Brasília – President Jair Bolsonaro will visit the United States on March 19 and, among other initiatives, should present to President Donald Trump the opening of “exploratory talks” for a free trade agreement between Brazil and the United States. The possibility of preliminary contacts related to a future free trade agreement between Brazil and the biggest economic power on the planet was received with great optimism by Carlo Barbieri, president of the Oxford Group, one of the main Brazilian consultants operating in the American market.

Carlo Barbieri said that he considers the willingness of President Jair Bolsonaro to announce his interest in the beginning of these negotiations to be auspicious: “this is a complex negotiation process and it is important to start it as soon as possible. The negotiations of the agreement themselves may be preceded by less complex negotiations in the sense of promoting trade liberalization and facilitation, in addition to other initiatives that in recent years have started to be implemented by the two governments”.

ED visa, an advance

CEO of the most renowned Brazilian business group that works, among other areas, in support of Brazilian companies interested in establishing themselves in the United States, Carlo Barbieri highlights that if Brazil and the United States conclude a free trade agreement, “it is important to emphasize that this agreement will have great and positive effects on immigration between the two countries, facilitating the entry of companies from one country into the other and also contributing to the reciprocal attraction of investments. With the agreement, Brazil will have access to the E2 visa, to which even small countries like Paraguay and Grenada already have access. This is a right that the American government guarantees to countries with which they have already signed a free trade agreement”.

According to Carlo Barbieri, “the E2 visa mainly benefits small and medium-sized companies as it requires investments between US$100,000 and US$150,000, against the US$500,000 required for entrepreneurs who apply for the EB5 visa”.

urgent reforms

In his analysis of relations between Brazil and the United States, less than a month after President Jair Bolsonaro’s visit to Washington, Carlo Barbieri recalls that “Brazil lived almost two decades of retrograde and negative politics during the Party’s governments. Workers and also under the command of Michel Temer, and this scenario needs to change. For this to happen, it is important that the government is able to implement the crucial reforms that the country so much needs, in the social security and tax areas, among others. In addition, it is essential that the country finally manages to reduce the burden of the so-called Brazil Cost. In short, Brazil needs to do its homework. Without the reduction of bureaucracy, the unlocking of the logistical knot and the modernization of the industry, Brazil will not be able to increase its competitiveness in international trade by adding, above all, manufactured products to its export agenda”.

Export of manufactured goods

Based on the experience accumulated during decades of operations in the United States, Carlo Barbieri emphasizes that “Brazil should better exploit the gigantic opportunities offered by the American market. Business opportunities involving, above all, manufactured products, with greater added value. But to access this market under competitive conditions, Brazilian industry must reach a greater degree of technological development and be able to produce products with the quality demanded by a demanding and sophisticated market such as the American market”.

In Carlo Barbieri’s assessment, the drop in the flow of trade between Brazil and the United States is an issue that should be placed as one of the main priorities of the governments in Brasília and Washington.

According to him, “it is important to remember that a few years ago, even without the existence of a bilateral free trade agreement, until recently, the United States was the final destination for 25% of all the volume exported by Brazil. Last year that percentage dropped to just 12%. Likewise, in 2000, eight out of every ten products exported by Brazil to the American market were industrialized products and last year there were only six. During this same period, the share of manufactured goods in the export basket dropped from 59% to just 36%, while sales of commodities doubled, from 25% in 2000 to 50% last year. It is necessary to reverse this trend and add added value to the bilateral export agenda”.

Dear Barbieri says that Brazil should follow the example set by Chile: “the Andean country negotiated a free trade agreement with the United States and after signing the document, Chileans practically quadrupled their exports to the United States in a short period of time. Brazil is fully capable of achieving a similar result”.

Flexibility of Mercosur

The experienced executive recognizes that before starting a formal process of negotiations with the United States, Brazil needs to find a solution to a problem within the scope of its geopolitical and economic-commercial influence: to convince the governments of Argentina, Paraguay and Uruguay, partners of Brazil in Mercosur, to make the rules of the Common Market of the Southern Cone more flexible. It is necessary to make the Mercosur rules more flexible, making it possible for the members of the bloc to sign individual free trade agreements with countries of their interest. In my opinion, if it does not manage to make Mercosur’s rules more flexible, Brazil will have no alternative but to withdraw from the bloc”.

The Oxford Group CEO stresses that “under Donald Trump’s government, the United States is practically abandoning global international trade agreements and what prevails now are bilateral agreements, which have come to dominate international trade and will dominate much more from now on in against. In multilateral agreements, it loses that it has more and President Trump saw this and started to privilege the negotiation of bilateral agreements, through which the United States has much greater bargaining power”.