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Friday, October 19, 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 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 issues such as security, energy, trade, human rights, and the environment. 

Political Situation 

Dilma Rousseff of the ruling center-left Workers’ Party was inaugurated to a four-year presidential term on January 1, 2011. She inherited a country that had benefited from 16 years of stable and capable governance under Presidents Fernando Henrique Cardoso (1995-2002) and Luis InĂ¡cio Lula da Silva (2003-2010). Rousseff’s 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. Although she has won approval for a federal worker pension reform, regulations for the 2014 World Cup, and a truth commission to investigate abuses during the military regime (1964-1985), other important initiatives have yet to advance. Rousseff has also lost several administration officials to corruption scandals but her efforts to clean up her cabinet have won popular support. In September 2012, 62% of Brazilians evaluated her administration as “good” or “very good.” 

Economic Conditions 

With a gross national income of $2.1 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 have reduced inflation, fostered growth, and 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 7.6% growth in 2010. The economy has since slowed; it grew by 2.7% in 2011 and is expected to grow by just 1.5% in 2012. Unemployment remains near a record low, however, and the Rousseff Administration is implementing several policies designed to stimulate the economy. 

Congressional Action 

The 112th Congress has maintained interest in U.S.-Brazil relations, with energy and trade issues receiving particular attention. Congress allowed a duty on imported ethanol to expire at the end of 2011, removing a long-standing barrier to U.S.-Brazil biofuels cooperation. A bill introduced in April 2012, H.R. 4621, would authorize the President to enter into negotiations with Brazil to obtain open and reciprocal market access for trade in ethanol products. H.R. 6539, introduced in September 2012, would create a U.S.-Brazil Joint Commission on Commerce and Trade to address bilateral trade issues and promote commercial opportunities in both countries. Several bills with implications for the long-standing U.S.-Brazil cotton dispute have also been introduced in the second session. H.R. 5143 would prohibit payments to the Brazil Cotton Institute and thereby prevent the United States from complying with the terms of a temporary bilateral agreement. Additionally, both versions of the 2012 farm bill, S. 3240 and H.R. 6083, include potential modifications of the U.S. cotton program.

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: October 11, 2012
Number of Pages: 35
Order Number: RL33456
Price: $29.95

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