Obama Set on Expanding Trade in Brazil, Chile

The president praises growing economic relations across the Americas, but impediments to trade remain.

Presidents Dilma Rousseff of Brazil and Barack Obama of the United States in Brasilia, March 19
Presidents Dilma Rousseff of Brazil and Barack Obama of the United States in Brasilia, March 19 (White House/Pete Souza)

President Barack Obama visited Brazil and Chile in recent days. The two South American powers have emerged as robust democratic partners of America’s in recent decades and increasingly, they share major trade relationships with the United States as well.

“Trade between the United States and Latin America has surged,” the president said in Santiago on Monday.

We buy more of your products, more of your goods than any other country, and we invest more in this region than any other country.

A day earlier, in Rio de Janeiro, the president professed that “the United States and Brazil should expand trade, expand investment, so that we create new jobs and new opportunities in both of our nations.”

To advance that aim, Obama and newly-elected Brazilian president Dilma Rousseff agreed to create a United States-Brazil Commission on Economic and Trade Relations that will meet at least once a year to “identify opportunities for expanding bilateral trade and investment flows” and “promote the removal of unnecessary bilateral trade and investment obstacles, particularly in the regulatory field.”

Significant impediments to free trade remain in the form of barriers against major Brazilian exports including ethanol, orange juice, steel and sugar. The United States government subsidizes cotton and soybean production moreover at the disadvantage of Brazilian farmers.

In a statement, Presidents Obama and Rousseff noted that regulatory cooperation could improve competitiveness and the economic wellbeing of both their nations. They also reaffirmed their “strong commitment” to bringing the World Trade Organization’s Doha Round to “a successful, ambitious, comprehensive and balanced conclusion.”

For years, Brazil has stalled further liberalization of global trade as long as the West insisted on protecting its agricultural market with tariffs and subsidies.

President Rousseff was particularly critical of more cloaked methods of protectionism on the part of the United States: its expansionary monetary policy that weakens the US dollar but makes American exports more competitive.

As the Brazilians see it, the many hundreds of billions of dollars the American central bank is pumping into the economy is causing “distortions in currency markets” and “pushing countries toward protectionist and defensive measures.” Brazil has now one of the most overvalued currencies in the world which hurts its manufacturers.

Chile and the United States have enjoyed strong trade relations for many years. America is Chile’s second-largest goods trading partner and its largest foreign investor, account for nearly a quarter of foreign direct investment in Chile between 1974 and 2010.

Last year, Chile was the first South American nation to join the Organization for Economic Cooperation and Development.

Bilateral trade has more than doubled since Chile and the United States entered a free-trade agreement in 2004. The countries have agreed to eliminate tariffs on 134 products this year. Already, both nations’ agriculture departments reached agreement to permit the import of certain cuts of US beef into Chile.

Despite the nuclear crisis in Japan and his country’s earthquake prone geography, Chilean President Sebastián Piñera wanted to reach an agreement on deepening civilian nuclear cooperation with the United States.

The leaders reaffirmed their commitment to work together in the realm of atomic energy during the visit while the United States will supply low enriched uranium to Chile to support the continued operation of its two research reactors. “This agreement will encourage the development of nuclear expertise and professionals in Chile and advance bilateral cooperation on nuclear safety, security, and safeguards in line with the highest international standards,” according to a statement released by the two leaders.

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