The CEO of Embraer, a Brazilian aerospace company headquartered in the state of Sao Paulo, supports the consolidation of the Western Hemisphere into a Free Trade Area of the Americas, but he isn’t waiting for it to happen to conduct business.
Embraer’s Mauricio Botelho told GlobalAtlanta in a brief telephone interview from the Georgia World Congress Center where he was attending the Business of the Americas Conference last week that his aerospace business is brisk with or without the FTAA.
In the past nine years, he said, he has exported $11 billion worth of airplanes and airplane parts and imported $8 billion worth of parts from the United States. More than 1,000 Embraer aircraft, including its regional jets and its double prop planes, are currently flying in the U.S., he added.
In an e-mail sent to GlobalFax from Brazil, Henrique Costa Rzezinski, senior vice president of external relations at Embraer, also downplayed the company’s difficulties with tariffs.
“Currently, Embraer does not face relevant barriers to its exports to the Western Hemisphere,” he wrote. “Tariffs are not applied in the major markets and non-tariff barriers are almost non-existent. This is to say that Embraer already benefits from an almost-free trade environment in the Americas.”
He did say, however, that the company would like to see further negotiations concerning export credits. “We have been frustrated by the fact that FTAA member countries seem to have given up the debate on subsidies disciplines in the negotiations. As you know, multilateral disciplines adopted in the WTO (World Trade Organization) do not provide a level playing field for developed and developing countries in the field of export credits.”
“We would like to see these distortions discussed and at least partially corrected in the FTAA negotiations, but apparently negotiators did not share this view,” he added.
Meanwhile, Embraer continues to expand its operations in the U.S. Last year it applied for a building permit for an aircraft assembly facility in Jacksonville, Fla., that qualifies the company as a compliant U.S. government supplier for defense and homeland security programs.
Embraer’s U.S. headquarters are in Ft. Lauderdale, Fla., where it operates its sales and product support facility. It also has an engineering office in Palm Beach Gardens and a maintenance, repair and overhaul facility in Nashville, Tenn.
Embraer and Harris Corp. have been selected to join forces with Lockheed Martin Corp. to participate in the competition to develop the U.S. Army’s Aerial Common Sensor (ACS) system.
For more information, call Susan Bruce of Hemisphere Inc. at (404) 885-8539.
Mr. Rzezinski’s full interview follows:
How would Embraer benefit from a Free Trade Area of the Americas?
Currently, Embraer does not face relevant barriers to its exports to the Western Hemisphere. Tariffs are not applied in the major markets and non-tariff barriers are almost non existent. This is to say that Embraer already benefits from an “almost free trade” environment in the Americas. Surely, the elimination of the remaining tariffs applied to our products in some countries would be beneficial for our competitiveness, especially because our competitors in general benefit from preferential tariffs in those countries.
Additionally, as an internationally-oriented company, Embraer will benefit from further liberalization of trade and investment flows among American countries and from the setting of rules applied from such flows.
We have been frustrated by the fact that the FTAA member countries seem to have given up the debate on the disciplining subsidies in the negotiations. As you know, multilateral disciplines adopted in the WTO do not provide a level playing field for developed and developing countries in the field of export credits. We would like to see these distortions discussed and at least partially corrected in the FTAA negotiations, but apparently negotiators did not share this view.
Is Embraer playing a role in helping to facilitate passage of the FTAA?
Embraer takes part in the Brazilian Business Coalition, an entity created to coordinate the participation of the Brazilian business sector in the trade negotiations, including those for the FTAA. Within this forum, Embraer supports stances geared at overcoming difficulties and resistances against the agreement. We are also in close contact with the Brazilian government and official negotiators, who are aware of our positions and interests as far as FTAA negotiations are concerned.
Please identify major roadblocks to passage of the FTAA. What do you believe has to happen to eliminate these challenges?
Major obstacles have already been identified by the negotiators. They relate to U.S. resistance to the negotiation of some aspectts of the agricultural agenda and anti-dumping rules in the FTAA and to Brazilian sensitiveness as far as issues like government procurement and investment are related.
In my view, the way to overcome these challenges also has been identified in the Miami Ministerial of November 2003 as the couintries negotiating thhe FTAA adopted the “two-level” architecture for the treaty: at the first level, a common set of rights and obligations will be established while at the second level, like-minded countries will negotiate deeper thematic agreements.
The interpretations of the agreement reached in Miami gave rise to some divergencies among countries in the meetings held by the TNC (Trade Negotiations Committee) in early 2004. Recently, negotiators from Brazil and the U.S. have met to translate the Miami agreement into a common text geared at allowing for the successful conclusion of the last (and most difficult) phase of the negotiations.
Would the FTAA help facilitate the formation of strategic alliances with U.S. companies?
Embraer has already many strategic alliances with companies from the U.S. and from other countries. This form of cooperation between firms does not depend directly on the setting of free trade agreements. However, agreements like FTAA can help establishing in the whole hemisphere, a business environment increasingly predictable and rules driven and such an environment could well foster the spreading of long-term cooperation mechanisms, like strategic alliances, among firms form the different countries of the Americas.