U.S. Has Concerns Over Brazilian Trade Deal Framework, says Chancellor Araújo

RIO DE JANEIRO, BRAZIL – After a one-hour meeting on Thursday, September 12th, with the head of the United States Trade Representative (USTR) at its headquarters, Minister Ernesto Araújo (Foreign Relations) said that the Trump administration still has questions over the design of the trade agreement it intends to sign with Brazil.

According to the Chancellor, the US is not sure whether it is more beneficial to negotiate with the country individually or within the Mercosur bloc and that, until this scope is defined, only trade facilitation measures – which do not necessarily involve tariffs – will be announced.

“We reiterate our conviction that we want to hold a negotiation and its scope; the US itself sometimes has its doubts about whether it is better to negotiate as a customs union or as individual countries. This is not decided,” said Araújo after meeting Robert Lighthizer, who heads the USTR.

The Brazilian government feels that, if it involves tariffs, the agreement with the Americans must occur in tandem with Mercosur, since Brazil is part of the customs union. Araújo said that the country will follow the rules, but that the South American bloc has already signaled that it can relax them according to each case.

“We want some kind of agreement where we have Brazil. If it is Mercosur, it will be partly Brazil anyway. At the moment, we remain with the Mercosur rule, of joint negotiation, but also a rule that, within Mercosur itself, can be made more flexible”.

Hours after the meetings with members of the US government, Araújo again talked to journalists and said that it is “very close to handing over the terms of a strong agreement”. However, he considered that tariff reductions, for instance, depend on broader trade negotiations between the two countries.

“Our plan, and I think their [US] plan too, is to have the tools to discuss tariffs as well, that would have to wait for the framework of a broader agreement,” the Chancellor said.

According to newspaper Folha de S.Paulo, the trade agreement between Brazil and the U.S. will not include the complete elimination of tariffs and the Brazilian delegation’s trip to Washington this week served to discuss, among other issues, measures to simplify business, a move regarded as a step before the formal opening of negotiations for a more comprehensive trade agreement between the countries.

The conclusion is that good cooperation between Jair Bolsonaro and Trump will not be enough to break down historical barriers.

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