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Toward a U.S., Brazil FTA?

April 21, 2012

Analysts and pundits have long criticized Presidents George W. Bush and Barack Obama alike for not doing enough to reach out to Brazil as a rising power in the Americas.

However, the VI Summit of the Americas, hosted by Colombia last weekend, was sandwiched between a couple of U.S.-Brazil bilateral meetings: Brazilian President Dilma Rousseff traveled to Washington, D.C. April 9-11, with Secretary Clinton visiting Brazil immediately after the Summit.

MercoPress reported on a press conference and a speech at the National Confederation of Industry on the first day of Secretary Clinton’s visit:

“I believe that the opportunities and potential for greater investment, trade, growth and jobs is only now being tapped,” Clinton said.

In order to promote economic growth for both countries, Clinton outlined key priorities.

“We need to redouble our efforts to conclude a double taxation treaty. We need to explore a bilateral investment treaty. We need to consider in the future a free trade agreement”, underlined Hillary Clinton.

As a proponent of job diplomacy, it makes sense that Secretary Clinton would mention a FTA when diplomatic talks are going well, especially since the U.S. and Brazil already signed an Agreement on Trade and Economic Cooperation in March 2011.

But it immediately caught my attention for the same reason a headline on renewed talk of a U.S., Uruguay FTA caught my attention: As a Mercosur member state, Brazil is restricted from entering into bilateral trade agreements.

This leads to an important question: Is it really possible that Brazil and Uruguay would be willing to take on Mercosur restrictions to enter into FTAs with the U.S., or are U.S. foreign policymakers really just that uninformed about Mercosur?

Recent reports indicate that it was primarily Argentina that opposed the U.S., Uruguay FTA in 2006. Former President of Uruguay Julio Maria Sanguinetti recently addressed the situation, stating that “now we are prisoners of Mercosur and Argentina.”

Uruguay and Paraguay are at a clear disadvantage under current Mercosur trade restrictions. They’re smaller and more dependent on their larger Mercosur partners, Brazil and Argentina, which have increasingly come under criticism for protectionist policies.

In the end, this has the potential to be interesting. If anyone can succeed in negotiating reforms for the Mercosur trade restrictions, you’d think it’d be Brazil.

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