For U.S. companies, there are two Brazils. There is the Brazil that the World Bank ranks as a difficult place to do business, more difficult than all but 56 of 181 countries measured. It is that Brazil that has high tariffs, averaging about 11.3 percent. It is that Brazil where it can take 10 years for a company to get a patent for its product.
Then there is the other Brazil, the one that continues to lure companies willing to tolerate the many obstacles in order to reach the country’s large and lucrative markets.
It is this Brazil that this year for the first time contributed money to the International Monetary Fund, becoming an IMF creditor instead of a borrower. This Brazil has become the ninth largest trading partner of the U.S. with total trade exceeding $63 billion annually. This Brazil imports more from the U.S. than it exports here.
“There are still a lot of issues,” said Lorrie Fussell, Brazil desk officer with the U.S. Department of Commerce in Washington, speaking at the 15th annual Georgia Institute of Technology Global Business Forum last month. “But it’s an incredible place to do business with a lot of resources. It’s very fulfilling when you’ve been able to accomplish something in Brazil.”
In land size, Brazil is larger than the continental United States. It has a population of nearly 200 million.
U.S. companies would like to sell Brazilians more products. But that can be easier said than done. Jamezell Ottinger, vice president of international business for Atlanta-based Nioxin Research Laboratories Inc., which makes hair care products, said it can take up to a year to get approval by regulatory agencies to sell products in Brazil, compared to three months in some countries.
“You have to be patient,” said the Commerce Department’s Ms. Fussell. “You have to do your homework, know what you’re getting into. I never advise a company which has never exported into a region to start with Brazil without knowing what you are getting into.”
While there are pending free trade agreements between the U.S. and two Latin American countries, Panama and Colombia, nothing is in the works with Brazil, said Charles Shapiro, former U.S. ambassador to Venezuela who currently heads the U.S. State Department’s task force on free trade agreements in the Western Hemisphere.
“Yes, it is hard to get products into Brazil,” Mr. Shapiro told GlobalAtlanta in a telephone interview. “What Brazil is insisting on is that we reduce our agricultural subsidies before they agree to reduce their tariffs on industrial and consumer products.”
During the Doha Round trade negotiations in Qatar late last fall, a global deal with Brazil was close, said Mr. Shapiro. “At the last minute, it was India that backed down,” he said. “How do you put that whole thing back together? It’s very complicated.”
Brazil is an agricultural powerhouse, the world’s largest exporter of sugar, orange juice, beef, poultry and tobacco, said Henrique Rzezinski, chairman of the Brazil section of the U.S.-Brazil Business Council and a speaker at the Georgia Tech forum. Brazil is also emerging as an energy giant, not only for biofuels such as ethanol but also for oil and natural gas, he said.
The Brazilian and U.S. governments have been making progress in improving their trade relations, said Mr. Rzezinski.
“If you take the Brazil-U.S. relationship today, I would say it’s at its highest point of dialogue, of very substantial cooperation,“ he said. “But I still think a more comprehensive agenda between both governments is very important in order to shape a strategic relationship and much stronger partnership than we have today.”
Although the U.S. and Brazil currently conduct more than $60 billion annually in trade, with the U.S. exporting slightly more than it imports, the potential is far greater, said Walter Bastian, deputy U.S. assistant secretary of commerce, another speaker at the Georgia Tech program.
“You’re leaving money on the table,” he said. “There are more deals that could be had.”