July 31, 2019 / 10:23 PM / 21 days ago

Brazil kicks off complex U.S. trade deal talks

BRASILIA (Reuters) - Brazil has begun negotiating a trade agreement with the United States, the South American country’s economy minister said on Wednesday, kicking off knotty talks between longstanding competitors whose leaders want closer commercial ties.

U.S. Commerce Secretary Wilbur Ross arrives to a meeting with Brazil's Economy Minister Paulo Guedes (not pictured) at the Ministry of Economy building in Brasilia, Brazil July 31, 2019. REUTERS/Adriano Machado

Speaking in Brasilia after meeting with U.S. Commerce Secretary Wilbur Ross, Economy Minister Paulo Guedes said the United States was eager for a deal and the chance to sell Latin America’s largest economy more goods, including ethanol.

Brazil and the United States compete in key areas like agriculture, making it likely the trade talks will be fraught and long-lasting. Brazil is also part of South America’s Mercosur customs union, which would have to be involved in any tariff reductions.

Yet far-right President Jair Bolsonaro, along with Guedes and his team, have pledged to bring down trade barriers, open up the economy and make Brazilian business more competitive.

Since his election last year, Bolsonaro has sought to build close ties with U.S. leader Donald Trump, an ideological ally who favors bilateral commercial pacts over multilateral deals.

After meeting with Ross, Bolsonaro echoed his concerns over potential “pitfalls” in a trade deal recently struck between the European Union and the Mercosur bloc that includes Argentina, Uruguay and Paraguay.

On Tuesday, Ross said the trade deal between Mercosur and the European Union, reached in principle last month, should avoid “poison pills” that would obstruct a possible U.S. accord.

Marcos Troyjo, Brazil’s deputy economy minister for foreign trade, said it would be possible to negotiate a trade accord with the United States that does not include changes to tariffs, adding that negotiations will begin with non-tariff areas.

Brazil is considering renewing in September a zero-tariff quota for 600,000 tonnes of ethanol imports per year that has been filled almost entirely by U.S. supplies, Troyjo said.

Brazil is also committed to establishing an import quota for 750,000 tonnes of U.S. wheat a year without tariffs, he said.

Ross on Tuesday reaffirmed U.S. support for Brazil to join the Paris-based Organisation for Economic Cooperation and Development, a club of the world’s leading market economies. Membership in the OECD would give Brazil a seal of approval that many institutional investors need to invest in the country, Troyjo said.

Reporting by Anthony Boadle; writing by Gabriel Stargardter; editing by David Gregorio and Tom Brown

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