Economic Synergy: US-Brazil Policy Collaborations

 Brazil has a GDP of $1.8 trillion and a GDP per capita of $8,717 in 2019. It is the ninth-largest economy in the world and the fifth-largest country in the world.16 More than half of GDP comes from services. Industry and agriculture come in next. About a third of GDP comes from agribusiness, which includes both raw materials and finished goods. This is why Brazil puts so much stress on agricultural policies in trade talks. Sugar cane, oranges, coffee, soybeans, beef, chicken, and corn are just some of the things that Brazil grows in big amounts. Brazil makes the ninth most oil in the world and the most in South America. Aside from that, it makes a lot of steel, chemicals, cars, planes, and auto parts. But compared to other traders in the world, it is still a pretty small one. 

Brazil's second-largest single-country trade partner in 2019 was the United States 

For a lot of the 20th century, Brazil and other Latin American countries used a method for industrialization called "import-substitution industrialization" (ISI) to focus on making their own goods instead of importing them. To help its industries grow, Brazil set up government-backed or state-owned businesses (SOEs) and kept them safe from foreign competitors. A lot of these are still in use, though some have been sold to private companies. Some of these are the National Steel Company, which was founded in 1942, the National Bank for Economic and Social Development (BNDES), which was founded in 1952, Petrobras, which is the national oil company and was founded in 1953, and Embraer, which is a major aircraft manufacturer and was founded in 1969. BNDES was a key part of Brazil's ISI policies; it provided money for critical industries and public infrastructure. Because of the way Brazil's banking system is set up, it is still an important way for businesses to get long-term loans. For decades, Brazil's industrial strategy had important effects, but they came with known downsides. Its strategy of growth based on imports protected domestic businesses from competition from around the world, but it also made it harder for the market to push for new ideas and better efficiency. 

The trade strategy was mostly "administrated protectionism."

A big government structure and other rules made things less efficient and raised the cost of doing business. In Brazil, attempts to privatize in the 1990s made things more competitive, but corruption, bribery, complicated rules, and an old and inefficient tax code are still big problems. These problems hurt Brazil's productivity and investor appeal, and they also hurt trade liberalization indirectly. Up until recently, though, protecting this regulatory regime and its national production structure had been a big part of Brazil's trade strategy. It did this both on its own and with other countries in the area as it tried to gain more power in Latin America and around the world. Brazil is a leader in the region in large part because it pushed for South American economic integration, supported multilateral talks with conditions, and didn't rush into separate trade deals with developed countries. When MERCOSUR, a trade agreement between Argentina, Paraguay, and Uruguay, was formed in 1991, it made Brazil even more of an economic hub in the region (see section on "MERCOSUR"). With a high common external tariff (CET) and many nontariff barriers (NTBs), MERCOSUR has mostly stayed defensive. These have kept the area safe from competition, mostly from the US and Europe. In the past, Brazil has tried to bring South America together and lessen the economic impact of the United States in the area. Also, Brazil was very important in bringing together other developing countries into a strong group within the WTO during the Doha Round of multilateral trade talks that started in 2001 and after they ended. For more information on Brazil's membership in the WTO, see the section on "World Trade Organization (WTO)." Brazil has been a strong voice in favor of lowering agricultural tariffs in developed countries and against calls for easier entry to the industrial and service sectors of developing countries.

As part of MERCOSUR, Brazil has made trade deals with many other countries

This is in addition to representing developing countries in global and regional trade talks. In October 2020, Brazil, the US, and Japan all agreed at the WTO that "market-oriented conditions are fundamental to a free, fair, and mutually advantageous world trading system, to ensure a level playing field for Members' enterprises for the benefit of their citizens." This was part of Brazil's plan to open up its economy. As part of its plan to improve Brazil's industrial sector, the Bolsonaro Administration has also lowered the number of rules that businesses have to follow and used MERCOSUR rules to lower tariffs on over 2,300 items, such as some drugs, medical equipment, and heavy machinery.29 The President has also promised to change BNDES, the pension system, some state-owned enterprises (SOEs), and government assets.