Gravity has always kept the United States and Brazil within close orbit, but the recent turbulence in their bilateral relations is cause for concern and an important challenge for their respective governments. Most scholars of U.S.-Brazil relations were surprised at the intensive presidential diplomacy carried out by former U.S. President George W. Bush and Brazilian President Luiz Inácio Lula da Silva. Today, more than a few are increasingly critical of the bilateral relationship under President Barack Obama’s administration.1 The bilateral agenda is ever more complex and both Presidents Obama and Lula are now accelerating efforts to deepen cooperation, but this hard work is too often frustrated, sidetracked, and even spoiled by a growing list of contentious issues. Although the sheer gravitational pull of people, trade, and investment draws these countries together, the breadth and complexity of the bilateral relationship now churns up greater turbulence than ever before.
Clearly Washington and Brasilia can cooperate when they can avoid or steer clear of turbulence. Last year the Obama administration announced a military cooperation agreement with Colombia without consulting Brazil, setting off a firestorm of Brazilian and South American condemnation against the White House and Pentagon. Yet, just months later U.S. Defense Secretary Robert Gates and Brazilian Defense Minister Nelson Jobim inked the first bilateral military cooperation accord in decades.3 The agreement is limited to facilitating greater exchanges between these nations’ armed forces, but it does illustrate the political will and diplomatic capacity to cooperate where and when possible. In May of 2010 the U.S. and Brazil convened the “Call to Action” conference of the U.S-Brazil Joint Action Plan to Eliminate Racial and Ethnic Discrimination and Promote Equality or JAPER, an ongoing effort to exchange experiences and best practices in an effort to end discrimination and racism.4 Of course, these inspired efforts to consolidate greater cooperation are juxtaposed to the ongoing and potentially bitter discord over the Iranian nuclear challenge and the future of the Nuclear Weapons Non-Proliferation Treaty or NPT. Members of the Obama administration have called into question President Lula’s efforts to broker a resolution to the conflict fueled by Iran’s nuclear program, verifying the greater than ever weight of this bilateral relationship and its potential for turbulent times ahead. Given the increasing geopolitical importance of the bilateral relationship, can the U.S. and Brazilian governments ride out such turbulence and jointly set course on expanding cooperation to confront such global issues as non-proliferation, global warming, terrorism, and trade; or will the new jumbo sized bilateral agenda fail to take off?
This article explores this question by offering an analysis of the underlying forces of gravity that keep these two nations within the same geopolitical orbit despite their different, and often divergent flight paths. The first section of this article describes and assesses several key structural linkages that bridge these two nations, including: immigration, remittances, trade, and foreign direct investment. This section reveals the increasing importance of the Brazilian immigrant community in the U.S. and the strategic, developmental nature of Brazil’s industrial exports to U.S. markets. The second section surveys the current bilateral turbulence by examining the WTO cotton case and the Iranian nuclear challenge as representative issues that reflect the growing international importance of the U.S. and Brazil dyad and reveal the divergent policy frames that can incite bilateral commotion.
The Forces of Gravity
Hirst is correct to conclude that Brazilians do not form a large immigrant community by comparative U.S. standards. However, their increasing numbers and geographic concentration in and around many of the United State’s most important urban centers now shape bilateral relations in ways unanticipated by either Almeida and Barbosa (2006) or Hirst (2005).
Hirst (2005) reports that 600,000 Brazilian resided in the U.S. during the first half of the decade, comprising only twenty five (25) percent of all Brazilian immigrants worldwide. These estimates are much less than those calculated by the Brazilian federal government whose methodology measures the large influx of Brazilians who overstayed their visas or crossed U.S. borders to obtain work or join family members residing in the U.S in recent years. The Brazilian government estimates that over three million Brazilians lived abroad in 2008.8 Those living in the U.S. amounted to forty two (42) percent of all Brazilian immigrants and numbered 1.28 million. Taken together, Brazilians who resided in the other leading recipient countries, including Paraguay, Japan, the United Kingdom, Portugal, and Spain in 2008, composed only 23.5 percent of Brazilian immigrants. While the numbers of Brazilians emigrating have probably receded in recent years due to the global financial downturn and Brazil’s quick recovery;9 the eventual expansion of the U.S. economy is likely to invite further Brazilian emigration for work and family reunification.
Indeed, as Hirst (2005) indicates, Brazilians residing in the U.S. have created new pressures upon Brazil’s U.S. based consulates and the Foreign Ministry (or Itamaraty as it is called). There are significant concentrations of Brazilian immigrant communities in Boston, Miami, and New York with secondary, but growing communities in Atlanta, Houston, Los Angeles, and San Francisco. Approximately 700,000 Brazilians work and live in the Boston and New York areas alone.10 The state of Florida has the largest trade flows with Brazil and over 300,000 Brazilians live in the Miami area with other significant communities in Orlando and Tampa Bay. Increasingly, Brazilian immigrant communities and representative social organizations, such as the Brazilian Immigrant Center11 in Boston, are working through consulates, the Foreign Ministry, local elected officials, and Brazilian congressional representatives to advance their distinct interests and policy preferences in both the U.S. and Brazil. In this sense, Hirst (2005) underestimates how immigrant based social networking can quickly escalate into community organizing, political organization, and eventually concerted activity to change government policies and programs in both countries.
Brazilian emigration to the U.S. is also accompanied by growing remittances to family members and business associates in Brazil. By 2004 remittances from the U.S. to Brazil accounted for 50 percent of all remittances received by Brazilians.16 According to the Bendixen and Associates report, 1.3 million Brazilians received remittances from relatives or friends living abroad in 2004, totaling $5.4 billion or nearly one percent of Brazil’s Gross National Product (GNP). Although the Inter-American Development Bank (IDB) reports that remittances to Brazil have recently declined to $4.7 billion in 2009, it is likely that this fall in individual transfers is momentary.17 Although some Brazilians have returned home due to the economic downturn in the U.S. and Europe, it is likely that remittances from the U.S. to Brazil will continue to grow in tandem with the U.S. economic expansion and coupled to the broadening set of social and economic relations between the citizens and residents of both countries. While remittances to Brazil are much less important than those sent to other nations in the Americas, they do constitute the second largest transfer to Latin America and the Caribbean, next to Mexico.18 Indeed, if Brazilian emigration to the U.S. and remittances to Brazil are valid indicators, then the social relations between the populations of the U.S. and Brazil challenge government policymakers from both countries while providing a solid base for greater cooperation.
U.S.-Brazil trade activity rose dramatically from 2003 to 2008, falling off in 2009 when the U.S. recession was in full downward swing.19 From 2003 to 2008 U.S. exports to Brazil increased from $11.2 billion to nearly $32.3 billion, while Brazilian imports rose from nearly $18 billion to $30.4 billion during the same period. Trade balances shifted during the period as well, with Brazil registering a favorable bilateral balance of just over $9 billion in 2005 and the U.S. making up ground with a positive margin of over $6 billion in 2009 due in part to the contracting U.S. demand for Brazilian imports during the recession. By 2008, before the U.S. recession and global financial crisis pulled worldwide trade down by approximately 25 percent, U.S.-Brazil trade reached almost $63 billion dollars, an increase of 54 percent in only five years. China surpassed the U.S. as Brazil’s largest trading partner in 2009, largely an outcome of the U.S. recession and China’s growing demand for Brazilian export commodities. However, a vibrant U.S. economic recovery will renew the dynamic growth of bilateral trade in the coming years and reinforce the key role that Brazilian technology intensive exports play in national development.
A deeper analysis of U.S.-Brazil bilateral trade demonstrates the importance of technology intensive manufactures and capital goods, rather than a reliance on commodity driven trade. Of the nineteen leading U.S. exports to Brazil in 2008, those with volumes in excess of $500 million in value, only three, petroleum products, fuel oils and metallurgical grade coal are low value added commodities.20 Seventeen percent of U.S. exports to Brazil in 2008 were civilian aircraft. Other leading exports to Brazil include: chemicals, computer accessories, plastics, telecommunications equipment, chemical fertilizers, semi-conductors, pharmaceutical preparations, electrical and industrial machines, drilling and oilfield equipment, industrial engines, railway and excavating equipment; all intermediate industrial products and capital goods. These technology intensive products comprise over 60 percent of U.S. exports to Brazil, thereby providing a growing and reliable export market for high value added U.S. manufactures while making a strategic contribution to Brazil’s economic development.
On the other side of the ledger, Brazil’s exports to the U.S. are increasingly diversified across economic sectors. Energy products such as crude oil, other petroleum products, and ethanol comprise nearly 30 percent of all Brazilian exports to the U.S.21 Iron and steel products represent 11.4 percent and civilian aircraft make up another 7.3 percent of exports to the U.S. Medium to high technology goods, such as engines, engine parts, industrial engines, pumps, compressors, and generators, and auto parts comprise another 7.0 percent of Brazilian exports. Low value commodities, such as coffee or stone, are a shrinking portion of overall bilateral commerce while U.S. markets are likely to expand for Brazil’s energy and industrial products in the coming years. For Brazil, bilateral trade provides Brazilian enterprises the opportunity to further develop competitive advantages in high value added, technology intensive goods, such as Embraer regional aircraft whose production serves as one of the leading edges of Brazil’s economic modernization. Also, growing high tech trade provides greater incentives for expanding investment and technology transfer opportunities between the two nations and their private sectors. In this sense, the bilateral trading relationship is strategic, increasingly interdependent, and much more important to Brazil’s economic development than its respective commercial relations with either China or the European Union.22
Foreign Direct Investment
Expanding trade and investment also led Brazilian investors to raise their stakes in the U.S. economy. Brazilian FDI doubled between 2002 and 2005 before falling in tandem with the run up and deepening of the U.S. recession.24 While Brazilian FDI is still insignificant as a proportion of total FDI in the U.S., the rapid increase earlier in the decade indicates the potential for growth and is associated with the rapid expansion of bilateral trade during the same period.
The economic and social relations between U.S. and Brazilian citizens and enterprises are expanding through an increasingly complex and interdependent global economy. The sheer number of Brazilians residing in the U.S. and sharing family connections with a growing number of U.S. citizens necessarily challenges bilateral relations in new and complex ways. These social relations compel both governments to double up on efforts to engage in greater cooperation over the movement of people and money between the two nations. Also, the growing bilateral trade, and its critical importance to Brazilian economic development, amplify the number of economic and institutional linkages and deepen their impact upon governmental affairs and political leadership. The recent growth and future potential for increasing FDI, especially U.S. investments in an expanding array of high value, technology intensive productive activities in Brazil, multiplies the linkages between influential enterprises and promotes technology transfer. More trade, investment, and other types of firm and sector based linkages will challenge both governments to negotiate investment protections and reach agreement on a bilateral tax treaty. The gravity of bilateral relations, that is the increasing density in economic and social relations, places great pressure on both governments to minimize conflict and steer through the turbulence by recognizing asymmetries, recalibrating national policy positions, and engaging in recurrent and focused consultations to achieve agreement. Yet, while the forces of gravity expand the opportunities and need for greater cooperation, they also serve to intensify the bilateral relationship and aggravate points of contention and conflict.
In 2002 Brazil brought charges against U.S. marketing subsidies for domestic cotton growers to the WTO Dispute Settlement Panel and eventually won the case in 2005. Since the panel found in favor of Brazil, the U.S. has advanced successive appeals, while in 2008 a WTO Compliance panel found the U.S. had not complied with the 2005 ruling. In late 2009 Brazil began preparations to administer the WTO authorized retaliatory measures, and in early 2010 the U.S. Trade Representative and Secretaries of Agriculture and Commerce traveled to Brasilia to initiate negotiations to preempt the implementation of these measures. In April of 2010 the parties reached a tentative agreement that included the suspension of retaliatory measures in exchange for annual compensation of $147 million to be placed into a fund for Brazilian cotton producers among other provisions. Both governments are working to flesh out the details of this agreement while also recognizing that the ultimate solution lies within the Doha round of the WTO negotiations and the reauthorization of the U.S. Farm bill in 2012.
This case illustrates the power asymmetries and respective trade negotiating positions between the U.S. and Brazil as well as ensuing bilateral friction. The U.S. is one of the largest cotton exporters, in part a consequence of the more than generous federal government subsidies, including counter-cyclical payments and marketing loans, that boost domestic cotton production beyond purely market calculations, thereby depressing world cotton prices paid to more competitive producers. These government payments, conceived appropriately as private goods, distort the global marketplace, lower Brazilian cotton producers’ earnings, and create sufficient turbulence to jeopardize bilateral cooperation on matters of trade and development in multilateral arenas such as the WTO’s Doha Round. Hence, the cotton case reflects, and U.S. subsidies reproduce, the developmental disparities that frame the divergent policy approaches followed by the Obama and Lula administrations and the resulting turbulence. Brazil’s victory at the WTO challenges the U.S. Congress and its willingness to abide by international trade law. Moreover, Brazil’s position effectively highlights the major rift between the “West and the rest,” reinforcing the Lula government’s expanding leadership role in matters of trade and development around the world, and thereby framing the issue around polarity and global governance rather than just commercial conflict. Ironically, while this case has stirred up a lot of bilateral turbulence, it may also lead both governments to increase the intensity of consultations and reboot efforts to expand bilateral trade and find more overlapping positions in the Doha negotiations.
The Iranian nuclear challenge also demonstrates the divergent positions of both countries with respect to energy, collective security, and global governance. This turbulent issue provides Brazil with a unique historical opportunity to illustrate the defects of the NPT, play a constructive role in advancing the cause of non-proliferation, and consequently make its case for a permanent seat on a reformed United Nations Security Council. For the Obama administration, Brazil’s non-conformist approach to Iran sharply contrasts with its heralded “convergence thesis”27 and reminds policymakers that Brazil can no longer be taken for granted or neglected in matters of geopolitical import and issues brought before the UNSC. More than any other event in recent years, the turbulence unleashed by the Iranian nuclear challenge, serves notice on both governments that bilateral relations now play a novel and consequential role in shaping multilateral deliberations on international security and non-proliferation.
At the core of this contentious issue is the evolving polarity in the international system and how such change informs the diplomatic responses offered by Washington and Brasilia. Iran’s uranium enrichment program has probably achieved “breakout capability,” a necessary, but insufficient step toward the production of weapon grade uranium.28 According to a recent report of the Institute of Science and International Security, Iran continues to dodge full and transparent inspections of its nuclear program facilities by the International Atomic Energy Agency (IAEA) in contravention of its obligations as a signatory to the NPT.29 During the past year, the Lula government has engaged Iran on multiple fronts, including commercial relations and efforts to guarantee Iran’s right to develop nuclear energy. Iranian President Mahmoud Ahmadinejad traveled to Brasilia to meet with President Lula in November of 2009, just months after the questionable Iranian presidential election and amidst ongoing regime efforts to stamp out public protests of his self-declared victory. Brazil’s non-conformist, but essentially constructive diplomacy unfolded through a graduated set of ministerial meetings, culminating with President Lula’s visit to Tehran in May of 2010 to negotiate directly with President Ahmadinejad. The Prime Minister of Turkey, Recep Tayyip Erdo?an, joined the Brazilian delegation to triangulate an agreement with the Iranian regime that calls for a nuclear fuel swap, as originally proposed by the Vienna Group in 2009, but falls short of preventing Iran from developing or exercising a breakout capability. President Lula’s diplomatic gambit now serves to undermine the Obama administration’s efforts to approve a new set of sanctions against Iran in the UNSC where Turkey holds a non-permanent seat until the end of 2010 and Brazil sits until the end of 2011.
Brazil’s big league diplomacy with Iran unveils its global ambition to play a central role in matters of non-proliferation and global governance by grabbing the diplomatic limelight precisely as it assumes it non-permanent seat o the UNSC and in association with the NPT’s 2010 Review Conference. This turbulent issue also measures the distance between the U.S. and Brazilian positions, the former framed in large measure by domestic political considerations and the latter by a decidedly strategic initiative to rebalance global polarity and reform the institutions of global governance. Referring to his agreement with Turkey and Iran, President Lula argued,
“The deal is exactly what the United States wanted to do five months ago... As long as we have only one country wanting to solve this we will have no tranquility in the Middle East. If the UN continues like this we will have serious problems with global governance.”
A new round of sanctions against Iran or even Brazil’s agreement with the Tehran regime will not prevent Iran from producing weapons grade uranium, but the symbolic sparring between the U.S. and Brazilian governments (along with its partner Turkey) can be expected to deliver up a gust of turbulence in the coming months as Presidents Obama and Lula demonstrate divergent leadership positions on Iran and non-proliferation in general. Regardless of the outcome of this diplomatic duel, Brazil has made its principal point with the U.S. and scored a diplomatic goal for those suspicious of Washington’s policies in the Middle East and Central Asian regions.
These turbulent issues are representative of the increasing complexity of bilateral relations, largely driven by Brasilia’s non-conformist, but multilateral diplomacy aimed at changing the rules of global governance to lessen coercion and induce greater consent among “the rest.” This global diplomacy necessarily challenges U.S. power and influence, especially in those issue areas of greatest mutual concern, including trade and non-proliferation. However, the dense bilateral fabric of social, organizational, and economic relations does keep both countries buckled together in close orbit. Unfortunately, these relations may not be sufficient to avert the maximum risk of allowing contentious issues to swell and eventually rupture into divisive political conflict between the two national governments. Brazil’s rising power and unique global leadership role will continue to develop and shape global governance precisely as the U.S. leadership position faces mounting challenges abroad with fewer resources. Both governments are likely to stumble over the growing bilateral agenda, but it is critical that policymakers understand the full breadth of the social, organizational and economic relations shared by the two nations and work to develop and refine appropriate policies and programs to deepen these linkages even when the turbulence threatens to blow bilateral cooperation off course.
3. Zissis, Carin, “U.S.and Brazil Ink Military Pact.” Americas Society, April 9, 2010 and accessed at: http://www.as-coa.org/article.php?id=2280
4. See the U.S. State Department’s “U.S. and Brazil Collaborate on Racial Equality.” May 18, 2010 and accessed at: http://www.state.gov/r/pa/prs/ps/2010/05/141967.htm
5. See Paulo Roberto de Almeida and Rubens Antônio Barbosa, Relacoes Brasil-Estados Unidos: Assimetrias e Convergências, Sao Paulo: Editora Saraiva, 2006; for the most comprehensive analytical treatment of bilateral relations.
8. See Brasileiros no Mundo: Estimativas, Ministério das Relações Exteriores, Subsecretaria Geral das Comunidades Brasileiras no Exterior, Departamento Consular e de Brasileiros no Exterior, Divisão de Assistência Consular. 2009, second edition.
11.The Brazilian Immigrant Center’s website can be accessed at: http://www.braziliancenter.org/site/.
. 12. The California-Brazil Partnership website can be accessed at: http://www.sen.ca.gov/soir/Brazil/senate.htp.
13. For more on these events see Langevin, Mark S. “Bringing Civil Society into U.S.-Brazil Relations.” Silver City, NM: International Relations Center, February 7, 2006; and Rosita Milesi and Orlando Fantazini. “Cidadãs e Cidadãos Brasileiros no Exterior:: O Documento de Lisboa, a Carta de Boston e o Documento de Bruxelas.” Instituto Migrações e Direitos Humanos, 2008.
15. The website can be accessed at: http://www.brasileirosnomundo.mre.gov.br/pt-br/.
16. According to Bendixen and Associates, “Estudo sobre os Destinatários de Remessas no Brasil, Abril-Maio, 2004,” with data extracted from the 2004 Interamerican Development Bank’s study of remittances in Latin America.
17. Interamerican Development Bank. “The Changing Patterns of Remittances: 2008 Survey of Remittances from the United States to Latin America.” Washington, D.C. April, 2008:7. Also, Interamerican Dialogue, Migrant Remittances Newsletter. Vol.7, No. 1, April 2010:4.
18. Orozco, Manuel. “Remittances to Latin America and the Caribbean: Issues and perspectives on development.” A Report Commissioned by the Organization of American States, Washington, D.C., September 2004:4
22. Certainly Brazil’s trade with both China and the EU are important to the country’s trade balance and economic stability, but do not currently offer Brazil’s most competitive industrial companies sufficient opportunities to expand markets, operations, or further develop competitive advantages.
26. See Mark S. Langevin. “Brazil’s Big League Diplomacy.” Parts I and II at The Globalist, May 21 & 22, 2010 and accessed at: http://www.theglobalist.com/AuthorBiography.aspx?AuthorId=651 and http://www.theglobalist.com/StoryId.aspx?StoryId=8476.
See Gonzalo Baeza and Mark S. Langevin. ‘The Convergence We Need? President Obama and U. S. Policy in Latin America and the Caribbean.” American Diplomacy. March 31, 2009. Accessed at: http://www.unc.edu/depts/diplomat/item/2009/0103/comm/baezalangevin_convergence.html
See “Nuclear Iran: Not Inevitable.” Institute for Science and International Security. January 21, 2009. Accessed at: http://www.isis-online.org/uploads/isis-reports/documents/Nuclear_Iran_21Jan2009.pdf
See “Iran’s Proposed LEU deal: Skeptical but Awaiting Clarification.” Institute for Science and International Security. May 17, 2010. Accessed at: http://isis-online.org/isis-reports/detail/irans-proposed-leu-deal-skeptical-but-awaiting-clarification/