Cablegate: Ambassador Sobel's Meeting with the Senate Foreign

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UNCLAS SECTION 01 OF 02 BRASILIA 002062

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ETRD BR
SUBJECT: Ambassador Sobel's meeting with the Senate Foreign
Relations and National Defense Committee

1. (SBU) Summary. Members of the Senate Foreign Relations and
National Defense Committee told Ambassador Sobel in a closed,
informal meeting on October 16 of concerns about a possible
U.S.-Brazil tax treaty, fears of Venezuelan aggression, support for
the Doha Round, and hopes for sustainable development in the Amazon
region. The Ambassador was warmly received with praise for his
outreach to Congress and efforts to improve the bilateral political
and commercial relationship. Mission will follow up on senators'
concerns on a tax treaty, and Ambassador Sobel plans to meet with
the committee for another informal discussion in a few months. End
summary.

Tax Treaty
----------

2. (SBU) Senator Francisco Dornelles, a former finance minister,
industry, commerce and trade minister, and labor minister, stated
Brazil's tax treaty with the European Union allows EU firms' profits
to be taxed only in Brazil, unlike the U.S. proposal for bilateral
tax treaty, and for that reason opposes our proposal. In his view,
a Brazil-U.S. tax treaty would harm Brazil's north and northeast
states and upset Brazil's regional policies. He agreed to meet with
embassy officers and Ambassador Sobel to discuss the matter further.
Senator Sergio Guerra said it was important to continue the
discussion and pledged his full support for a bilateral tax treaty
if the Ambassador engages in a dialogue on the Dornelles's points.
(Note: Dornelles does not represent of a majority of the Senate,
according to Economics Committee Chairman Aloizio Mercadante.
Septel forthcoming.)

Trade
-----

3. (SBU) The Doha Round is important for a new leap forward and
there are great expectations for its advancement, Senator Joao
Tenorio said, and the Ambassador has fostered more bilateral
contacts in agriculture and agribusiness, which are especially
important to Brazil, particularly biofuels. Senator Tenorio also
congratulated Ambassador Sobel for his work to improve the
commercial relationship. Senator Arthur Virgilio declared his
support for the Free Trade Area of the Americas, noting that Brazil
has not helped Mercosul become a consolidated body, and dismissed
charges that FTAA would be bad for Latin America. Referring to "the
close relationship between Brazil and the U.S.," Virgilio urged the
U.S. to be "more proactive," and urged Brazil to be "more
pragmatic," especially so as "not to let Doha die."

Amazonia
--------

4. (SBU) Senator Flexa Ribeiro noted that the U.S. once had a
consulate in Para, but now has only a consular agency, and he would
like to see relations improve, presumably including a U.S. consulate
in Belem. He further suggested the USG and Brazil exchange views on
the Amazon more often so as to promote its development while
protecting it from environmental harm. He said the region has ten
percent of Brazil's population but sixty percent of its territory.
Ambassador Sobel noted that he would be speaking soon with
Environment Minister Marina Silva about the upcoming visit of the
U.S. Forest Service director, and that the USG is interested in
helping Brazil preserve its forests.

Venezuela
---------

5. (SBU) Senator Virgilio expressed a concern that Venezuela could
attack Guyana, Brazil, or Colombia because President Hugo Chavez
"first smashes things up, creates an arms race, and then attacks a
neighbor." (Note: We have heard similar views from other Brazilian
leaders in recent months. End note.) Senator Fortes said the U.S.
should concern itself with all of South American, not only
Venezuela.

6. (SBU) Comment: Senators clearly were appreciative of the
Ambassador's effort to reach out, and took seriously the opportunity
to engage. Ambassador Sobel plans to return to the committee soon
for another informal conversation.

Participants
------------

BRASILIA 00002062 002 OF 002

7. U.S.

Ambassador Sobel
Stephen Liston, political counselor
Peter Tinsley, deputy political counselor
Dale Prince, political officer (notetaker

Brazil

Heraclito Fortes, chairman (DEM, Democrats, opposition, Piaui)

Rosalba Ciarlini (DEM, Democrats, opposition, Rio Grande do Norte)

Gerson Camata (PMDB, Brazilian Democratic Movement Party, government
coalition, Espirito Santo)

Francisco Dornelles (PP, Progressive Party, governing coalition, Rio
de Janeiro

Sergio Guerra (PSDB, Brazilian Social Democracy Party, opposition,
Pernambuco)

Arthur Virgilio, leader of the PSDB in the Senate (PSDB, Brazilian
Social Democracy Party, opposition, Amazonas)

Joao Tenorio (PSDB, Brazilian Social Democracy Party, opposition,
Alagoas)

Flexa Ribeiro (PSDB, Brazilian Social Democracy Party, opposition,
Para)

Cicero Lucena (PSDB, Brazilian Social Democracy Party, opposition,
Paraiba)

Marconi Perillo (PSDB, Brazilian Social Democracy Party, opposition,
Goias)

Romeu Tuma (PTB, Brazilian Labor Party, governing coalition, Sao
Paulo)

Serys Shlessarenko (PT, Workers Party, governing coalition, Mato
Grosso)

Inacio Arruda (PCdoB, Communist Party of Brazil, governing
coalition, Ceara)

SOBEL

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