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Friday, March 23, 2012

Brazil-U.S. Relations

Peter J. Meyer
Analyst in Latin American Affairs

As its economy has grown to be the sixth largest in the world, Brazil has consolidated its power in South America, extended its influence to the broader region, and become increasingly prominent on the world stage. The Obama Administration regards Brazil as an emerging center of influence, whose leadership it welcomes “to pursue progress on bilateral, hemispheric, and global issues.” In recent years, U.S.-Brazil relations have generally been positive despite Brazil’s prioritization of strengthening relations with neighboring countries and expanding ties with nontraditional partners in the “developing South.” Although some disagreements have emerged, Brazil and the United States continue to engage on a number of issues, including security, energy, trade, human rights, and the environment.

Dilma Rousseff of the ruling center-left Workers’ Party was inaugurated to a four-year presidential term on January 1, 2011. She is Brazil’s first female president. Rousseff inherited a country that has benefited from what many analysts consider 16 years of stable and capable governance under Presidents Cardoso (1995-2002) and Lula (2003-2010). Her multiparty coalition holds significant majorities in both houses of Brazil’s legislature; however, keeping the unwieldy coalition together to advance her policy agenda has proven challenging. She has won approval for a truth commission to investigate abuses during the military regime but other important initiatives have yet to advance. Rousseff has lost six cabinet ministers to corruption scandals but remains popular. In January 2012, 59% of Brazilians approved of her Administration, the highest approval rating for an administration after one year in office since the return to democracy.

With a gross national income of $1.83 trillion, Brazil is the largest economy in Latin America. Over the past five years, the country has enjoyed average annual growth of over 4%. This growth has been driven by a boom in international demand for its commodity exports and the increased purchasing power of Brazil’s fast-growing middle class. The country has also benefitted from a series of policy reforms implemented over the course of two decades that reduced inflation, established stability, and fostered growth. These policies have enabled Brazil to better absorb international shocks like the recent global financial crisis. After contracting by 0.3% in 2009, the Brazilian economy quickly bounced back with 7.5% growth in 2010. Although the economy has since slowed, with estimated growth of 2.9% in 2011, Brazil has the resources necessary to weather another potential downturn in the global economy.

The 112th Congress has maintained interest in U.S.-Brazil relations. It allowed a duty on Brazilian ethanol to expire at the end of 2011, removing a long-standing barrier to further energy and trade cooperation. Likewise, several pieces of legislation related to Brazil were introduced during the first session, including bills to suspend foreign assistance to Brazil (H.R. 2246) and the issuance of visas to Brazilian nationals (H.R. 2556) until the country amends its constitution to allow for the extradition of its citizens, and bills (H.R. 3039 and S. 1653) to accelerate visa processing for citizens of Brazil and other countries. As Congress debates the farm bill during the second session, it may evaluate potential changes to U.S. cotton subsidies that would ensure U.S. compliance with World Trade Organization rulings, and allow the United States to reach a permanent agreement with Brazil to avoid WTO-sanctioned retaliatory measures.

This report analyzes Brazil’s political, economic, and social conditions, and how those conditions affect its role in the world and its relationship with the United States.

Date of Report: March 7, 2012
Number of Pages: 36
Order Number: RL33456
Price: $29.95

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