Brazil-U.S. Relations
Peter J. Meyer
Analyst in Latin American Affairs
Clare Ribando Seelke
Specialist in Latin American Affairs
August 18, 2009
Congressional Research Service
7-5700
www.crs.gov
RL33456
CRS Report for Congress
P
repared for Members and Committees of Congress
Brazil-U.S. Relations
Summary
On January 1, 2007, Luis Inácio Lula da Silva, of the leftist Workers’ Party (PT), was inaugurated
to a second four-year term as President of Brazil. Lula was re-elected in the second round of
voting with fairly broad popular support. His immediate tasks were to boost Brazil’s lagging
economic growth and address the issues of crime, violence, and poverty. Despite President Lula’s
significant personal popularity, occasional corruption scandals and inter-party rivalries within his
governing coalition have made it difficult to advance his agenda through Brazil’s fractured
legislature.
President Lula has benefitted from a strong economy throughout most of his second term. The
global financial crisis, however, has slowed Brazil’s economic growth and is threatening to erase
some of the social gains made in recent years. President Lula has implemented countercyclical
policies to boost the economy and protect those most exposed to the effects of the economic
downturn. These actions appear to have been reasonably successful, as a number of analysts
believe the Brazilian economy has already begun to recover.
During the first Lula term, Brazil’s relations with the United States were generally positive,
although President Lula prioritized strengthening relations with neighboring countries and
expanding ties with nontraditional partners, including India and China. Brazil-U.S. cooperation
has increased during President Lula’s second term, particularly on energy issues. Two presidential
visits in March 2007 culminated in the signing of the Memorandum of Understanding (MOU)
Between the United States and Brazil to Advance Cooperation on Biofuels; the agreement was
expanded in November 2008. President Obama has made strengthening U.S.-Brazilian relations a
major part of his policy toward Latin America, meeting with President Lula a number of times
since his inauguration. While several differences between the countries have emerged in recent
months, Brazil-U.S. relations remain friendly.
The 111th Congress has maintained considerable interest in Brazil. On March 12, 2009, a
resolution was introduced in the Senate (S.Res. 74, Lugar) that would recognize the importance
of the U.S.-Brazil partnership and call on the U.S. Treasury Secretary to pursue negotiations
concerning a bilateral tax treaty. The Western Hemisphere Energy Compact (S. 587, Lugar)—
which would provide $6 million to expand U.S.-Brazil biofuels cooperation in FY2010—was also
introduced on March 12, 2009. An international custody case involving Brazil has been another
concern of Congress. Both the House and the Senate passed resolutions (H.Res. 125 and S.Res.
37) in March 2009 calling on Brazil to comply with the requirements of the Convention on the
Civil Aspects of International Child Abduction and to assist in the safe return of Sean Goldman to
his father in the United States. On June 4, 2009, H.R. 2702 (C. Smith) was introduced in the
House. The bill would suspend the Generalized System of Preferences for Brazil until the country
meets its obligations under the Convention on the Civil Aspects of International Child Abduction.
This report analyzes Brazil’s political, economic, and social conditions, and how those conditions
affect its role in the region and its relationship with the United States.
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Contents
Background ................................................................................................................................ 1
Political Situation........................................................................................................................ 1
The First Lula Administration ............................................................................................... 2
The Second Lula Administration ........................................................................................... 3
Economic and Social Conditions ................................................................................................. 4
Economic Challenges and Efforts to Boost Growth ............................................................... 5
Social Indicators ................................................................................................................... 6
Foreign and Trade Policy ............................................................................................................ 7
Relations with the United States .................................................................................................. 8
Selected Issues in U.S.-Brazil Relations ...................................................................................... 9
Counternarcotics ................................................................................................................. 10
Counterterrorism and the Tri-Border Area ........................................................................... 10
Energy Security .................................................................................................................. 11
Oil ................................................................................................................................ 12
Ethanol and Other Biofuels ........................................................................................... 12
Nuclear Energy ............................................................................................................. 13
Trade Issues ........................................................................................................................ 14
Doha Round of the World Trade Organization Talks ..................................................... 14
World Trade Organization Disputes ............................................................................... 14
Generalized System of Preferences ............................................................................... 15
Intellectual Property Rights ........................................................................................... 15
Human Rights ..................................................................................................................... 16
Violent Crime and Human Rights Abuses by Police....................................................... 16
Race and Discrimination .............................................................................................. 17
Trafficking in Persons for Forced Labor ....................................................................... 18
Convention on the Civil Aspects of International Child Abduction....................................... 19
HIV/AIDS .......................................................................................................................... 20
Amazon Conservation......................................................................................................... 21
Domestic Efforts ........................................................................................................... 22
Carbon Offsets and Other International Initiatives ......................................................... 23
Figures
Figure 1. Map of Brazil ............................................................................................................. 24
Contacts
Author Contact Information ...................................................................................................... 25
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Brazil-U.S. Relations
Background
Brazil is considered a significant political and economic power in Latin America, and an
emerging global leader. A former Portuguese colony that achieved independence in 1822, Brazil
occupies almost half of the continent of South America and boasts immense biodiversity,
including the vast Amazon rainforest, and significant natural resources. Brazil is the fifth-most
populous country in the world. Brazil’s 191 million citizens are primarily of European, African,
or mixed African and European descent.1 With a gross national income (GNI) of $1.8 trillion in
2007, Brazil’s diversified economy is the tenth largest in the world, the largest in Latin America,
and one of the largest in the developing world, but per capita GNI is only $5,910, and the country
has an unequal income distribution.2 Brazil has long held potential to become a world power, but
its rise to prominence has been curtailed by political setbacks, including 21 years of military rule
(1964-1985), social problems, and uneven economic growth.
Political Situation
The Brazilian political system has several unique characteristics that distinguish it from other
countries in Latin America. The country’s federal structure, comprising 26 states, a Federal
District, and some 5,581 municipalities, evolved from the decentralized colonial structure devised
by the Portuguese in an attempt to control Brazil’s sizable territory. Even during the centralizing
government of Getúlio Vargas and the Estado Novo, or New State (1937-1945), landowning
remained the source of local power in Brazil, and states retained considerable autonomy. Brazil’s
military governments ruled from 1964-1985 and, while repressive, were not as brutal as those in
other South American countries. Although nominally allowing the judiciary and Congress to
function during its tenure, the Brazilian military stifled representative democracy and civic action
in Brazil, carefully preserving its influence during one of the most protracted transitions to
democracy to occur in Latin America. Brazil was also one of the last countries in the region to
abandon state-led economic policies in favor of market reforms. Significant pro-market reforms
did not occur until the government of Fernando Henrique Cardoso (1994-2002).3
During the first decade after its return to democracy in 1985, Brazil experienced economic
recession and political uncertainty as numerous efforts to control runaway inflation failed and two
elected presidents did not complete their terms. One elected president died before taking office;
the other was impeached on corruption charges. In 1994, Cardoso, a prominent sociologist of the
center-left Brazilian Social Democratic Party (PSDB), was elected by a wide margin over Luis
Inácio Lula da Silva of the leftist Worker’s Party (PT), a former metalworker and union leader
who had led the PT since the early 1980s.4 Cardoso was elected largely on the basis of the success
1 Brazil has never had a large indigenous population. Today, Brazil’s indigenous population consists of roughly
460,000 persons, many of whom reside in the Amazon. U.S. Department of State, Country Reports on Human Rights
Practices 2007: Brazil, March 2008.
2 World Bank, World Development Report 2009.
3 For a historical overview of Brazil’s political development, see Bolivar Lamounier, “Brazil: Inequality Against
Democracy,” in Larry Diamond, Jonathan Hughes, Juan J. Linz, and Seymour Martin Lipset, eds., Democracy in
Developing Countries: Latin America, Boulder, CO: Lynne Reiner, 1999.
4 In recent years, the PSDB has become ideologically centrist while the PT has move to the center-left. Timothy J.
Power and Cesar Zucco Jr., "Estimating Ideology of Brazilian Legislative Parties, 1990-2005," Latin American
(continued...)
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of the anti-inflation “Real Plan” that he implemented as Finance Minister, which resulted in a
new currency (the real) pegged to the dollar in July of 1994. During his first term, Cardoso
achieved macroeconomic stability, opened the Brazilian economy to trade and investment, and
furthered privatization efforts. Despite those achievements, the Cardoso government was unable
to enact much-needed political and social changes, such as social security, tax, or judicial
reforms.
President Cardoso sought a second presidential term after a constitutional reform was passed in
1997 to allow for reelection, and he defeated Lula in the first round of voting in October 1998
with 53% of the vote. President Cardoso’s popularity fell towards the end of his second term,
however, as Brazil faced a series of financial crises. Most analysts credit Cardoso with restoring
macroeconomic stability to Brazil’s economy and solidifying its role as leader of the Southern
Common Market (Mercosur),5 but fault him for failing to implement more aggressive political
and social reforms.6
The First Lula Administration
In 2002, Lula ran in his fourth campaign for the presidency of Brazil. Unlike in his previous
failed campaigns, he moderated his leftist rhetoric and—while still advocating greater attention to
social issues—promised to maintain the fiscal and monetary policies associated with Brazil’s
standing International Monetary Fund (IMF) agreements. The 2002 presidential election proved
to be a referendum on eight years of “neo-liberal” economic policies enacted by Cardoso. High
unemployment rates and economic stagnation led voters to support Lula, a longtime critic of
neoliberalism. Lula was elected decisively in the second round of voting with a significant
majority of the vote, defeating Cardoso’s designated successor, José Serra, the Minister of Health
and senator from São Paulo.
During his first term, President Lula maintained the restrained economic policies associated with
his predecessor. In 2003, the Lula government enacted social security and tax reforms, and in
2004, a law to allow more private investment in public infrastructure projects. President Lula also
launched several social programs, some of which have been more successful than others. The
Bolsa Familia (Family Stipend) program, which provides monthly stipends to 11.4 million poor
families in exchange for compulsory school attendance for all school-age children, has been
credited with reducing poverty, though some critics argue that it has made poor households too
dependent on government services.7 By 2005, legislative initiatives had stalled, and President
Lula was increasingly criticized for failing to develop effective programs to address land
distribution and crime. Critics argued that, ironically, one of the Lula government’s only major
achievements in the first term was to maintain the orthodox economic policies of the Cardoso
Administration. In 2006, some analysts began to dismiss President Lula’s efforts to expand
Brazil’s international profile as a leader among developing countries as “a relatively inexpensive
(...continued)
Research Review, vol. 44, no. 1, 2009.
5 Mercosur is a common market composed of Brazil, Argentina, Paraguay, and Uruguay that was established in 1991.
See CRS Report RL33620, Mercosur: Evolution and Implications for U.S. Trade Policy, by J. F. Hornbeck.
6 Susan Kaufman Purcell and Riordan Roett, eds., Brazil Under Cardoso, Boulder, CO: Lynne Reiner Publishers, 1997;
Mauricio A. Font and Anthony Peter Spanakos, Reforming Brazil, New York: Lexington Books, 2004.
7 Anthony Hall, “From Fome Zero to Bolsa Familia: Social Policies and Poverty Alleviation Under Lula,” Journal of
Latin American Studies, vol. 38, November 2006.
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[tactic] to shore up domestic support”8 that had failed to yield many concrete results. Criticism of
Lula further escalated with the onset of several corruption scandals involving top PT officials that
occurred during the latter half of Lula’s first term.9 A congressional inquiry in April 2006 cleared
President Lula of any direct responsibility for the scandals.
The Second Lula Administration
President Lula defeated the PSDB’s Gerardo Alckmin in the second round of presidential
elections held in late October 2006, capturing 61% of the vote. Lula won handily in the poorer
north and northeastern regions of the country, but failed to carry the more prosperous southern
and western states or São Paulo. Some observers assessed that Brazilians, though divided by class
and region, effectively voted in favor of continuing macroeconomic stability under a second Lula
Administration despite the corruption scandals that had involved Lula’s party during the first
term. Others attribute his win to the success of the Bolsa Familia program, which led voters in
poorer income brackets to overwhelmingly support him.10 The PT did not fare as well as Lula,
suffering a loss of nine seats in the Chamber of Deputies and losing four Senate seats in the
concurrent legislative elections.
Despite enjoying high approval ratings (67% in August 2009)11 and several years of strong
economic growth, President Lula’s second administration has been periodically hindered by
corruption scandals and a lack of support from members of his coalition. Many of President
Lula’s priorities—including significant tax and political reforms—have stalled in Brazil’s
Congress, where the PT-allied but ideologically flexible Party of the Brazilian Democratic
Movement (PMDB) controls the presidencies of both the Senate and Chamber of Deputies.
The PMDB has exercised increasing independence since its stronger than expected results in the
October 2008 municipal elections. Although the PMDB had agreed to back a PT president in the
Senate in exchange for PT support for a PMDB president in the Chamber of Deputies, the PMDB
reneged on the agreement and won control of both houses. Since taking control, the PMDB has
imposed its own legislative agenda. President Lula has done little to challenge these decisions
since the PT’s chances of maintaining the presidency in 2010 are likely dependent on a continued
alliance with the PMDB.12 This has also led President Lula to vigorously defend Senate President
José Sarney (President of Brazil 1985-1990) against a number of corruption allegations, ranging
from abuse of public funds to nepotism.13 Given the ongoing corruption investigations and the
political posturing that is expected to lead up to the October 2010 presidential election, some
8 Jeffrey Cason, “Hopes Dashed? Lula’s Brazil,” Current History, February 2006.
9 Wendy Hunter, “The Normalization of An Anomaly: The Worker’s Party in Brazil,” World Politics, vol. 59, no. 3,
April 2007.
10 Matt Moffett and Geraldo Samor, “In Brazil Campaign, A Barroom Brawl and a Class War,” Wall Street Journal,
October 27, 2006; Wendy Hunter and Timothy J. Power, “Rewarding Lula: Executive Power, Social Policy, and the
Brazilian Elections of 2006,” Latin American Politics and Society, Spring 2007.
11 “Brazil: ‘Teflon’ Lula retains strong approval ratings,” Oxford Analytica, August 17, 2009.
12 “Power struggle exposes senate wrongdoings,” Latin American Weekly Report, March 26, 2009; “Brazil: PMDB
powerbrokers may hold key in 2010,” Oxford Analytica, March 30, 2009.
13 Otávio Cabral, “Os Novos e Bons Companheiros,” Veja, July 22, 2009.
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analysts believe it is unlikely that the Brazilian Congress will act on President Lula’s legislative
agenda.14
While some of President Lula’s supporters have pushed for a constitutional amendment that
would allow him to run for a third term, Lula has stressed the importance of alternation of power,
stating unequivocally that “Brazil should not have a third mandate.”15 The top candidates to
replace Lula include 2002 candidate José Serra of the PSDB and current Minister of the
Presidency Dilma Rouseff of the PT.
Economic and Social Conditions
Throughout the last two decades, Brazil’s fiscal and monetary policies have focused primarily on
inflation control. When President Lula took office in 2003, Brazil had an extremely high level of
public debt, virtually necessitating that he adopt austere economic policies. Despite his leftist
political origins, President Lula has maintained restrained economic policies, even surpassing the
IMF’s fiscal and monetary targets. As a result, Brazil began to experience some benefits,
including lower inflation and a lower credit risk rating. In December 2005, the Lula government
repaid its $15.5 billion debt to the IMF ahead of schedule. The government’s overall foreign debt
was reduced by 19.9% between 2003 and 2006.16 Fiscal discipline has been accompanied by
record exports that have enabled Brazil to achieve substantial GDP growth in recent years. Brazil
still suffers from high real interest rates, however, which have dampened investment and
economic growth.
Brazil is a major exporter of agricultural and industrial products and plays a significant role in the
world trading system. Since 2002, Brazil has been the world’s third-largest exporter of
agricultural products after the United States and the European Union. In 2008, Brazil was the
world’s leading exporter of coffee, orange juice, sugar, chicken, beef, soy, and tobacco. Demand
for Brazilian commodity exports in Asia is strong, as is global demand for Brazil’s manufactured
goods and services. Brazil is the world’s second-largest producer of ethanol (after the United
States), and its state-run oil company, Petrobras, a leader in deep-water oil drilling, has recently
announced the discovery of what may be the world’s largest oil field find in 25 years.17
Brazil also has a relatively balanced trade regime. Its main trading partners in 2008 were the
European Union (24% of exports, 22% of imports), the United States (14% of exports, 15% of
imports), China (8% of exports, 12% of imports), and its neighbors in Mercosur (11% of exports,
9% of imports).18 In 2008, the value of Brazil’s exports reached some $198 billion, and the
country’s trade surplus was $25 billion.19
14 “Reform agenda may be shelved yet again,” Latin American Regional Report: Brazil & Southern Cone, February
2009; “Analysis—Brazil’s Senate scandal a risk to Lula’s agenda,” Reuters, August 11, 2009.
15 “Lula speaks out on third term,” Latin News Daily, June 3, 2009.
16 “Brazil Foreign Debt at $168.9 Billion End-2006,” Latin America News Digest, January 26, 2007.
17 Trade data made available by Global Trade Atlas, 2009.
18 Mercosur trade statistics only include the other full members of the trade bloc: Argentina, Uruguay, and Paraguay.
19 Trade data made available by Global Trade Atlas, 2009.
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Economic Challenges and Efforts to Boost Growth
One of President Lula’s goals for his second term is to boost Brazil’s lagging economic growth.
Between 2000 and 2006, Brazil’s annual growth rates averaged roughly 2.7%. In 2006, Brazil
posted GDP growth of about 2.8%, the second lowest recorded in Latin America. In 2007,
President Lula launched a Program to Accelerate Growth (PAC) aimed at boosting Brazil’s
growth rates to 5% per year through increased public and private investment in infrastructure.
The PAC provides tax breaks and incentives to spur investment and includes measures to improve
and simplify Brazil’s regulatory framework. While some have praised President Lula for the
PAC’s investments in much-needed infrastructure projects, others have criticized him for failing
to curb excessive public spending or to promote labor reform. GDP growth in Brazil reached
5.4% in 2007, and is estimated to have reached 5.1% in 2008.20
Despite the success of these efforts, some analysts have identified several factors that could
constrain Brazil’s long-term growth potential. These include a sizeable public debt burden,
excessive government spending, inflation, high taxes and interest rates, low investment and
savings rates, and an unwieldy public pension system that a 2006 report by the Organization for
Economic Co-operation and Development (OECD) asserted is a significant obstacle to sustained
economic growth.21 Despite his popularity, President Lula has thus far not elected to use his
political capital to enact much-needed structural reforms to address these issues.
The global financial crisis has further complicated President Lula’s attempts to accelerate
economic growth. As a result of the crisis, the Brazilian economy contracted by 3.8% in the final
quarter of 2008 and 0.8% in the first quarter of 2009.22 Likewise, unemployment rose to 9% in
March 2009, reflecting the loss of over 800,000 jobs.23 President Lula took several steps to
counteract these trends and minimize the impact of the crisis. The government injected at least
$100 billion of additional liquidity into the local economy, provided support packages to
productive sectors, and cut the key interest rate.24 President Lula also acted to maintain domestic
consumption in hopes of partially offsetting declines in global demand. The government
mandated an above-inflation increase to the minimum wage for 2009, provided temporary tax
relief, announced its intention to increase investments in its Program to Accelerate Growth (PAC)
to a total of $500 billion through 2010, and made it clear that it will not cut spending on social
programs like Bolsa Familia.25 President Lula’s actions appear to have been reasonably
successful, as the Brazilian economy grew by an estimated 1.5% in the second quarter and
20 “Brazil: Country Profile 2008,” Economist Intelligence Unit; “Country Report: Brazil,” Economist Intelligence Unit,
March 2009.
21 Fabio Giambiagi and Luiz de Mello, “Social Security Reform in Brazil: Achievements and Remaining Challenges,”
Organization for Economic Co-operation and Development (OECD), Economics Department Working Paper No. 534,
December 6, 2006.
22 “Brazilian economy starts to recover,” Latin News Daily, July 29, 2009.
23 Raymond Colitt, “Approval for Brazil’s Lula hit by economic crisis,” Washington Post, March 20, 2009; “Over the
worst?,” Latin American Economy & Business, April 2009.
24 “Will the economy grow in 2009?” Latin American Economy & Business, February 2009; “Brazil economy:
Bottoming out?” Economist Intelligence Unit, May 7, 2009.
25 “Will the economy grow in 2009?” Latin American Economy & Business, February 2009; Tax Relief for the Middle
Classes,” Latin American Weekly Report, December 18, 2008.
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unemployment fell to 8.1% in June 2009.26 Some analysts now believe that the Brazilian
economy may avoid a contraction in 2009 and could grow by 4.5% in 2010.27
Social Indicators
Despite its well-developed economy and large resource base, Brazil has had problems solving
deep-seated social problems like poverty and income inequality. Brazil has had one of the most
unequal income distributions in Latin America, a region with the highest income inequality in the
world. A 2004 World Bank study reported that some 50 million Brazilians live in poverty.28 The
U.N. Development Program has identified 600 Brazilian municipalities, many in the north and
northeastern part of the country, in which poverty levels are similar to those present in poor
African countries. One major cause of poverty and inequality in Brazil has been the extreme
concentration of land ownership among the country’s elites. A 2004 study found that 1% of the
Brazilian population controlled 45% of the farmland.29 The Brazilian government has also
acknowledged that there is a racial component to poverty in Brazil. People of African descent in
Brazil, also known as Afro-Brazilians, represent roughly 45% of the country’s population, but
constitute 64% of the poor and 69% of the extreme poor.30 Other factors that inhibit social
mobility in Brazil include a lack of access to quality education and job training opportunities for
the country’s poor.
Brazil’s endemic poverty and inequality have, until recently, not been significantly affected by the
government’s social programs. A March 2005 OECD study found that, even though Brazil had
spent the same level or more of public spending on social programs as other countries with
similar income levels, it had not achieved the same social indicators as those countries.31 There
has been more recent evidence, however, that the Lula government’s Bolsa Familia (Family
Stipend) program, combined with relative macroeconomic stability and growth over the past few
years, has reduced poverty rates, particularly in the north and northeast regions of the country.32
According to the Getulio Vargas Foundation, the level of poverty in Brazil during Lula’s first
term in government fell by 27.7%. Since 2002, the proportion of the Brazilian population who
define themselves as middle-class has risen from 44% to 52%.33
26 “Country Report: Brazil,” Economist Intelligence Unit, August 2009; “Brazil,” Latin News Daily,” July 24, 2009.
27 Geri Smith, “Brazil’s Coming Rebound,” Businessweek, August 6, 2009.
28 David De Ferranti et al., Inequality in Latin America: Breaking with History? Washington, DC: The World Bank,
2004.
29 “Special Report: Land Report Dilemma,” Latin America Regional Report, December 21, 2004.
30 Ricardo Henriques, “Desigualdade racial no Brasil,” Brasilia: Instituto de Pesquisa Econômica Aplicada (IPEA),
2001.
31 Organization for Economic Cooperation and Development, “Economic Survey of Brazil 2005,” March 2005.
32Anthony Hall, “From Fome Zero to Bolsa Familia: Social Policies and Poverty Alleviation Under Lula,” Journal of
Latin American Studies, vol. 38, November 2006; United Nations Development Program, “Human Development
Report 2007/8,” November 2007.
33 Nilson Brandão Junior and Marianna Aragão, “Miséria no Brasil Cai 27,7% no 1º Mandato de Lula,” Estado de São
Paulo, September 20, 2007; “Brazil: Half the Nation, a Hundred Million Citizens Strong,” Economist, September 13,
2008.
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Foreign and Trade Policy
Brazil’s foreign policy is a byproduct of the country’s unique position as a regional power in
Latin America, a leader among developing countries in economic cooperation and collective
security efforts, and an emerging world power. Brazilian foreign policy has been based on the
principles of multilateralism, peaceful dispute settlement, and nonintervention in the affairs of
other countries.34 Brazil engages in multilateral diplomacy through the U.N. and the Organization
of America States (OAS). It is currently commanding a multinational U.N. stabilization force of
some 9,000 personnel in Haiti, and is seeking a permanent seat on the U.N. Security Council.
Brazilian foreign policy has also tended to emphasize regional integration through organizations
such as Mercosur, the Rio Group, and the Union of South American Nations (UNASUR).
Since the mid-1990s, Brazil has had much more success in developing political cohesion than
true economic integration among its neighbors in the Southern Cone. Mercosur was established in
1991 by Brazil, Argentina, Paraguay, and Uruguay. In 1996, Chile and Bolivia became “associate
members”; Peru followed in 2003 (not implemented) and Venezuela and Mexico in 2004.35
Associate members have no voting rights and need not observe the common external tariff. In
October 2004, after years of talks, Mercosur and the Andean Community of Nations signed a
trade pact, giving all Andean countries—Bolivia, Colombia, Ecuador, Peru, and Venezuela—the
equivalent of associate membership. This breakthrough led to the creation of the South American
Community of Nations (later renamed the Union of South American Nations, UNASUR) two
months later in a pact that included 12 countries (those in Mercosur, the Andean Community,
along with Chile, Guyana, and Suriname). In December 2005, Mercosur agreed to the accession
of Venezuela as a full member, though the Paraguayan and Brazilian Congresses have yet to
approve Venezuela’s entry. In December 2006, Bolivia expressed its intention to join Mercosur as
a full member, but critics say that its accession would politicize the union unnecessarily.
Recent events do not bode well for the future of Mercosur. In 2006, Mercosur’s internal dispute
resolution process proved unable to resolve a dispute between Argentina and Uruguay over
whether to allow European companies to construct two paper mills along the river that
demarcates their border. At the same time, Uruguay diversified its trade with the United States
and even threatened to withdraw from Mercosur, arguing that it seems to serve only the needs of
Argentina and Brazil. Furthermore, Mercosur has not addressed trade asymmetries among its
members, resolved the issue of double tariffs on some imports from outside the region, or drafted
a common customs code, leaving some analysts to believe it has become a forum for foreign
policy posturing. Some within the Brazilian government and private sector believe Brazil has
outgrown Mercosur. These thoughts have only been reinforced by recent talks between Brazil and
the European Union concerning the possibility of a bilateral trade deal.36
In addition to trying to expand its regional profile through established political and economic
channels, Brazilian government and business officials have worked together to expand the
country’s commercial interests in the region. Some of those efforts have been more successful
34 Georges D. Landau, “The Decision making Process in Foreign Policy: The Case of Brazil,” Center for Strategic and
International Studies: Washington, DC: March 2003.
35 For more information on Mercosur, see CRS Report RL33620, Mercosur: Evolution and Implications for U.S. Trade
Policy, by J. F. Hornbeck.
36 “Deathknell Sounds,” Latin American Regional Report, January 2009.
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than others. One initiative has involved the use of so-called “ethanol diplomacy.” Brazil has
sought to reassert regional leadership by signing bio-fuels partnership agreements with countries
that would otherwise be dependent on expensive oil imports.37 A not-so-successful endeavor has
involved trying to use Petrobras’ investments in Bolivia to influence the populist government of
Evo Morales. Even though Petrobras had made extensive investments in Bolivia, the Lula
government was caught off guard by Morales’s May 2006 nationalization of his country’s natural
gas industry. Although President Lula has since acceded to several of Morales’s demands—
including cutting tariffs for Bolivian exports to Brazil, stepping up investments in Bolivia, and
maintaining the level of Brazil’s daily gas imports from Bolivia—he has also taken a number of
steps to make Brazil less reliant on Bolivian natural gas.38
Brazil’s political, business, and military ventures are complemented by the country’s trade policy.
In Brazil, the Ministry of Foreign Relations continues to dominate trade policy, causing the
country’s commercial interests to be (at times) subsumed by a larger foreign policy goal, namely,
enhancing Brazil’s influence in Latin America and the world.39 For example, while concluding
meaningful trade agreements with developed economies (such as the United States and the
European Union) would probably be beneficial to Brazil’s long-term economic self-interest, the
Brazilian government has instead prioritized its leadership role within Mercosur and expanded
trade ties with countries in Africa, Asia and the Middle East.
Some analysts assert that these “south-south” initiatives have enhanced Brazil’s international
profile, but others have noted that they have yielded few concrete results for the country, and that
they have come at the expense of Brazil-U.S. relations. Roberto Abdenur, the former Brazilian
Ambassador to Washington, criticized the “south-south” approach of the Brazilian Foreign
Ministry for indoctrinating Brazilian diplomats with “anti-imperialist” and “anti-American”
attitudes.40 Others have criticized Brazil for not speaking out on human rights violations and
undemocratic practices in other countries of the developing south.41
Relations with the United States
Currently, relations between the United States and Brazil may be characterized as friendly. The
United States has increasingly regarded Brazil as a significant power, especially in its role as a
stabilizing force in Latin America. U.S. officials assert that the United States seeks to increase
cooperation with moderate leftist governments in Latin America (like Brazil) in order to ease
mounting tensions among countries in South America, and to deal with populist governments in
the region. Brazil under President Lula has helped diffuse potential political crises in Venezuela,
Ecuador, and Bolivia, and supported Colombia’s ongoing struggle against terrorist organizations
and drug traffickers. Brazil is also commanding the U.N. stabilization force in Haiti.
37 “Chávez, Lula Promote Competing Visions,” Miami Herald, August 10, 2007.
38 “Bolivia’s Populism Steps on Brazil,” Christian Science Monitor, May 8, 2006; “Brazil May Pay a Price for
Generous Deal on Gas,” Financial Times, February 22, 2007; “Brazil Seeks to Lure Bolivia Away from Venezuela,”
Reuters, December 13, 2007; “New chapter in gas dispute with Bolivia,” Latin News Daily, March 30, 2009.
39 See CRS Report RL33258, Brazilian Trade Policy and the United States, by J. F. Hornbeck.
40 Otávio Cabral, “Nem na Ditadura,” Veja, February 7, 2007.
41 “Brazil: Diplomacy criticised for undermining human rights,” Latin American Weekly Report, July 16, 2009; “Whose
side is Brazil on?,” Economist, August 13, 2009.
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Brazil and the United States have worked closely on a wide range of bilateral and regional issues,
and Brazil-U.S. cooperation has increased in recent years, as reflected in the continuing high-
level contacts between the two governments, particularly on energy issues. Early in 2007, two
high-level meetings between Presidents Bush and Lula culminated in the March 2007 signing of a
U.S.-Brazil Memorandum of Understanding (MOU) to promote bio-fuels development in the
Western Hemisphere.42 The initiative was expanded in November 2008 to include additional
countries in Africa, Central America, and the Caribbean (See “Ethanol and Other Biofuels”
section below).43
Although Brazil and the United States share common goals for regional stability, Brazil’s
independent approach to foreign policy has led to periodic disputes with the United States on
trade and political issues, including how (and whether) to create a Free Trade Area of the
Americas (FTAA) and Brazil’s vocal opposition to the war in Iraq and the U.S. embargo of Cuba.
Despite President Lula’s friendly relationship with President Obama, a number of differences
between Brazil and the United States have emerged in recent months. In addition to ongoing
disputes over the U.S. tariff on Brazilian ethanol and the Doha Round of WTO negotiations,
Brazil has called on the United States to take a stronger stance on the political crisis in Honduras
and has reacted negatively to the U.S. proposal to use seven Colombian military bases, which the
Brazilian foreign minister described as “a strong military presence whose aim and capability
seems to go well beyond what might be needed inside Colombia.”44
Brazil is considered a middle-income country and does not receive large amounts of U.S. foreign
assistance. Brazil received $15.3 million in U.S. aid in FY2008, will likely receive $21.5 million
in FY2009, and would receive $11.8 million under the Obama Administration’s request for
FY2010. U.S. assistance priorities in Brazil include supporting environmental programs and the
strengthening of local capacity to address threats to the Amazon, promoting renewable energy and
energy efficiency to mitigate climate change, strengthening the professionalism and peacekeeping
capabilities of the Brazilian military, and reducing the transmission of communicable diseases.45
Selected Issues in U.S.-Brazil Relations
The Bush Administration came to view Brazil as a strong partner whose cooperation should be
sought in order to solve regional and global problems, and the Obama Administration appears to
view Brazil in a similar light. Current issues of concern to both Brazil and the United States
include counternarcotics and counterterrorism efforts, energy security, trade, human rights, the
fight against HIV/AIDS, and the environment.
42 For more information, see CRS Report RL34191, Ethanol and Other Biofuels: Potential for U.S.-Brazil Energy
Cooperation, by Clare Ribando Seelke and Brent D. Yacobucci.
43 U.S. Department of State, Office of the Spokesman, “Joint Statement by the United States and Brazil Announcing the
Expansion of Cooperation on Biofuels to Advance Energy Security and Promote Sustainable Development,” November
20, 2008.
44 “Brazil-US rows building over Colombia, biofuel, trade: FM” Agence France Presse, August 2, 2009; “Brasil espera
una actitud más firme de EEUU contre el golpe,” EFE News Service, August 4, 2009.
45 U.S. State Department, FY2010 Congressional Budget Justification for Foreign Operations, May 29, 2009.
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Counternarcotics
Although Brazil is not a major drug-producing country, it serves as a major transit country for
illicit drugs from neighboring Andean countries destined primarily for Europe. Urban gangs—
such as São Paulo’s First Command of the Capital (PCC) and Rio de Janeiro’s Red Command
(CV)—have begun playing greater roles in narcotics and weapons smuggling, establishing their
presence in other countries in the region and forging ties with Colombian and Mexican
traffickers. Brazil has also become the second-largest consumer (after the United States) of
cocaine in the world.
With U.S. support, Brazil has taken several steps to improve its counternarcotics capabilities. In
2004, Brazil implemented an Air Bridge Denial program, which authorizes lethal force for air
interdiction, and in 2006, Brazil passed an anti-drug law that prohibits and penalizes the
cultivation and trafficking of illicit drugs. Brazil has also worked with its neighbors to construct
Joint Intelligence Centers at strategic points along its borders and invested in a sensor and radar
project called the Amazon Vigilance System in an attempt to control illicit activity in its Amazon
region. In 2008, Brazil’s federal police captured 18 metric tons of cocaine, 514 kilograms of
cocaine base, 430 kilograms of crack, 182 metric tons of marijuana, 12 kilograms of heroin,
125,706 dosage units of ecstasy, and 95,653 dosage units of LSD.46 Additionally, Brazilian police
arrested a major Colombian-born drug trafficker and leader of the Norte del Valle cartel in 2007
and extradited him to the United States in 2008. Brazilian authorities also worked with the Drug
Enforcement Administration (DEA) in 2008 to investigate a major Brazilian trafficker, leading to
the arrests and indictments of 10 members of his network. Despite these accomplishments, the
United States remains concerned that Brazil lacks the legal structure necessary to prevent
narcotics trafficking and money laundering, and that Brazil’s federal police lack the resources
they need to control the country’s extensive border regions.
Brazil received $992,000 in U.S. counternarcotics assistance in FY2008, is expected to receive $1
million in FY2009, and would receive $1 million in FY2010 under the Obama Administration’s
request.47 U.S. counternarcotics assistance includes training for the Brazil’s federal police,
support for interdiction programs at Brazil’s ports, and expanding the capabilities of special
investigations units.
Counterterrorism and the Tri-Border Area48
The Tri-Border Area (TBA) of Argentina, Brazil, and Paraguay has long been used for arms
smuggling, money laundering, and other illicit purposes. According to the 2009 State Department
Country Reports on Terrorism, the United States remains concerned that Hezbollah and Hamas
are raising funds through illicit activities and from sympathizers in the sizable Middle Eastern
communities in the region. Indeed, reports have indicated that Hezbollah earns over $10 million a
year from criminal activities in the TBA.49 Although it has been reported that al Qaeda’s
operations chief Khalid Shaikh Mohammed lived in the Brazilian TBA city of Foz de Iguazu in
46 U.S. Department of State, International Narcotics Control Strategy Report, February 27, 2009.
47 U.S. Department of State, “Summary and Highlights, International Affairs, Function 150, Fiscal Year 2010.”
48 For more information, see CRS Report RS21049, Latin America: Terrorism Issues, by Mark P. Sullivan.
49 Alain Rodier, “Notes D’Actualité N˚168: Les Trafics de Drogue du Hezbollah en Amérique Latine,” Centre
Français de Recherche sur le Rensignement, April 14, 2009.
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1995 and Brazilian authorities arrested Ali al-Mahdi Ibrahim—who was wanted by Egypt for his
alleged role in the 1997 massacre of tourists at Luxor—in the TBA in 2003, the State Department
report states that there have been no corroborated reports that any Islamic groups have an
operational presence in the area.50 The United States joined with the countries of the TBA in the
“3+1 Group on Tri-Border Area Security” in 2002 and the group built a Joint Intelligence Center
to combat trans-border criminal organizations in the TBA in 2007.
The United States has also worked bilaterally with Brazil to improve its counterterrorism
capabilities. In addition to providing counterterrorism training, the United States has worked with
Brazil to implement the Container Security Initiative (CSI) at the port of Santos. While the State
Department Country Reports on Terrorism lauded the Brazilian government as a “cooperative
partner in countering terrorism,” it also noted that Brazil’s failure to strengthen its legal
counterterrorism framework by passing long-delayed anti-money laundering and counterterrorism
bills “significantly undermined its overall commitment to combating terrorism.”51 Brazil, like
many Latin American nations, has been reluctant to adopt specific antiterrorism legislation as a
result of the difficulty of defining terrorism in a way that does not include the actions of social
movements and other groups whose actions of political dissent were condemned as terrorism by
repressive military regimes in the past.52
In January 2009, the Western Hemisphere Counterterrorism and Nonproliferation Act of 2009
(H.R. 375, Ros-Lehtinen) was introduced in the House. Among other provisions, the bill calls on
the U.S. Secretary of State to negotiate with Brazil, Argentina, and Paraguay to establish a
Regional Coordination Center (RCC) in the TBA to serve as a joint operational facility dedicated
to coordinating efforts, capacity, and intelligence to counter current and emerging threats and
prevent the proliferation of nuclear, chemical, and biological weapons. A similar provision can be
found in the Foreign Relations Authorization and Reform Act for Fiscal Years 2010 and 2011
(H.R. 2475, Ros-Lehtinen), which was introduced in the House in May 2009.
Energy Security
In the last few years, there has been significant congressional interest in issues related to Western
Hemisphere energy security. Brazil is widely regarded as a world leader in energy policy for
successfully reducing its reliance on foreign oil through increased domestic production and the
development of alternative energy resources. Currently, over 85% of Brazilian electricity is
generated through hydropower.53 At the same time, Brazil has attained the ability to produce large
amounts of enriched uranium as part of its nuclear energy program. More recently, Brazil’s state-
run oil company, Petrobras, a leader in deep-water oil drilling, has discovered what may be the
world’s largest oil field find in 25 years.54
50 “Latin America: A Safe Haven for Al Qaeda?” STRATFOR, September 4, 2003; U.S. Department of State, Office of
the Coordinator for Counterterrorism, “Country Reports on Terrorism,” April 30, 2009.
51 Ibid.
52 “Anti-terrorism law project scrapped,” Latin American Security & Strategic Review, January 2008.
53 “Brazil: Hydrocarbons potential poses major challenges,” Oxford Analytica, November 20, 2007.
54 “Brazil’s Now a Hot Commodity,” Los Angeles Times, January 3, 2008.
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Oil
On September 2, 2008, President Lula celebrated the first oil output to be extracted from the new
offshore fields. The discovery of the Tupi field in November 2007, located in the Santos Basin
350 miles off the coast of Rio de Janeiro, has the potential to turn Brazil into a major oil and gas
producer and an important source of energy for the United States. The field alone may hold up to
50 billion barrels of oil. The Brazilian government is considering new measures that may pave the
way for a heavy state hand in the country’s energy markets, such as the creation of a new 100%
state-owned company to manage the exploration blocks. This has raised concerns among some
foreign investors.55 A number of analysts have also questioned the feasibility of developing the
reserves at this time given the global financial crisis and recent declines in oil prices. Since the
reserves are in the so-called “pre-salt” layer, drilling will be difficult and costly. While Petrobras
maintains that the reserves are economically viable as long as the price of crude oil remains above
$35 per barrel, some analysts believe development will be difficult to finance with oil anywhere
below $70 per barrel.56 Brazil has announced that it will need $270 billion in investment over the
next 10 years to develop the reserves.57 In May 2009, Brazil and China signed an agreement
under which China will provide Petrobras with $10 billion in financing in exchange for
guaranteed oil deliveries of 150,000 barrels per day (bdp) in 2009 and 200,000 bpd for the next
decade.58 Also in May of 2009, the Export-Import Bank of the United States approved a $2 billion
financing agreement with Petrobras. In August 2009, the U.S. government reportedly indicated
that it was prepared to go beyond the original agreement to provide up to $10 billion in
financing.59
Ethanol and Other Biofuels60
Brazil stands out as an example of a country that has become a net exporter of energy, partially by
increasing its use and production of ethanol. On March 9, 2007, the United States and Brazil, the
world’s two largest ethanol-producing countries, signed a Memorandum of Understanding to
promote greater cooperation on ethanol and biofuels in the Western Hemisphere. The agreement
involves: (1) technology sharing between the United States and Brazil; (2) feasibility studies and
technical assistance to build domestic biofuels industries in third countries; and, (3) multilateral
efforts to advance the global development of biofuels. The first countries to receive U.S.-
Brazilian assistance were the Dominican Republic, El Salvador, Haiti, and St. Kitts and Nevis.61
Since March 2007, the United States and Brazil have moved forward on all three facets of the
agreement. U.S. and Brazilian consultants have carried out feasibility studies that identified short-
term technical assistance opportunities in Haiti, the Dominican Republic, and El Salvador. On
November 20, 2008, the United States and Brazil announced an agreement to expand their
55 “Brazil’s Golden Times Start to Roll,” Latin News Daily, September 3, 2008; “Hydrocarbons Potential Poses Major
Challenges,” Oxford Analytica, November, 20, 2007.
56 “Brazil: Petrobras euphoria fades with oil price,” Oxford Analytica, December 11, 2008.
57 “Brazil needs $270 bln over 10-yrs for deepwater oil,” Reuters, March 19, 2009.
58 “Brazil: Da Silva Goes to China,” Stratfor, May 19, 2009.
59 “Brazil: U.S.-Chinese Competition in Latin America,” Stratfor, August 12, 2009.
60 For more information, see CRS Report RL34191, Ethanol and Other Biofuels: Potential for U.S.-Brazil Energy
Cooperation, by Clare Ribando Seelke and Brent D. Yacobucci.
61 U.S. Department of State, Office of the Spokesman, “Memorandum of Understanding Between the United States and
Brazil to Advance Cooperation on Biofuels,” March 9, 2007.
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biofuels cooperation and form new partnerships with Guatemala, Honduras, Jamaica, Guinea-
Bissau, and Senegal.62 The United States and Brazil are also working with other members of the
International Biofuels Forum (IBF) to make biofuels standards and codes more uniform. In March
2009, the Western Hemisphere Energy Compact (S. 587, Lugar) was introduced. The legislation
would provide $6 million in FY2010 to expand U.S.-Brazil biofuels cooperation.63
Despite this progress, several potential obstacles to increased U.S.-Brazil cooperation on biofuels
exist, including current U.S. tariffs on most Brazilian ethanol imports. The United States currently
allows duty-free access on sugar-based ethanol imports from many countries through the
Caribbean Basin Initiative, Central American Free Trade Agreement, and the Andean Trade
Preferences Act, among others.64 Some Brazilian ethanol is processed at plants in the Caribbean
for duty-free entry into the United States, but exports arriving directly from Brazil are currently
subject to a 54-cent-per-gallon tax, plus a 2.5% tariff. Several bills were introduced in the 110th
Congress that would have eliminated or adjusted the ethanol tariff.
Nuclear Energy
Between the mid-1970s and the mid-1980s, Brazil sought to develop nuclear weapons as it
competed with Argentina for political and military dominance of the Southern Cone. Brazil’s
1988 constitution limits nuclear activity to peaceful purposes, however, and in 1991, Brazil and
Argentina reached an agreement not to pursue nuclear weapons. Although Brazil subsequently
joined the Nuclear Nonproliferation Treaty (NPT) and a number of other multilateral
nonproliferation regimes, some international observers became concerned when Brazil
commissioned a uranium enrichment plant in 2004 and refused to give International Atomic
Energy Agency (IAEA) inspectors full access to the centrifuge plant in 2005. The Brazilian
government maintained that it needed to enrich uranium in order to produce its own fuel, and it
justified its refusal to give IAEA inspectors access by citing security concerns over the
proprietary aspects of the country’s nuclear technology. Negotiations between Brazil and the
IAEA ended in October 2005 when the Bush Administration lent its support to Brazil by asserting
that limited inspections should be enough for Brazil to comply with its international obligations.65
President Lula has stated Brazil’s intention to spend $540 million over the next eight years to
build a third nuclear power plant and a nuclear-powered submarine. In September 2008, the
Brazilian Minister for Energy and Mining announced that he would like Brazil to build 60 new
nuclear energy plants over the next 50 years. He claimed this expansion of nuclear power is the
62 U.S. Department of State, Office of the Spokesman, “Joint Statement by the United States and Brazil Announcing the
Expansion of Cooperation on Biofuels to Advance Energy Security and Promote Sustainable Development,” November
20, 2008.
63 Senator Lugar had introduced a similar measure in the 110th Congress, S. 1007, reported out of the Senate Foreign
Relations Committee on September 23, 2008.
64 For more information, see CRS Report RS21930, Ethanol Imports and the Caribbean Basin Initiative (CBI), by
Brent D. Yacobucci.
65 “New Round of Nuclear Enrichment Scare Stories,” Latin American Weekly Report, February 12, 2006; Bernard
Aronson, “Brazil’s Chance to Lead on Nuclear Containment,” Wall Street Journal, March 18, 2005; Sharon Squassoni
and David Fite, “Brazil as Litmus Test: Resende and Restrictions on Uranium Enrichment,” Arms Control Today,
October 2005.
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only way that Brazil will be able to meet the energy needs of its growing population while
avoiding massive carbon emissions through the burning of fossil fuels.66
Trade Issues
Trade issues are central to the bilateral relationship between Brazil and the United States, with
both countries being heavily involved in subregional, regional, and global trade talks. Brazil has
sought to strengthen Mercosur and to establish free trade agreements with most of the countries in
South America, while also pursuing efforts to negotiate a Mercosur-European Union free trade
agreement. The United States has been actively involved in the Doha negotiations and, until late
2005, pressed for action on the region-wide Free Trade Agreement of the Americas (FTAA).
Since negotiations for the FTAA have been largely abandoned, the United States has continued to
sign bilateral and subregional agreements with countries throughout Latin America. Bilateral
trade between the United States and Brazil totaled $63.4 billion in 2008, with U.S. exports to
Brazil increasing 34% to $32.9 billion and U.S. imports from Brazil increasing 19% to $30.5
billion.67
Doha Round of the World Trade Organization Talks 68
Brazil has had a leading role in the Doha round of the World Trade Organization (WTO) talks. In
2003, Brazil led the G-20 group of developing countries’ efforts to insist that developed countries
agree to reduce and eventually eliminate agricultural subsidies as part of any settlement. In late
July 2004, WTO members agreed on the framework for a possible Doha round agreement, but
formal talks were suspended indefinitely in July 2006 after key negotiating groups failed to break
a deadlock on the issue of agricultural tariffs and subsidies. In June 2007, negotiators from India
and Brazil walked out of a round of informal talks with representatives from the United States
and the European Union (EU), refusing to open their markets further unless U.S. and EU
subsidies were substantially reduced. In recent years, trade ministers have repeatedly failed to
reach an agreement to conclude the Doha round and the U.S. negotiating position remains a
source of contention with Brazil.69
World Trade Organization Disputes
Brazil won a WTO dispute settlement case against U.S. cotton subsidies in September 2004,
which the United States appealed, but Brazil’s position was reaffirmed by the WTO appellate
body in March 2005. In keeping with the requirement that the United States modify its policies or
negotiate a mutually satisfactory settlement with Brazil, the Bush Administration in early July
2005 asked Congress to modify the cotton subsidy program and Brazil agreed to temporarily
suspend retaliatory action. In December 2007, a WTO dispute panel ruled in support of Brazil’s
claim that the United States is not moving quickly enough to comply with the 2005 ruling that it
66 “Brazil’s Nuclear Ambitions Expand,” Latin American Regional Report, November 2008.
67 U.S. Department of Commerce statistics, as presented by Global Trade Atlas, 2009.
68 For more information on the Doha Round, see CRS Report RL32060, World Trade Organization Negotiations: The
Doha Development Agenda, by Ian F. Fergusson.
69 “Uncertainty Lies Ahead for WTO,” Oxford Analytica. July 31, 2008; “Brazil-US rows building over Colombia,
biofuels, trade: FM,” Agence France Presse, August 2, 2009.
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should remove some of its cotton subsidies.70 Brazil has argued that it has the right to impose up
to $2.5 billion in annual trade sanctions against U.S. imports as a result of this noncompliance.
The United States maintains that Brazil is “consistently overstating” the amount of compensation
it is entitled to and that retaliation should not exceed $22.8 million per year.71
In a separate decision, in December 2007 the WTO decided to investigate Brazil and Canada’s
claims that U.S. agriculture support programs have exceeded allowed levels.72 Brazil has asserted
that the United States has exceeded its annual commitment levels for the total aggregate measure
of support (AMS) in each of the years 1999, 2000, 2001, 2002, 2004, and 2005. It also has
complained that the U.S. export credit guarantee program operates as a WTO-legal export
subsidy. Canada is pursuing a similar case against the United States.
Generalized System of Preferences 73
The Generalized System of Preferences (GSP) provides duty-free tariff treatment to certain
products imported from developing countries. In the 109th Congress, renewal of the preference (as
established by Title V of the Trade Act of 1974) was somewhat controversial, owing, in part, to
concerns of some Members that a number of the more advanced developing countries (such as
Brazil and India) were contributing to the impasse in the Doha round of WTO talks. Compromise
language worked out between the House and Senate extended GSP for two years for all countries,
while asserting that the President “should” revoke “competitive need limitation (CNL)” waivers
for products from certain countries, based on the criteria specified. In June 2007, the Bush
Administration decided to revoke the CNL waivers on Brazilian brake parts and ferrozirconium.74
The 110th Congress extended GSP until December 31, 2009 with P.L. 110-436. On June 4, 2009,
H.R. 2702 (C. Smith) was introduced in the House. The bill would suspend GSP for Brazil until
the country meets its obligations under the Convention on the Civil Aspects of International Child
Abduction.
Intellectual Property Rights
In the last few years, Brazil has taken steps to improve its record on protecting intellectual
property rights (IPR). The Brazilian government has created a national action plan to address
piracy and intellectual property crimes, which has included increased police actions. Brazil and
the United States continue to work together to address intellectual property issues, primarily
through the U.S.-Brazil Bilateral Consultative Mechanism and the U.S.-Brazil Commercial
Dialogue. In recognition of this progress, the United States Trade Representative lowered Brazil
from the Priority Watch List of countries with significant IPR violations to the Watch List in
2007. Brazil remained on the Watch List in 2008 and 2009. In order to build on progress that has
been made, USTR recommends that Brazil should consider strengthening its IPR enforcement
70 “WTO Tells U.S. to Act on Illegal Cotton Subsidies,” Financial Times, December 19, 2007. For more information,
see CRS Report RL32571, Brazil’s WTO Case Against the U.S. Cotton Program, by Randy Schnepf.
71 “U.S. Contests ‘Exaggerated’ Brazilian Claim For Compensation in Cotton Dispute at WTO,” BNA International
Trade Daily, March 3, 2009.
72 See CRS Report RL34351, Brazil’s and Canada’s WTO Cases Against U.S. Agricultural Support, by Randy
Schnepf.
73 This section was drawn from CRS Report RL33663, Generalized System of Preferences: Background and Renewal
Debate, by Vivian C. Jones.
74 “USTR Revokes GSP Waivers for India, Brazil Despite Rangel Objections,” Inside U.S. Trade, June 29, 2007.
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legislation, more vigorously addressing book and internet piracy, and signing the World
Intellectual Property Organization Internet Treaties.75 The U.S. government has also expressed
concerns about Brazil’s periodic threats to issue compulsory licenses for patented pharmaceutical
products. In May 2007, Brazil broke a patent on a drug used to treat HIV/AIDS that is produced
by Merck & Co. in order to import a cheaper version of that drug from India.76 In July 2009,
President Lula suggested that developing countries should be allowed to lift patent rights to
produce more vaccine to battle the A(H1N1) flu epidemic.77
Human Rights
The U.S. State Department’s Country Report on Human Rights on Brazil covering 2008 states
that while “the federal government generally respected the human rights of its citizens ... there
continued to be numerous, serious abuses, and the records of several state governments were
poor.” Three human rights issues of particular concern include crime and human rights abuses by
police, race and discrimination, and trafficking in persons.
Violent Crime and Human Rights Abuses by Police
Most observers agree that the related problems of urban crime, drugs, and violence, on the one
hand, and corruption and brutality in law enforcement and prisons, on the other, are threatening
citizens’ security in Brazil. Crime is most rampant in the urban shanty towns (favelas) in Rio de
Janeiro and São Paulo. Violence has traditionally been linked to turf wars being waged between
rival drug gangs for control of the drug industry or to clashes between drug gangs and police
officials, who have been criticized for the brutal manner in which they have responded to the
gang violence. Prison conditions in Brazil range from “poor to extremely harsh and life
threatening,” and the countrywide prison system, which housed more than 400,000 inmates in
2007, had almost double the system’s designed capacity.78
The current weaknesses in Brazil’s criminal justice system became dramatically apparent in 2006,
when gangs launched violent attacks that destabilized the cities of São Paulo and Rio de Janeiro.
In May 2006, street combat and rioting organized by a prison-based gang network, the First
Capital Command (PCC), paralyzed the city of São Paulo for several days.79 Officially, the
violent gang attacks, which were followed by police reprisals, resulted in at least 186 deaths.80 In
late December 2006, drug gangs torched buses and attacked police stations in Rio de Janeiro,
leaving some 25 dead. Recent clashes have also involved vigilante militias, composed of off-duty
police and prison guards, which are now charging citizens to “protect” them from the drug gangs.
75 U.S. Trade Representative, “Special 301 Report,” April 30, 2009.
76 “Haggling Saves Brazil $1 Billion on AIDS Drugs,” Reuters News, November 13, 2007.
77 “Update: Argentina, Brazil Question Swine Flu Vaccine Patents,” CNN Money, July 24, 2009.
78 U.S. Department of State, “Country Reports on Human Rights Practices 2008” February 25, 2009.
79 Formed in 1993 to protest the country’s poor prison conditions, the PCC now has at least 6,000 dues-paying
members and reportedly exerts control over more than 140,000 prisoners in the São Paulo prison system. Stephen
Hanson, “Brazil’s Powerful Prison Gang,” Council on Foreign Relations, September 26, 2006.
80 “Brazil: Battle of São Paulo Leaves a Disquieting Balance,” Latin American Weekly Report, May 23, 2006; “Police
are Criticized in Wave of Gang Violence in Brazil,” New York Times, May 30, 2006; “Attacks in São Paulo Prompt
Fears of Renewed Gang Offensive,” EFE News Service, February 7. 2007.
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Rio de Janeiro officials have identified the militias as criminal groups but have thus far been
unable to contain them.81
Human rights groups have identified extrajudicial killings by police and prison authorities as
Brazil’s most pressing human rights problem.82 Upon completing a November 2007 visit to
Brazil, a U.N. Special Rapporteur concluded that police in Brazil are allowed to “kill with
impunity in the name of security.”83 Indeed, Rio de Janeiro police killed nearly four people per
day in 2008, a 6% increase from 2007. Some have defended these strong-arm tactics, however,
crediting them for a 10% decline in Rio de Janeiro’s murder rate.84
Many analysts have asserted that Brazilian politicians at all levels of government have failed to
devote the resources and political will necessary to confront the country’s serious public security
problems. In particular, they maintain that there has been a lack of coordination between federal,
state, and local officials, and that political calculations have often prevented state governments—
which have been largely ineffective in responding to the recent violence—from seeking much-
needed assistance from the federal government. President Lula did not launch any major anti-
crime initiatives during his first term, but announced a $3 billion anti-crime initiative in August
2007 that combines police reform, prison construction, and other public security measures with
significant investments in prevention and rehabilitation programs.85
Race and Discrimination 86
People of African descent in Brazil, also known as Afro-Brazilians, represent 45% of the
country’s population, but constitute 64% of the poor and 69% of the extreme poor.87 During the
Cardoso Administration, the Brazilian government began to collect better official statistics on
Afro-Brazilians. These statistics found significant education, health, and wage disparities between
Afro-Brazilians and Brazil’s general population.
Brazil now has the most extensive anti-discrimination legislation geared towards Afro-
descendants of any country in Latin America. In 2001, Brazil became the first Latin American
country to endorse quotas in order to increase minority representation in government service.
Since 2002, several state universities in Brazil have enacted quotas setting aside admission slots
for black students. Although most Brazilians favor government programs to combat social
exclusion, they disagree as to whether the beneficiaries of affirmative action programs should be
selected on the basis of race or income.88 In 2003, Brazil became the first country in the world to
81 “Troops Alone Will Not Solve State of Violence,” Latin American Brazil & Southern Cone Report, January 2007;
“Brazilian Slums Face a New Problem: Vigilante Militias,” Christian Science Monitor, February 8, 2007.
82 Brazilian authorities report that, partially in response to violent gang attacks, São Paulo state police killed 533
alleged criminals in 2006 compared to 300 in 2005. See “Police Killings of Suspects Up in Brazil,” Associated Press,
February 1, 2007. President Lula has taken some steps to combat police brutality in Brazil.
83 “Special Rapporteur on Extrajudicial, Summary, or Arbitrary Executions Concludes Visit to Brazil,” States News
Service, November 15, 2007.
84 “Police raid fatalities in Rio revive debate over policy,” Latin American Security & Strategic Review, February 2009.
85 “Brazil: Public Security Program Finally Launched,” Latin American Weekly Report, August 23, 2007.
86 For more information, see CRS Report RL32713, Afro-Latinos in Latin America and Considerations for U.S. Policy,
by Clare Ribando Seelke and June S. Beittel.
87 Ricard Henriques, “Desigualdade racial no Brasil,” Brasilia: Instituto de Pesquisa Econômica Aplicada (IPEA), 2001
88 Livio Sansone, “Anti-Racism in Brazil,” NACLA Report on the Americas, September 1, 2004.
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establish a Special Secretariat with a ministerial rank to manage Racial Equity Promotion
Policies. Afro-Brazilian activists, while acknowledging recent government efforts on behalf of
Afro-descendants, have noted that most universities have preferred not to implement quota
systems, and that the Special Secretariat lacks the funding, staff, and clout necessary to advance
its initiatives.89
Despite these limitations, Brazil has taken a leadership role in advancing issues of race and
discrimination within the Organization of American States, where it is leading the drafting of an
Inter-American Convention for the Prevention of Racism and All Forms of Discrimination and
Intolerance. In March 2008, Brazil and the Untied States signed an agreement known as the
United States-Brazil Joint Action Plan Against Racial Discrimination to bilaterally promote racial
equality in areas such as education, health, housing, and labor.90 On September 9, 2008, the
House passed H.Res. 1254 (Engel), expressing congressional support for the U.S.-Brazil anti-
discrimination plan.
Trafficking in Persons for Forced Labor 91
According to the U.S. State Department’s Trafficking in Persons report, Brazil does not fully
comply with the minimum standards for the elimination of trafficking, but is making significant
efforts to do so. As a result, it is listed as a Tier 2 country.92 Brazil is a source, transit, and
destination country for people, especially women and children, trafficked for commercial sexual
exploitation. Brazilian Federal Police estimate that between 250,000 and 400,000 children are
exploited in domestic prostitution, especially in the country’s coastal resort areas where child sex
tourism is prevalent.
Brazil is also a source country for men trafficked internally for forced labor. More than 25,000
men have reportedly been recruited to labor in slave-like conditions, many in the country’s
agribusiness industry. Roughly half of the more than 11,000 people freed from debt slavery in
2007 and 2008 were found working on sugarcane plantations.93 While the Brazilian government
announced an agreement with the sugar industry to provide decent working conditions for the
country’s sugarcane cutters in June 2009, the accord does not establish minimum wages or formal
obligations.94 Reports suggest that significant numbers of men working in cattle ranching, mining,
89 Dayanne Mikevis and Matthew Flynn, “Brazil’s Civil Rights Activists Achieving Overdue Policy Reform,” Citizen
Action in the Americas, No. 17, April 2005.
90 “Partnering with U.S. to Fight Racial Bias,” Miami Herald, September 8, 2008.
91 For more information, see CRS Report RL33200, Trafficking in Persons in Latin America and the Caribbean, by
Clare Ribando Seelke.
92 Since 2001, the U.S. State Department has evaluated foreign governments’ efforts to combat trafficking in persons in
its annual Trafficking in Persons (TIP) reports, which are issued each June. Countries are grouped into four categories
according to the U.S. assessment of efforts they are making to combat trafficking. Tier 1 is made up of countries
deemed by the State Department to have a serious trafficking problem but fully complying with the minimum standards
for the elimination of trafficking. Those standards are defined in the Victims of Trafficking and Violence Protection
Act of 2000 (P.L. 106-386) as amended. Tier 2 is composed of governments not fully complying with those standards
but which are seen as making significant efforts to comply. Tier 2 Watch List, first added as a category in the 2004
report, is made up of countries that are on the border between Tier 2 and Tier 3. Tier 3 includes those countries whose
governments the State Department deems as not fully complying with TVPA’s anti-TIP standards and not making
significant efforts to do so. Tier 3 countries have been made subject to U.S. sanctions since 2003.
93 U.S. Department of State, Office to Monitor and Combat Trafficking in Persons, “Trafficking in Persons Report,”
June 4, 2008 & June 16, 2009.
94 “Brazil seeks decent working conditions for sugarcane cutters,” EFE News Service, June 26, 2009.
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and the production of charcoal for pig iron—a key ingredient of steel that is then purchased by
major companies in the United States—are also subjected to slave labor.95
Over the past year, the Brazilian government has taken a number of actions to address the
problem of human trafficking. Anti-slave labor mobile units under the Ministry of Labor
increased their operations, inspecting remote areas, freeing victims, and forcing those responsible
to pay fines and restitution. Slave labor victims received some $3.6 million in compensation as a
result of the 2008 operations. The Brazilian government also continued prosecuting traffickers,
providing assistance to victims, and broadcasting its anti-trafficking public awareness campaign.
Additionally, the Brazilian government began implementing a national plan of action to prevent
trafficking in persons. Despite these actions, Brazil has made only limited progress in bringing
traffickers to justice and effectively penalizing those who exploit forced labor.96
Convention on the Civil Aspects of International Child Abduction
Over the past several years, a high-profile child custody case has focused attention on Brazil’s
noncompliance with the Hague Convention on the Civil Aspects of International Child
Abduction.97 In June 2004, Sean Goldman was taken to Brazil by his mother, Bruna Bianchi
Carneiro Ribeiro Goldman, a Brazilian native. Ms. Bianchi then informed her husband David
Goldman—a U.S. citizen—that their marriage was over, she would not be returning to the United
States, and she wanted full custody of Sean. In August 2004, the Superior Court of New Jersey
ruled that Ms. Bianchi’s continued retention of Sean constituted parental kidnapping under U.S.
law and awarded Mr. Goldman custody.98 In September 2004, Mr. Goldman filed an application
for Sean’s return under the 1980 Hague Convention on the Civil Aspects of International Child
Abduction, to which both the United States and Brazil are party and which entered into force
between the countries on December 1, 2003. Under the Convention, a child removed from a
country in violation of a parent’s custodial rights should be promptly returned to the place of his
or her habitual residence. The courts of the country of the child’s residence can then resolve the
custody dispute.99
In 2005, a Brazilian federal judge ruled that although Sean had been moved to Brazil wrongfully,
he should remain in Brazil because he had become settled in his new location.100 In August 2008,
Ms. Bianchi died and a Brazilian state court judge granted temporary custody of Sean to the man
Ms. Bianchi married following her move to Brazil, Joao Paulo Lins e Silva.101 Mr. Goldman
95Michael Smith and David Voreacos, “The Secret World of Modern Slavery,” Bloomberg Markets, December 2006;
U.S. Department of State, Office to Monitor and Combat Trafficking in Persons, “Trafficking in Persons Report,” June
16, 2009.
96 U.S. Department of State, Office to Monitor and Combat Trafficking in Persons, “Trafficking in Persons Report,”
June 16, 2009.
97 For more information on international parental child abductions, see CRS Report RS21261, International Parental
Child Abductions, by Alison M. Smith.
98 David G. Goldman V. Bruna B. Goldman, FD-13-395-05C (Superior Court of New Jersey 2004).
99 Hague Conference on Private International Law: Final Act, Draft Conventions on Civil Aspects of International
Child Abduction and on International Access to Justice, Articles on the Law Applicable to Certain Consumer Sales,
and Recommendations and Decisions of the Conference, Oct. 25, 1980, 19 I.L.M. 1501 (1980).
100 Under Article 12 of the Hague Convention, a judge may refuse to return a child if the child has become settled in his
or her new home and more than one year has passed from the date of the child’s removal.
101 Joshua Partlow, “Fight for 8-Year-Old Colors Relationship Between U.S., Brazil,” Washington Post Foreign
Service, March 13, 2009; Kirk Semple, “Court Battle Over a Child Strains Ties in 2 Nations,” New York Times,
(continued...)
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appealed the ruling, and on June 2, 2009, a Brazilian federal judge ruled that Brazil must respect
the Hague Convention and ordered that Sean be returned to his father. Just a day later, however, a
Brazilian Supreme Court justice stayed the order in accordance with a request from the
conservative Progressive Party, which argued that sending the child to the United States would be
unconstitutional.102 The Brazilian Supreme Court unanimously refused to consider the
Progressive Party’s appeal and sent the case back to a federal court, which authorized Mr.
Goldman to live in Brazil and share custody of Sean until the court reaches a definitive verdict.103
The U.S. State Department’s Report on Compliance with the Hague Convention on the Civil
Aspects of International Child Abduction cites Brazil for patterns of noncompliance with the
Convention. It faults Brazilian courts for treating Convention cases as custody decisions,
demonstrating bias toward Brazilian citizens, and making the judicial process excessively
lengthy. In February 2009, Secretary of State Clinton brought up the Goldman case in her meeting
with Brazilian Foreign Minister Celso Amorim, and in March 2009, President Obama raised the
matter in his meeting with President Lula. Both Brazilian leaders maintain that the Goldman case
will be settled by the country’s independent judiciary.104 There are currently some 50 unresolved
cases of children being retained in Brazil after having been wrongly removed from the United
States.105
On March 11, 2009, the House unanimously passed H.Res. 125 (C. Smith), calling on Brazil to
meet its obligations under the Hague Convention to return Sean Goldman to his father in the
United States. On March 24, 2009, the Senate approved S.Res. 37 (Lautenberg) by unanimous
consent, calling on Brazil to comply with the requirements of the Convention on the Civil Aspects
of International Child Abduction and to assist in the safe return of Sean Goldman to his father in
the United States. On June 4, 2009, H.R. 2702 (C. Smith) was introduced in the House. The bill
would suspend the Generalized System of Preferences for Brazil until the country meets its
obligations under the Convention on the Civil Aspects of International Child Abduction.
HIV/AIDS
Internationally recognized as having one of the world’s most successful HIV/AIDS programs,
Brazil has made the fight against the spread of HIV/AIDS a national priority. Initially focused on
disease prevention, Brazil’s HIV/AIDS program expanded to providing antiretroviral therapy
(ART) on a limited basis by 1991, and later guaranteeing universal access by 1996. Currently
some 172,000 Brazilians have access to free generic versions of ART drugs, some of which are
locally produced and financed by the Brazilian government. The incidence of HIV/AIDS in
Brazil has stabilized since 1997, and universal free access to ART has increased average survival
times from 18 months for those diagnosed in 1995, to 58 months for those diagnosed in 1996.106
(...continued)
February 25, 2009.
102 Alexei Barrionuevo, “Judge in Brazil Stays Ruling Ordering Return of Boy to U.S.,” New York Times, June 3, 2009.
103 Stan Lehman, “Brazil court rebuffs bid to block boy’s return,” Associated Press, June 10, 2009; “Brazil court tilts in
favor of U.S. father in custody fight,” EFE News Service, June 19, 2009.
104 Joshua Partlow, “Fight for 8-Year-Old Colors Relationship Between U.S., Brazil,” Washington Post Foreign
Service, March 13, 2009; Darlene Superville, “Obama, Brazil leader focus on economy, energy,” Associated Press,
March 14, 2009.
105 Kirk Semple, “Court Battle Over a Child Strains Ties in 2 Nations,” New York Times, February 25, 2009.
106 Daniel R. Hogan and Joshua A. Salomon, “Prevention and Treatment of HIV/AIDS in Resource-Limited Settings,”
(continued...)
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HIV prevalence has been stable at 0.5% for the general population in Brazil since 2000, so most
government prevention efforts are now targeted at high-risk groups where prevalence rates are
still above 5%.
Brazil’s decision to develop generic ART drugs to treat HIV/AIDS under the compulsory
licensing provision of its patent law led to a subsequent 80% drop in the cost of treatment. That
decision brought Brazil into conflict with the United States and the international pharmaceutical
industry. In May 2001, the United States submitted a complaint to the WTO, which was later
withdrawn, that Brazil’s practices violated the Trade-Related Aspects of Intellectual Property
Rights (TRIPS) agreement and prevented companies from developing new products in Brazil.
While the pharmaceutical industry argued that TRIPS was an essential tool to protect intellectual
property rights, developing countries (like Brazil) countered that TRIPS inhibited their ability to
fight public health emergencies in a cost-effective manner. In August 2003, a WTO decision
temporarily waived part of the TRIPS rules to allow the export of generic drugs to countries
confronting a grave public health challenge (such as HIV/AIDS, tuberculosis, or malaria). That
temporary waiver became permanent in late 2005.107
Brazil currently manufactures older ART drugs for domestic consumption and export to several
African countries but has to import newer medicines. According to Brazil’s Ministry of Health,
tough negotiations with pharmaceutical companies have resulted in $1.1 billion in savings for the
country’s HIV/AIDS program.
Amazon Conservation
The Amazon basin spans the borders of eight countries and is the most biodiverse tract of tropical
rainforest in the world. It holds 20% of the Earth’s fresh water and 10% of all known species.
Approximately 60% of the Amazon falls within Brazilian borders, making Brazil home to 40% of
the world’s remaining tropical forests.108
The Brazilian Amazon was largely undeveloped until the 1960s, when the military government
began subsidizing the settlement and development of the region as a matter of national security.
Over the last 40 years, the human population has grown from 4 million to over 20 million, and the
resulting settlements, roads, logging, cattle ranching, and subsistence and commercial agriculture
have led to approximately 15% of the Brazilian Amazon being deforested.109 In the 1980s, some
predicted that deforestation would decline if the Brazilian government stopped providing tax
incentives and credit subsidies to settlers and agricultural producers. Those predictions have not
borne out, however, as the complex and often interrelated causes of deforestation have multiplied
rather than decreased.110 Between 1990 and 2000, Brazil lost an area of rainforest twice the size
(...continued)
World Health Organization, February 2005.
107 Mary Anastasia O’Grady, “Brazil Could Turn a Trade Victory into Defeat,” Wall Street Journal, December 16,
2005.
108 Lesley K. McAllister, “Sustainable Consumption Governance in the Amazon,” Environmental Law Reporter,
December 2008; “Amazon: World’s largest tropical rainforest and river basin,” World Wildlife Fund, 2009.
109 Lesley K. McAllister, “Sustainable Consumption Governance in the Amazon,” Environmental Law Reporter,
December 2008.
110 Some have suggested that access to pristine tracts of rainforests through roads is the primary driver of deforestation
in the Amazon. Regional roads constructed by the government, as well as local roads created by logging operations,
(continued...)
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of Portugal. Deforestation rates declined following the peak year of 2004, but in November 2008,
the National Institute for Space Research (INPE) announced a new increase in the rate of
deforestation, with over 4,600 square miles being cleared between July 2007 and July 2008.111
Domestic Efforts
Recognizing that deforestation threatens the biodiversity of the Amazon region and is responsible
for 70% of Brazil’s annual greenhouse-gas emissions, the Lula Administration has expanded
protected areas and implemented new environmental policies.112 During its first five years in
office, the Lula Administration created 62 new natural reserves, bringing the total area of the
Brazilian Amazon protected by law to nearly 110,000 square miles, the fourth-largest percentage
of protected area in relation to territory in the world.113 President Lula has also signed a Public
Forest Management Law that encourages sustainable development, placed a moratorium on
soybean plantings and cattle ranching in the Amazon, and announced a plan to reduce the rate of
Amazon deforestation by half to 2,300 square miles per year by 2017. Brazil plans to meet this
goal by increasing federal patrols of forested areas, replanting over 21,000 square miles of forest,
and financing sustainable development projects in areas where the local economy depends on
logging.114 The Lula Administration maintains that these efforts have been successful,
highlighting the fact that just 76 square miles of the Amazon were deforested between February
and April 2009, a 90% reduction from the same period in 2008.115
Although some conservation groups have praised President Lula for his Administration’s actions,
a number of environmentalists—including former Environment Minister Marina Silva and current
Environment Minister Carlos Minc—have questioned the Administration’s commitment to
sustainable development.116 Critics assert that the Administration favors agricultural interests over
conservation. This claim was reinforced by President Lula’s June 2009 approval of an
environmental law that grants nearly 260,000 square miles of the Amazon to illegal squatters,
72% of which will go to large land holders.117 Critics also maintain that Brazil’s occasional
declines in deforestation rates are not the result of the Lula Administration’s initiatives, but
correspond to declining global commodity prices that make it less profitable to clear the forests.
They point out that deforestation rates only began falling as commodity prices collapsed in late
2008.118 In order to combat further deforestation, some analysts maintain that the Brazilian
(...continued)
provide access to forested areas. Using these roads, farmers clear remaining forests and practice slash and burn
agriculture until the land loses much of its soil fertility and it becomes more profitable to move to other forested tracts
rather than resuscitate existing lands. After agriculture, pasture grasses are generally planted and cattle are raised.
Eventually, cattle grazing and cyclical burning alter the ecosystem to the point that forests cannot regenerate.
111 “Government Sets Targets to Cut Deforestation,” Latin American Regional Report, December 2008.
112 “Brazil: The Land Cries for Amazonia,” Latin America Data Base NotiSur, February 13, 2009.
113 “Brazil: Government policy for Amazon still ambiguous,” Latin News Weekly Report, May 22, 2008.
114 “Government Sets Targets to Cut Deforestation,” Latin American Regional Report, December 2008.
115 Raymond Colitt, “Brazil on target in slowing Amazon deforestation,” Reuters, June 2, 2009.
116 Joshua Partlow, “Brazil’s Decision to Reduce Deforestation Praised,” Pittsburgh Post-Gazette, December 7, 2008;
Ana Paula Paiva, “Brazil environment minister says lacks support,” Reuters, May 28, 2009.
117 Jose Pedro Martins, “Brazil: Environmentalists and Church Protest Legalization of Fraudulently Obtained Lands in
the Amazon,” Latin America Data Base NotiSur, June 25, 2009.
118 Raymond Colitt, “Brazil on target in slowing Amazon deforestation,” Reuters, June 2, 2009.
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government will have to greatly increase the number of people employed to work in protected
areas and do more to confront agricultural producers operating within the Amazon.119
Carbon Offsets and Other International Initiatives
The Amazon holds 10% of the carbon stores in the world’s ecosystem and absorbs nearly two
billion tons of carbon dioxide each year, making it a sink for global carbon emissions and an
important asset in the prevention of climate change.120 The Kyoto Protocol—of which Brazil is a
signatory—created a Clean Development Mechanism (CDM), which allows emission reduction
projects in developing countries to earn certified emission reduction credits (CERs) that can then
be traded or sold to industrialized countries to meet their mandated emission reduction targets.
Brazil has taken full advantage of the CDM, and is host to over 9% of the worldwide emission
reduction projects. These projects represent 33.5 million CERs, or a reduction of 33.5 million
tons of carbon dioxide.121 The CDM allows for a wide variety of emission reduction projects, but
in terms of forestry, CERs are only awarded for afforestation and reforestation projects, not forest
conservation. As a result, forestry projects account for a very small percentage of the total CERs
awarded. A number of industrialized countries that would like to achieve a greater percentage of
their mandated emission reductions through carbon offsets have teamed with developing
countries with substantial tropical forests to propose widening the CDM to include forest
conservation. Brazil has opposed such a plan, arguing it would absolve rich countries from
cutting their own emissions.122 Brazil has supported the rise of voluntary offset markets, however,
in which organizations and individuals not subject to mandatory emission reductions can buy
carbon offsets to contribute to conservation and clean energy projects.
Brazil believes Amazon conservation should be done through public funding rather than a carbon
market. Accordingly, it launched the “Amazon Fund” in August 2008. The fund is intended to
attract donations from countries, companies, and non-governmental organizations to assist in
Brazil’s Amazon conservation efforts. Brazil intends to raise $21 billion by 2021—and hopes to
raise $1 billion within a year—to support forest conservation, scientific research, and sustainable
development. Norway has donated $140 million to the fund—with a pledge of $1 billion by
2015—and Germany has contributed $24.5 million.123
USAID environment programs support Amazon conservation through the promotion of proper
land-use and encouragement of environmentally friendly income generation activities for the
rural poor. In FY2006, USAID initiated the Amazon Basin Conservation Initiative, which
supports community groups, governments, and public and private organizations working
throughout the Amazon Basin in their efforts to conserve the Amazon’s globally important
biodiversity. USAID provided $5.2 million for environmental programs in Brazil in FY2007 and
an estimated $9.5 million in FY2008. The Joint Explanatory Statement of the Omnibus
119 Ibid; Joshua Partlow, “A Protected Forest’s Fast Decline,” Washington Post, February 6, 2009.
120 “Brazil: Global warming risks threaten Amazonia,” Oxford Analytica, March 16, 2009; Conor Foley, “The End of
the Amazon?,” Foreign Policy, June 2009.
121 United Nations Framework Convention on Climate Change, “CDM Statistics,” August 2009.
122 “Rich, poor in dispute over rainforest cash,” Reuters, December 4, 2008. For more information on Forest Carbon
Markets, see CRS Report RL34560, Forest Carbon Markets: Potential and Drawbacks, by Ross W. Gorte and
Jonathan L. Ramseur.
123 “Brazil’s Amazon Fund not to suffer from financial crisis; minister,” Xinhua News Agency, October 25, 2008;
“Germany pledges euro18 million to Amazon fund,” Associated Press, December 18, 2008.
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Appropriations Act for FY2009 (P.L. 111-8) recommends that, in addition to funding for country
programs, no less than $25 million be made available for the Amazon Basin Conservation
Initiative, $10 million of which is directed to activities in the Brazilian Amazon.
Figure 1. Map of Brazil
Source: Map Resources. Adapted by CRS Graphics.
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Author Contact Information
Peter J. Meyer
Clare Ribando Seelke
Analyst in Latin American Affairs
Specialist in Latin American Affairs
pmeyer@crs.loc.gov, 7-5474
cseelke@crs.loc.gov, 7-5229
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