The U.S. Chamber of Commerce said Thursday that the United States should make it a priority to establish dialogue with Brazil on a comprehensive free trade agreement. Commercial relations between the largest economies in South and North America have grown substantially over the past decade and that trend could accelerate with more liberal trade policies, it said.
A fully implemented free trade agreement with Brazil would have a positive impact on the U.S. economy, wages and employment by nearly doubling exports there, according to a study the Chamber’s Brazil-U.S. Business Council commissioned
from Trade Partnership Worldwide LLC.
Two-way trade between the United States and Brazil reached $108.3 billion in 2014, with U.S. export values ($70 billion) almost double those of imports. Exports to Brazil have grown 15 percent on an annual basis over the past decade. Key goods exports to Brazil include chemicals, petroleum, transportation equipment and machinery.
Meanwhile, investment by Brazilian companies in the United States – mostly for manufacturing facilities – rose from $29 billion in 2007 to over $93 billion in 2012.
U.S. Gross Domestic Product would increase .11 percent, or about $24 billion, on the strength of $62 billion or more in additional exports per year.
The study assumes an agreement will be able to fully eliminate tariffs in each nation and about half of the impact of non-tariff measures. Barriers are highest in the agricultural sector. A deal would benefit U.S. manufacturing the most, with agriculture under pressure from competition from Brazilian producers.
With the Obama administration trying to round up votes in Congress to ratify the 12-nation Trans-Pacific Partnership Agreement and engaging in talks with the European Union to reduce barriers to transatlantic trade and investment, the Brazil-U.S. Business Council said a Brazil free trade agreement should be next on the agenda.
“The commercial relationship the United States and Brazil have enjoyed over the last decade is deep and broad and a U.S.-Brazil trade agreement would realize the full economic potential of this relationship,” Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, said in a statement. “This is not a short-term objective, but it’s important our two governments understand the benefits associated with expanding commercial ties through a trade negotiation.”
The study is designed to spark interest in deeper U.S.-Brazil economic ties.
Trade barriers are especially high in Brazil for imported beverages and tobacco, agriculture products, forestry products and fisheries products, according to the study. Motor vehicles and parts, processed foods imports, apparel and leather products also face high rates of protection, as is the case for air and land transportation services exports and business and ICT services.
The U.S. also imposes tariffs and non-tariff barriers on imports of goods and services from Brazil.
“The private sector welcomes the reduction of barriers that would help boost trade and investment,” Tim Glenn, president of DuPont Crop Protection and chairman of the Council’s Trade Task Force, said. “It is time for the Brazilian and U.S. governments to begin a dialogue on a trade agreement that eliminates tariffs and reduces non-tariff barriers, which would have a net positive impact on the U.S. economy, consumer spending, bilateral as well as total exports and imports, employment and wages.”