“Brazil is not only one of the most important countries in the Western Hemisphere but is a global leader on a whole range of issues… including climate change, energy, educational exchanges, science and technology.” (Barack Obama, 2015)
“We have celebrated an upward trajectory in our relations.” (Dilma Rousseff, 2015)
Both sides can (rightly) claim that the first state visit by a Brazilian Head of State to the White House in a decade was a great success. The Summit reflected the strengthening and increasingly multi-faceted partnership between the top two economic powers in the Western Hemisphere, and highlighted significant trade opportunities and geo-strategic considerations for the rest of the world. From a Brazilian perspective, President Dilma Rousseff standing alongside Barack Obama for their joint press conference demonstrated a more proactive, confident and progressive Brazil during the first part of her second term. Accompanied by her universally respected new finance minister, Joaquim Levy, Rousseff showed an intensity to get things done, perhaps borne out of a confidence that only a re-elected head of government can achieve.
The accelerated recovery of the US economy, reflected in higher GDP forecasts (+2.8% y-o-y in 2015), combined with a more entrepreneurial and business-friendly Brazil, will offer important opportunities for expanding bilateral trade and investment. Moving away from a reliance on low margin commodity-based exports to China, Brazil is aggressively opening up investment into its world leading agriculture, energy and aerospace sectors. Infrastructure, a major sector that will benefit from significant investment inflows, will also be opened up to foreign capital.
Bilateral Trade Between the US and Brazil Doubled to $110 Billion in the Decade to 2014
As the two largest food-producing countries in the world, the United States and Brazil have now joined forces to meet the fast increasing demand for safe and sustainable food. Their undoubted expertise will be a major force for good globally, very likely for decades to come. Utilizing Brazil’s globally renowned acumen in agricultural research and development, the partnership between the United States Agency of International Development and the Brazilian Cooperation Agency is set to offer respite to the heavily malnourished regions of the world. Brazil will take the lead in the transfer of science, technology and targeted training for agricultural policy makers, technicians and farmers in those vulnerable parts of the world.
The United States and Brazil have reduced absolute greenhouse gas emissions more than any other countries since 2005 and have agreed on further steps ahead of the UN Climate Summit in December 2015. Brazil previewed its post-2020 climate target at the Summit, announcing that it will restore 12 million hectares of forests by 2030 as well as achieve a 0% deforestation rate by that date. The United States and Brazil stated a joint goal of increasing the share of renewables in electricity generation to 20% by 2030. Praised by Obama as an “indispensable partner”, Brazil is playing a critical role in addressing climate change with a deal to boost renewable power production.
For her part, Rousseff announced the launch of the new cycle of concessions for investment in Brazil that creates the opportunity for US companies and investors to participate in a $64 billion multi-year investment program. With bilateral trade reaching $110 billion last year, apart from the undoubted investment in the agriculture and oil and gas sectors, moves to modernize the broad range of Brazilian infrastructure will be an imperative for the country. Investment in transport links (ports, airports, rail systems and road links), will have a marked positive effect on the economy. Smaller but no less important details were also laid out; both Presidents have approved American and Brazilian citizens visa free travel by early 2016.
With such great opportunity for both countries, we are expecting several agreements and initiatives for trade and investment to be unveiled over the coming weeks. As Brazil considers further expanding their cooperation with the US on biofuels and clean energy technology, the US alludes to endorsing Brazil’s quest for a permanent seat on the UN Security Council. With their relationship strengthening, many avenues have yet to be explored. Even so, they are off to a fantastic start.