Cablegate: Brazil: Trade, Taxes and Investment - Camex Lytha Spindola

DE RUEHBR #1128/01 2381645
R 251645Z AUG 08



E.O. 12958:N/A
SUBJECT: BRAZIL: Trade, Taxes and Investment - CAMEX Lytha Spindola
and Ambassador meeting August 20


1. (SBU) SUMMARY: In a meeting August 20 between Ambassador Sobel
and CAMEX (see para 7) Executive Secretary Lytha Spindola, Spindola
hinted strongly that MRE is becoming extremely interested in
pursuing 4 plus 1 conversations on trade with the United States.
She expressed optimism that forward movement on both the TIEA and
the tax treaty negotiations would be possible once the current
political atmosphere on information exchange calms down in the
press. Spindola will be in Washington September 3 and 4 to
participate in an MRE-led delegation examining non-tariff measures
in meetings with USG agencies. END SUMMARY.
2. (SBU) Making clear she was speaking informally, Spindola
indicated that, after expected Doha Round meetings in September, GOB
will resume thinking about trade agreements and the focus will turn
to extra-regional agreements. She signaled MRE is considering
proposing taking up the 4 plus 1 process again. She emphasized that
Amorim will be very interested in the extra-regional agenda. (NOTE:
See reftel. In the Ambassador's meeting August 21 with Mario
Marconini, International Negotiations Director for FIESP, Marconini
commented that 4 plus 1 would be 5 plus 1 (Venezuela) and that GOB
would be more likely to put more energy into EU negotiations. END
NOTE). Spindola indicated she is assembling a recommendation list
for which countries to engage. She will propose to Ministers at the
August 28 CAMEX meeting that they put this issue on a near-term
CAMEX agenda. Spindola strongly encouraged the Ambassador to reach
out to FM Amorim to discuss further. She reminded the Ambassador
that MDIC, Finance and External Relations Ministers are the
"triumvirate" needed to secure CAMEX agreement on important issues.
3. (SBU) Spindola acknowledged the flurry of recent press
highlighting opposition from Congress members, lawyers, and some in
the private sector to information exchange under the Tax Informaiton
Exchange Agreement (TIEA) with the United States. She believed that
once the negative press on both the TIEA and on the July 31
appointment of Lina Vieira as head of the Receita Federal (Brazilian
IRS) calms down, progress on achieving congressional ratification of
the TIEA and substantive BTT negotiations will be possible. (NOTE -
the press has reported negatively on Vieira's appointment, casting
aspersions on both her technical expertise and her close
relationship with Finance Ministry policymakers, questioning both
her independence and her ability to do her job. Vieira has been a
civil servant for thirty six years serving with state and federal
tax authorities. Post impression to date is she is deeply
knowledgeable on tax issues and fully recognizant of political
dynamics within her government. Spindola and Vieira are reportedly
close friends. END NOTE).
4. (SBU) Spindola summarized that she is "very optimistic" about the
future US-Brazil economic cooperation relationship. She believes
the 4 plus 1 process on trade could be re-launched, that progress on
completing a bilateral tax treaty will be possible, and (reminding
that CAMEX agreed to guidance to prioritize negotiating investment
agreements with countries with which Brazil is negotiating "FTAs"),
that progress toward an investment agreement could also be possible
in the near future. (COMMENT: The "FTAs" Brazil is currently
negotiating together with its Mercosul partners in general fall
short of the US definition of a Free Trade Agreement. Similarly,
CAMEX agreed guidelines for negotiating investment agreements appear
to fall short of US BIT standards. END COMMENT).
5. (U) Spindola will join a MRE-led delegation September 3 and 4
that will meet with FDA and other USG agencies in Washington to
discuss non-tariff measures. She is particularly interested in the
delegation's intention to explore USG risk assessment and risk
management practices. Her interest arises from her role supporting
CAMEX's trade facilitation agenda.
6. (SBU) COMMENT: The Ambassador found Spindola's signal that Brazil
may soon be interested in resuming four plus one trade discussions
very intriguing. He intends to seek a meeting with FM Amorim as
soon as possible to explore the Minister's thinking further. The
Ambassador was similarly encouraged by Spindola's optimism that the
tax and investment agenda with the United States might soon be in a
position to make progress. He intends to follow up with Spindola
after the August 28 CAMEX meeting. Spindola reportedly enjoys a
close relationship with MDIC Minister Miguel Jorge and with some
within Fazenda and is now better positioned in her relationship with
Receita Federal. Her position permits her access to the internal
deliberations of Ministers on trade-related issues, and as the
person responsible for coordinating their meetings, she has some
ability to help shape the agenda. END COMMENT.
7. (U) REMINDER NOTE: As previously reported, CAMEX (the External
Trade Chamber) is in some ways comparable to the USG TPSC/TPRG/Econ
Deputies/Econ Principals process. Membership is composed of MDIC
(Commerce Ministry, the Chair), Casa Civil (President's staff), MRE
(Foreign Relations Ministry), Finance, Agriculture, Planning, and
Agriculture Development Ministries. CAMEX has an Executive
Secretariat, and Lytha Spindola is the Executive Secretary. CAMEX
work is done in working groups progressively up through a Council of
Ministers that takes decisions. While the TPRG process is a good
comparison, CAMEX has a broader mandate, with responsibility for
decisions on: trade defense measures; trade facilitation; common

BRASILIA 00001128 002 OF 002

external tariff changes decisions; export guarantees; international
negotiations; and trade security. That is, CAMEX does everything
from approving anti-dumping cases to green-lighting MRE's proposed
WTO negotiating positions to setting tariff rates. Like our system,
some issues are "easy" and never rise to political level for debate
while others receive high-level engagement. END NOTE

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