a regional leader on these efforts: It is a participant in the 3+1 Group on tri-border area security with Argentina, Paraguay, and the  U.S. It is one of the only South American members of the Financial Action Task  Force [FATF], and is the current president of the FATF-Style Regional Body in  South America, known as GAFISUD.

We encourage Brazil to take its efforts one step further: To criminalize the  financing of terrorism in order to further protect the Brazilian financial sector.

Energy 

In energy, Brazil is a leader. In fact, Brazil remains many years ahead of the  game with its embrace of ethanol. Your nation had the foresight to promote ethanol over the long-term, and to lead auto companies and fuel distributors to share its vision.

Today, 8 out of 10 new Brazilian vehicles are capable of running on ethanol.  And, through its world renowned oil company, Petrobras, and with foreign  partners, Brazil is pioneering deep water oil production.

Brazil is diversifying the energy mix even further with its hydropower and links with natural gas networks with its neighbors. This is gratifying, as I  remember the energy shortage during my 2001 visit. I understand further steps  are needed to ensure an adequate supply of electricity in the year ahead to  avoid a repetition of earlier problems.

Brazil has taken these bold steps to  diversify the types and sources of fuels it uses. And by doing so, has  augmented its own energy security and that of this Hemisphere as well as  helped protect the environment.

We applaud Brazil’s efforts for cleaner energy. Meanwhile, the U.S. is moving  boldly on energy and the environment as well. Our Energy Bill and our Advanced  Energy Initiative seek to diversify our fuel sources through biofuels and  hydrogen and to restore our own oil and gas production. It also calls for  investments in solar technologies, clean coal, nuclear and renewable energy.

Like Brazil, our federal government is trying to set an example. For instance,  the cars that take our senior State Department diplomats around Washington for  meetings are now almost completely powered by ethanol. And our shuttle bus fleet runs on Compressed Natural Gas.

Private Sector

I would like to talk briefly about the important role the private sector plays  in economic development. As you know, many Fortune 500 corporations operate in  São Paulo and have operated throughout Brazil for years. Small and medium-sized companies have also entered the Brazilian market and are making their presence  known. I know there are many private-sector partnerships between Brazilian and  U.S. companies.

The best companies don’t measure their success simply in terms of dollars and  cents, or simply in terms of profits. They know that economies flourish when  people flourish. So they contribute to local communities and are committed to  corporate social responsibility.

I’m pleased to remind you that Motorola was the 2004 winner of the Secretary of State’s Award for Corporate Excellence for its great contributions to Brazil.  Motorola worked with police chiefs and citizens across Brazil to help fight  crime. They reached out to youth for mentoring programs and after-school  programs. They also donated over $200 million to a technical college here in  São Paulo, creating thousands of jobs.

Motorola’s contributions are just one example of the many U.S. companies  practicing good corporate citizenship overseas.

There is tremendous competition for capital investment around the world.  Investors look for locations that are open to foreign investment, have  transparent regulatory regimes, and offer predictable legal frameworks that can enforce contract and property rights. Brazil has made great progress on  regulatory reforms over the past fifteen years, and it is important that such  progress continues.

Poverty Reduction

Finally, a word about the important task of poverty reduction. Not only have  the people of Brazil called on its leaders to spread opportunity to those left  out and left behind, but the people of this Hemisphere are doing the same.

Brazil has articulated a reform agenda very focused on the spread of  opportunity. Already there are major gains in employment, particularly from the informal sector to the formal sector. Simplification and streamlining of the  tax system will help businesses focus their energies on growing and being more  competitive, both within Brazil and with other countries.

At last year’s Summit of the Americas, President Bush proposed an innovative  initiative, funded by the U.S. and the Inter-American Development Bank, for  catalyzing much more private investment in infrastructure in this Hemisphere.  Right now, public funds to build infrastructure are constrained in many parts  of this region.

It’s imperative we find ways to unlock large volumes of private finance so that new businesses can start and existing ones grow. This of course helps those people who want to work to remain in the workforce. The U.S. will  continue to work hard to realize this initiative. Similarly, we all know the  vital importance of investing in our human infrastructure with better education and financing.

Trade is one of the most important tools for spreading opportunity to the poor. Indeed, economic studies confirm that countries with more open economies engage in increased international trade and have higher growth rates. The U.S. has  taken the approach to linking trade, aid, and development with the Millennium  Challenge Account (MCA) and trade capacity building initiatives.

MCA funding  will help this region: Honduras and Nicaragua have already negotiated projects  and will receive US$ 390 million in funding. Last fall El Salvador was selected to begin negotiations for an MCA compact, and Bolivia is currently negotiating  one. Paraguay’s Threshold Program has been approved, and Guyana is in the  process of negotiating its own program.

Let me conclude by saying how optimistic I am about strengthening our  relationship and achieving progress with Brazil and this Hemisphere.

Our two countries are committed to democracy, to market reforms and to economic freedom and opportunity. We are partners in security and prosperity for our  peoples and for creating opportunities to those left behind.

And we value the democratic strength of our Latin American allies. By working  side by side, we can help our citizens and people in the Americas and around  the world take advantage of the ideals that democracy and freedom offer. Our  work on sustainable development, trade liberalization and poverty reduction is  a good start. The competitiveness of businesses in Brazil and the region will  be maintained and improved if we continue to make real progress in these areas.

Our economic relationship with Brazil is unsurpassed in South America. We have  a long history working together and we look forward to many more years of  cooperation both with your government and with business leaders such as  yourselves. Thank you.

These are the remarks made to the Commercial Association of São Paulo (ACSP) by E. Anthony Wayne, Assistant Secretary for the U.S. Bureau of Economic and Business  Affairs, as prepared for delivery.

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  • Show Comments (2)

  • Guest

    When???
    When will all this take place? The next two hundred years? As I noticed on my visit to Brasil, Things are slow to progress with corrupt politicians whom only make promises on election year.

  • Guest

    I KNEW this had to be a political speech….LOL.

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