Cablegate: Brazil's Trade Strategy Post-Doha: Fiesp's Position

VZCZCXRO7908
RR RUEHRG
DE RUEHSO #0454 2381030
ZNR UUUUU ZZH
R 251030Z AUG 08 ZDK
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 8476
INFO RUEHBR/AMEMBASSY BRASILIA 9612
RUEHRG/AMCONSUL RECIFE 4177
RUEHRI/AMCONSUL RIO DE JANEIRO 8820
RUEHBU/AMEMBASSY BUENOS AIRES 3236
RUEHAC/AMEMBASSY ASUNCION 3483
RUEHMN/AMEMBASSY MONTEVIDEO 2761
RUEHSG/AMEMBASSY SANTIAGO 2483
RUEHLP/AMEMBASSY LA PAZ 3895
RUCPDOC/USDOC WASHDC 3154
RUEATRS/DEPT OF TREASURY WASHDC
RHMFIUU/DEPT OF ENERGY WASHDC
RUEHRC/USDA FAS WASHDC 0743
RHEHNSC/NATIONAL SECURITY COUNCIL WASHDC

UNCLAS SAO PAULO 000454

SIPDIS
SENSITIVE

STATE PASS USTR FOR KDUCKWORTH

E.O. 12958: N/A
TAGS: ETRD ECON PREL BR
SUBJECT: BRAZIL'S TRADE STRATEGY POST-DOHA: FIESP's POSITION

1. (SBU) In an August 21 meeting between Ambassador Sobel and Mario
Marconini (strictly protect), Director for International
Negotiations at FIESP (Sao Paulo Federation of Industries),
Marconini provided his insights into Brazil's negotiating position
during the last round of Doha trade negotiations, his views on the
path ahead, and FIESP's future strategy for engaging the GOB on
trade issues. The meeting with Marconini followed the Ambassador's
discussions the day before with the Executive Secretary of the GOB's
inter-ministerial foreign trade secretariat (CAMEX) on the
possibility of pursuing 4 plus 1 conversations on trade with the
U.S. (septel).

2. (SBU) Marconini told the Ambassador that FIESP will actively
engage the government of Brazil (GOB) on trade policy in this new
post-Doha era. Despite past tension between FIESP and the GOB,
Marconini was optimistic that the GOB would be receptive to FIESP's
engagement after FIESP allied with the GOB in Geneva while other
Brazilian private sector participants (led by the automotive sector)
teamed up with the Indians and South Africans. To begin, FIESP is
preparing a "white book" that closely evaluates by sector all the
potential trade deals on the table. The purpose is to provide the
GOB with real data and to empirically position FIESP in favor of
deals that are not trade diverting. Marconini predicted that the
GOB would initially re-focus attention on negotiating a Mercosul/EU
deal, which was almost completed in 2004 before falling apart over
services, intellectual property, and the automotive industry.

3. (SBU) Noting that the U.S. remains Brazil's most important trade
partner, the Ambassador sought Marconini's views on potential
negotiations with the U.S., either bilaterally or via Mercosul.
Marconini said that FIESP would take a pragmatic approach on this
and other options going forward. FIESP would in principal be in
favor of pursuing 4 plus 1 conversations (but noted that 5 plus 1 is
the political reality with Venezuela nominally in the mix), while
not insisting that negotiations take place via Mercosul. "We will
not take such a clear public position on this. We'll be pragmatic
and look at it on a case-by-case basis. If Mercosul doesn't want a
FTA with the U.S., we'll have to see how to proceed without
Mercosul. We have to be flexible as we proceed." Marconini
admitted that the GOB is likely to look more favorably on
negotiations with the U.S. now that Doha has stalled. (Note: While
the GOB continues to actively lobby India to reconsider its Doha
position, Marconini noted that no progress is being made on this
front. End Note.) However, he also noted that negotiations would be
tough: "the U.S. market is viewed as extremely competitive to
Brazilians." Marconini suggested that FIESP could be helpful in
selling the benefits of an eventual trade deal with the U.S to the
GOB. (NOTE: FIESP is Brazil's most powerful industry association.
Their membership represents over 30 percent of the country's GDP.
END NOTE)

4. (SBU) COMMENT: Marconini's cautious optimism that the GOB may be
entering an era of enhanced pragmatism vis-`-vis international trade
negotiations echoes the sentiment Post is hearing from other
interlocutors. Contacts have consistently criticized the GOB's
previous strategy of tying all hopes to Doha and to the interests of
the other members of the G-20. After Brazil's position diverted
radically and publically from Argentina, China, India and South
Africa in the final moments of the recent Doha negotiations, Brazil
appears increasingly likely to revamp its strategy. While it
remains to be seen where the GOB will focus its attention, there
does appear to be renewed interest in engaging with the U.S.
FIESP's view is that this could be a good moment for the U.S. and
Brazil to engage bilaterally and find renewed common ground.
Marconini suggested that resolving emerging divisions on the
biofuels front (to include the U.S. tariff on imported ethanol)
could be a very important aspect of the process.

5. (SBU) This cable has been cleared by Ambassador Sobel.

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