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Tuesday, March 12, 2013

Brazil-U.S. Relations

Peter J. Meyer
Analyst in Latin American Affairs

As its economy has grown to be the seventh largest in the world, Brazil has utilized its newfound economic power to consolidate its influence in South America and play a larger role in international affairs. The Obama Administration’s National Security Strategy recognizes Brazil as an emerging center of influence, and welcomes the country’s leadership on bilateral, hemispheric, and global issues. U.S.-Brazil relations generally have been positive in recent years, though Brazil has prioritized strengthening relations with neighboring countries and expanding ties with nontraditional partners in the “developing South.” While some foreign policy disagreements have emerged, the United States and Brazil continue to engage on issues such as security, energy, trade, human rights, and the environment. 

Political Situation 

Dilma Rousseff of the 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 Inácio 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 has proven challenging. She has won approval for portions of her policy agenda, but several important initiatives— including a new oil royalty framework—have yet to advance. The Rousseff Administration is currently concentrating its efforts on accelerating economic growth, which has slowed considerably over the past two years. With an approval rating of 62%, President Rousseff enters the second half of her term with more popular support than Cardoso or Lula had at the same point in their administrations. 

Economic Conditions 

Brazil is the largest economy in Latin America with a gross domestic product (GDP) of $2.4 trillion. Over the past decade, the country has enjoyed average annual growth of about 3.7%. 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 that have reduced inflation 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 7.5% growth in 2010. The economy has since slowed, however, growing by 2.7% in 2011 and an estimated 1.5% in 2012. Although the Rousseff Administration’s economic policies have yet to boost growth significantly, they have helped bring unemployment to its lowest level on record. 

Congressional Action 

Members of Congress have expressed considerable interest in U.S.-Brazil relations in recent years, and bilateral ties are likely to remain on the agenda of the 113
th Congress. Trade issues may receive particular attention. The Generalized System of Preferences (GSP), which provides dutyfree tariff treatment to certain imports from Brazil and other developing countries, is scheduled to expire in July, and its renewal is one of Brazil’s top priorities. Likewise, potential reauthorization of the farm bill, which is scheduled to expire in September, has implications for a long-running trade dispute over U.S. cotton subsidies. Two bills designed to pressure Brazil to amend its constitution and allow the extradition of Brazilian nationals have been introduced in the new session; H.R. 571 would suspend foreign assistance to Brazil and H.R. 572 would suspend the issuance of visas to Brazilian nationals until the country changes its extradition policy.

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: February 27, 2013
Number of Pages: 35
Order Number: RL33456
Price: $29.95

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