US embassy cable - 04BRASILIA2358

UNCLAS BRASILIA 002358 
 
SIPDIS 
 
SENSITIVE 
STATE PASS USTR 
USDOC FOR 3134/USFCS/OIO/WH/EOLSON 
USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD 
 
E.O. 12958: N/A 
TAGS: EAGR, ECON, ETRD, PREL, BR, Trade 
SUBJECT: AMBASSADOR DISCUSSES BILATERAL TRADE ISSUES WITH 
MINISTER OF DEVELOPMENT, COMMERCE, AND FOREIGN TRADE 
 
 
1.  (SBU) Summary.  During a September 10 courtesy call by the Ambassador on Luiz Furlan, Minister of Development, Commerce and Foreign Trade (MDIC), the latter pressed for greater progress on bilateral issues and a sharper focus on finding ways to increase Brazilian exports to the U.S.  In particular, Furlan underscored the importance of Brazil's "small but sensitive" shrimp exports to the U.S., and hoped for a quick (and favorable) resolution by the U.S. Import Administration of the pending anti-dumping review.  Furlan spoke positively regarding recent draft proposals by USDOC for Informal Commercial Exchange (ICE) talks with Brazil, though he requested greater specificity and detail from the USG as to what such discussions might entail.  Finally, Furlan opined that notwithstanding press speculation that the EU-Mercosul FTA negotiations were at an impasse, his view was that progress on concluding an accord could be made in the short-term.  End Summary. 
 
2. (U) On September 10, the Ambassador paid his initial courtesy call on MDIC Luiz Furlan.  Vice Minister Marcio Fortes, Mario Mugnaini Jr. (Executive Secretary of the GOB's inter-agency Foreign Trade Committee), Fernando de Magalhaes Furlan (Chief of Staff), Jose Mauro da Couto (Special Advisor to the Minister), and Pompeu Andreucci Neto (Senior Advisor on Foreign Affairs) joined the meeting from the Brazilian side.  Econ Counselor accompanied the Ambassador. 
 
3. (SBU) During the 45-minute conversation, Furlan touched upon a wide variety of issues.  In particular, he made the following points: 
 
--  While Brazilian agricultural exports to Europe and Asia had registered substantial increases this year, U.S. import restrictions were making it difficult for Brazilian producers to export primary products to the U.S.   Some way needed to be found to focus on why exports to the U.S. are lagging given that Brazilian products are competitive in other markets. 
 
--   Despite press speculation that the E.U.-Mercosul FTA talks had hit an impasse, his view (which provoked gasps from some of his advisors) was that progress could be made in the short-term, with an agreement possible this fall.  (Note:  O Estado de Sao Paulo reported on September 13 that in an informal meeting with Foreign Minister Amorim, MDIC Furlan and Minister of Agriculture Rodriguez on Sunday, September 12, EU negotiator Pascal Lamy agreed to present the EU offer as a complete package during market access discussions slated for September 20 in Brussels.  Notwithstanding Furlan's optimism, he was quoted to the effect that "much remains to be done."  Subsequently, the September 14 O Estado quoted Amb. Jose Graca Lima, the GOB representative to the EU as saying that he did not believe that an EU-Mercosul accord could be reached prior to the October 31 target date.) 
 
--  The GOB would continue with its policy of economic and political outreach to both developing countries and the developed world.  Brazil soon hoped to finalize its FTA with South Africa and the SADCC, and in the coming weeks world leaders such as Japanese PM Koizumi, Russian President Putin, PRC leader Hu Jintao, and Pakistani President Musharraf would come to Brasilia to discuss, inter alia, increasing economic ties. 
 
--  Preliminarily, the GOB looked with favor on USDOC's idea of Informal Commercial Exchanges (ICE) with Brazil.  However, Furlan felt that the concept needed to be further defined and requested that the USG "concretizar" its thoughts on this issue.  Comment.  It is likely that prior to proceeding, Furlan wants to make certain that any ICE talks do not intrude upon the ongoing Bilateral Consulative Mechanism, led(from the Brazilian side) by Itamaray.  End Comment. 
 
--  Finally, Furlan noted the importance of Brazil's fledgling shrimp export industry.  This "small but sensitive" sector, he said, was key to the economy of several of Brazil's poor northeastern states.  Furlan indicated that he hoped for a quick (and favorable) resolution by the U.S. Import Administration of the pending anti-dumping investigation. For his part, the Ambassador stated that the U.S. Import Administration's final determination is due in December.  The Ambassador noted that, as is USDOC's usual practice, the anti-dumping investigation would be conducted in a fair, transparent manner.