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Cablegate: Minister of Industry and Commerce Discusses Possible

VZCZCXRO7091
RR RUEHRG
DE RUEHRI #0089/01 1051443
ZNR UUUUU ZZH
R 141443Z APR 08
FM AMCONSUL RIO DE JANEIRO
TO RUEHC/SECSTATE WASHDC 4434
INFO RUEHBR/AMEMBASSY BRASILIA 0777
RUEHSO/AMCONSUL SAO PAULO 5141
RUEHRG/AMCONSUL RECIFE 3419
RUEHAC/AMEMBASSY ASUNCION 0339

UNCLAS SECTION 01 OF 02 RIO DE JANEIRO 000089

SIPDIS

USDOC WASHDC
SIPDIS

SENSITIVE

STATE PASS NSC FOR MICHAEL SMART/GARY TOMASULO
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSON/ADRISCOLL/MWAR D

E.O. 12958: N/A
TAGS: ETRD ECIN EINV EAIR CMGT CVIS PGOV PREL BR
SUBJECT: Minister of Industry and Commerce Discusses Possible
Deliverables for U.S.-Brazil CEO Forum

This cable is sensitive but unclassified, please protect
accordingly.

1. (SBU) Summary: On April 8, 2008, Brazilian Minister of Industry
and Commerce Miguel Jorge and Ambassador Sobel discussed Minister
Jorge's upcoming visit to Washington DC for the CEO Forum Meeting at
the end of April. Ambassador Sobel stressed the importance of
showing concrete results from these meetings and suggested
deliverables in the areas of extending visa reciprocity to 10 years,
combining tourist and business visas, progress on Bilateral Tax and
Investment Treaties, and tourism and aviation agreements.
Ambassador also raised U.S. industry concerns over the proposed "Lei
de Sacoleiros" (small importers law). End Summary.


Next Steps on Possible Investment and Tax Treaties
--------------------------------------------- -----

2. (SBU) With the White House participating in the upcoming meeting
in April, Amb. Sobel argued the importance of having deliverables to
show the concrete results of the CEO Forum. He pushed for progress
on the Bilateral Tax Treaty (BTT) and international arbitration
under a Bilateral Investment Treaty (BIT), two specific
recommendations from the CEO Forum in Brasilia of October 2007. But
Minister Jorge expressed doubts about the ability to move forward on
either initiative.

3. (SBU) Min. Jorge noted concerns about a BIT being
unconstitutional based on an argument that no State can be governed
by private sector (i.e., outside the court system) dispute rulings
in Brazil. The Ambassador suggested that, as a first step, the U.S.
would need to review a draft BIT proposal from Brazil, and urged
Min. Jorge to weigh in with the Foreign Ministry to produce a draft
sooner rather than later. If the U.S. can get an initial working
draft to review, the Ambassador feels that the Bush Administration
can convince the U.S. Congress to support a BIT between our two
countries. For example, he noted, U.S. House Speaker Pelosi
believes that the time is right for a U.S.-Brazil BIT.

4. (SBU) Regarding a Bilateral Tax Treaty, Min. Jorge noted that
U.S. requirements for tax and banking information would make a BTT
very difficult, if not impossible. Brazil has issues with
collecting tax information since a judicial process is required,
according to Jorge. He conceded, however, that an amnesty bill was
pending which could resolve some of the challenges currently
associated with realizing a BTT.

Visa and Aviation Agreements Key to More Tourism
--------------------------------------------- ---

5. (SBU) Ambassador said that the U.S. would be willing to extend
the validity of B1 (work) and B2 (tourist) visas to ten years if
Brazil was willing to reciprocate. Citing that agreement on this
issue could be reached within the next two weeks, the Ambassador
also advocated for consolidation of the B1 and B2 visas. Minister
Jorge seemed amenable to the idea.

6. (SBU) On proposed changes to the aviation agreement, which would
allow more direct routes for U.S. carriers to northeastern Brazil,
Ambassador Sobel informed Minister Jorge that he had received State
Department approval to move forward. Ambassador Sobel pushed
Minister Jorge to continue the work of outgoing Minister of Tourism
Marta Suplicy, who is expected to resign soon, to promote more
tourism between the U.S. and Brazil.

Proposed "Lei de Sacoleiros" Could Lead to More Piracy
--------------------------------------------- ---------

7. (SBU) Ambassador Sobel raised U.S. information technology
industry concerns over a potential rise in piracy that could result
from proposed Brazilian legislation to place a flat tax on goods
coming to Brazil by land from Paraguay up to $250,000, allowing
exporters to self-declare what goods are being shipped. Minister
Jorge did not see any problems with the law, and seemed surprised
that U.S. companies would have a problem with it. While admitting
that there are political reasons behind supporting the law, Minister
Jorge asserted that it was meant to stop the flow of arms coming in
through Rio's ports. He did not agree with the argument that it
would result in increased piracy, and invited the U.S. government or
U.S. industry to present any compelling evidence to support its
claim.

RIO DE JAN 00000089 002 OF 002

8. This message was cleared/coordinated with Embassy Brasilia.

MARTINEZ

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