U.S. business group asked Brazil to ratify goal of becoming carbon neutral by 2050

RIO DE JANEIRO, BRAZIL – American business people and investors who met with Economy Minister Paulo Guedes Washington asked him to ratify Brazil becoming carbon neutral starting in 2050. The Brazilian Congress ratified a trade protocol signed between the two countries a year ago to come into force.

During an event in April, President Jair Bolsonaro announced that Brazil anticipated its carbon neutrality goal -in practice, to cease or offset all its pollutant emissions- from 2060 to 2050. However, the country has not yet formalized the change.

“This is a great priority, as it is symbolic of Brazil’s commitment to its climate and sustainable ambitions and will bring confidence to American investors,” says Cassia Carvalho, executive director of the Brazil-US Business Council, which is part of the US Chamber of Commerce.

Guedes met with the US Chamber of Commerce representatives last week in a hotel near the White House. Present were executives from AES, Apple, Citigroup, Dow, Embraer, FedEx, and Morgan Stanley.

At the meeting, government representatives responded that Brazil is working to advance environmental goals and improve the business environment for investments that consider ESG criteria (environmental, social, and governance best practices).

The representatives also asked the government to help speed up the approval in the Brazilian Congress of the Protocol on Commercial Rules and Transparency, signed in October 2020, but which depends on the support of the Legislature to come into force. In the US, the document did not need approval by Congress.

The protocol provides for changes in three areas: trade facilitation and customs administration, good regulatory practices, and anti-corruption. The agreement foresees new rules for prior consultations and penalties and the adoption of regulatory provisions similar to those adopted in the USMCA treaty covering North America.

On the corruption side, the treaty expands actions related to money laundering, recovery of funds of illicit origin, denial of entry for foreign public officials involved in corruption, and additional protection for whistleblowers.

The director of the Brazil Council evaluates that issues such as the devalued real, high inflation, and energy prices should be adjusted in the short and medium-term, but that the Brazilian position on environmental issues will continue to be relevant to trade relations for much longer.

Alberto Ramos, director of the economic research group for Latin America at Goldman Sachs, assesses that the current scenario in these areas is more nebulous.

“Progress on structural reforms and efforts for much-needed fiscal consolidation has been slow and sometimes erratic. And the durability and strength of some key fiscal anchors, including the spending cap, have been increasingly questioned. Overall, fiscal risks remain high, and this puts pressure on long-term interest rates,” Ramos said in a virtual debate with Central Bank President Roberto Campos Neto.

Ramos also highlighted that the country had reached double-digit inflation, soaring energy prices, the risk of rationing, and political uncertainties. “We have a very complex election ahead of us, with an uncertain outcome and a lack of clarity about policy directions after it. And this uncertainty will not be solved soon, since the election is more than a year away,” he evaluated.

Despite the uncertain scenario, foreign trade between the USA and Brazil is at a historic high, according to data from Amcham (Brazilian-American Chamber of Commerce) released last week. Between January and September, US$49.6 billion were exchanged, the highest volume ever recorded in the period since 1997, when the entity’s Trade Monitor was created.

Brazilian exports to the United States totaled US$22.3 billion in the period, which represents 47.1% more than in the same period last year. Steel products, fuels, aircraft, and wood stood out in sales. The amount destined to the USA represents 10.4% of the total Brazilian exports to the world.

Brazilian imports from the United States reached an unprecedented US$27.3 billion, 29.8% in relation to 2020. Purchases of natural gas and health products, such as vaccines, intensified the increase.

Although the US is trying to regain its lost position in Brazil, it cannot keep up with China. Trade between Brazil and China surpassed the 2020 record in the first nine months of this year, totaling US$100 billion, and bilateral trade is expected to reach a total of US$108 billion in 2021.