Brazil: Background and U.S. Relations
Peter J. Meyer
Analyst in Latin American Affairs
August 20, 2015
Congressional Research Service
7-5700
www.crs.gov
RL33456
Brazil: Background and U.S. Relations
Summary
The United States traditionally has enjoyed robust economic and political relations with Brazil,
which is the seventh-largest economy in the world and is recognized by the Obama
Administration as a “major global player” and an “indispensable partner” on issues ranging from
international development to climate change. Administration officials have often highlighted
Brazil’s status as a multicultural democracy, referring to the country as a natural partner that
shares values and goals with the United States. Bilateral ties have been strained from time to time
as the countries’ occasionally divergent national interests and independent foreign policies have
led to disagreements. U.S.-Brazilian relations were particularly strained following revelations in
2013 of alleged National Security Agency (NSA) activities inside Brazil. Cooperation has
improved over the past year, however, culminating in a June 2015 presidential meeting at the
White House. Ongoing areas of engagement include trade, energy, security, racial equality, and
the environment.
Brazil’s Political and Economic Situation
After narrowly winning a second round runoff election in October 2014, President Dilma
Rousseff of the center-left Workers Party was inaugurated to a second four-year term on January
1, 2015. Economic conditions in Brazil have deteriorated significantly in recent years, and
Rousseff is now in the difficult position of trying to keep her campaign promises to protect social
welfare programs and maintain low unemployment while simultaneously implementing austerity
measures that many economists think are necessary to attract investment and ultimately boost
growth. While international investors have welcomed Rousseff’s efforts to carry out an economic
adjustment, much of her political base is opposed to the policy shift. Unemployment has begun to
increase, and the economy is expected to contract by 1.5% this year.
The poor economic situation has weakened Rousseff’s political standing, which was already
fragile as a result of a major corruption scandal that has implicated numerous officials in the
governing coalition. In August 2015, 8% of Brazilians approved of Rousseff’s job performance
while 71% disapproved. Nominally allied legislators are increasingly voting against key portions
of Rousseff’s policy agenda, and some political leaders are discussing the possibility of her
impeachment.
Congressional Action
The 114th Congress has taken up several legislative measures that will influence U.S.-Brazil
relations. As part of the Trade Preferences Extension Act of 2015 (P.L. 114-27), Congress
renewed the Generalized System of Preferences (GSP) program, which provides non-reciprocal,
duty-free tariff treatment to certain products imported from Brazil and other designated
developing countries. Congress is also considering reforms to the International Monetary Fund
(IMF) that would provide greater voting power to Brazil and other emerging economies. While
the State Department and foreign operations appropriations bill reported in the Senate, S. 1725,
would authorize the IMF reforms, which have been awaiting congressional approval for nearly
five years, the version reported in the House, H.R. 2772, would not. Additionally, Congress may
appropriate funding to continue U.S. assistance programs in Brazil and U.S.-Brazil development
cooperation in other countries. The reports accompanying the State Department and foreign
operations appropriations bills, S.Rept. 114-79 and H.Rept. 114-154, both recommend providing
$10.5 million to support conservation programs in the Brazilian Amazon.
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Contents
Recent Developments ...................................................................................................................... 1
Political and Economic Situation .................................................................................................... 2
Background ............................................................................................................................... 3
Cardoso Administration (1995-2002) ................................................................................. 4
Lula Administration (2003-2010) ....................................................................................... 5
Rousseff Administration (2011-Present) ................................................................................... 6
Economic Challenges.......................................................................................................... 7
Political Challenges ............................................................................................................ 8
U.S.-Brazil Relations ....................................................................................................................... 9
U.S. Foreign Assistance and Trilateral Development Initiatives ............................................. 10
Commercial Relations .............................................................................................................. 11
Bilateral Trade and Investment ......................................................................................... 13
Cotton Dispute .................................................................................................................. 14
Energy Ties .............................................................................................................................. 15
Biofuels ............................................................................................................................. 16
Oil ..................................................................................................................................... 17
Security Cooperation ............................................................................................................... 19
Counternarcotics ............................................................................................................... 19
Counterterrorism ............................................................................................................... 20
Defense ............................................................................................................................. 21
Promotion of Racial Equality .................................................................................................. 22
Amazon Conservation ............................................................................................................. 23
Figures
Figure 1. Map of Brazil ................................................................................................................... 2
Figure 2. U.S. Trade with Brazil: 2004-2014 ................................................................................ 14
Figure 3. U.S. Oil Trade with Brazil: 2004-2014 .......................................................................... 19
Figure 4. Deforestation in the Brazilian Amazon: 2004-2014 ....................................................... 25
Tables
Table 1. U.S. Assistance to Brazil: FY2012-FY2016 ..................................................................... 11
Contacts
Author Contact Information .......................................................................................................... 26
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Recent Developments
On August 6, 2015, the Brazilian polling organization Datafolha published a poll
that found 8% of Brazilians approve of President Dilma Rousseff’s performance
in office while 71% of disapprove. Two-thirds of those surveyed supported
Congress opening impeachment proceedings against the president (see “Political
Challenges”).
On July 9, 2015, the International Monetary Fund (IMF) published an updated
World Economic Outlook that forecasts that the Brazilian economy will contract
by 1.5% in 2015. In April 2015, the IMF had forecasted a 1% contraction (see
“Economic Challenges”).
Also on July 9, 2015, the Senate Appropriations Committee reported the
Department of State, Foreign Operations, and Related Programs Appropriations
Act, 2016 (S. 1725) to the full Senate. Among other provisions, the bill
authorizes reforms to the IMF that would provide greater voting power to Brazil
and other emerging economies (see “U.S.-Brazil Relations”). The report
accompanying the bill (S.Rept. 114-79) recommends providing $10.5 million to
support conservation programs in the Brazilian Amazon (see “Amazon
Conservation”).
On June 30, 2015, President Rousseff met with President Obama at the White
House. While the meeting produced few major policy announcements, it
demonstrated both countries’ willingness to move beyond a difficult period in
bilateral relations in the aftermath of disclosures about National Security Agency
(NSA) activities in Brazil (see “U.S.-Brazil Relations”).
On June 29, 2015, President Obama signed into law the Trade Preferences
Extension Act of 2015 (P.L. 114-27), which extended the Generalized System of
Preferences (GSP) program through 2017. GSP provides nonreciprocal, duty-free
tariff treatment to certain products imported from Brazil and other designated
developing countries. Authorization for the program had previously expired on
July 31, 2013 (see “Bilateral Trade and Investment”).
On June 25, 2015, the Brazilian Congress approved two bilateral defense
cooperation agreements with the United States that had been pending since 2010
(see “Defense”).
On June 15, 2015, the House Appropriations Committee reported its version of
the Department of State, Foreign Operations, and Related Programs
Appropriations Act, 2016 (H.R. 2772) to the House of Representatives. The bill
does not authorize reforms to the IMF that would provide greater voting power to
Brazil and other emerging economies (see “U.S.-Brazil Relations”). The report
accompanying the bill (H.Rept. 114-154) recommends providing $10.5 million to
support conservation programs in the Brazilian Amazon (see “Amazon
Conservation”).
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Brazil: Background and U.S. Relations
Figure 1. Map of Brazil
Source: Map Resources. Adapted by CRS Graphics.
Political and Economic Situation
President Dilma Rousseff of the center-left1 Workers Party (Partido dos Trabalhadores, PT) first
assumed office in January 2011. Her predecessors, Presidents Fernando Henrique Cardoso (1995-
1 The PT was founded as a leftist party, but it moved toward the ideological center upon taking office in 2002. Timothy
J. Power and Cesar Zucco Jr., “Estimating Ideology of Brazilian Legislative Parties, 1990-2005,” Latin American
Research Review, vol. 44, no. 1, 2009.
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2002) and Luis Inácio Lula da Silva (2003-2010), made notable progress in consolidating
democratic governance, stabilizing the economy, and reducing the country’s vast social
disparities. Brazil also benefitted from favorable international economic conditions in the decade
prior to her election, which, combined with the policies of her predecessors, facilitated Brazil’s
rise to become the seventh-largest economy in the world.
Economic conditions began to deteriorate early in Rousseff’s term, however, and her
administration struggled throughout her first four years in office to address weak economic
growth and popular discontent. Nevertheless, Rousseff was narrowly reelected. Now over seven
months into her second term, Rousseff is implementing economic austerity measures designed to
attract investment and boost long-term growth while attempting to protect social welfare
programs. Rousseff’s political standing has weakened significantly as the economy has continued
to slow and revelations about a major corruption scandal have come to light. Her public approval
rating has fallen to single digits, nominally allied legislators have voted against Rousseff on key
portions of her policy agenda, and some political leaders have begun to discuss impeachment.
Brazil at a Glance
Land Area: 8.5 mil ion sq. km. (slightly smaller than the United States)
Population: 202.8 million (2014 est.)
Race/Ethnicity: White—47.7%, Mixed Race—43.1%, Black—7.6%, Asian—1.1%, Indigenous—0.4% (Self-
identification, 2010)
Religion: Catholic—65%, Evangelical Christian—22%, None—8%, Other—4% (2010)
Official Language: Portuguese
Gross Domestic Product (GDP): $1.9 tril ion (2015 est.)
GDP per Capita: $9,312 (2015 est.)
Top Exports: iron ore, soybeans, oil, meat, and machinery (2014)
Life Expectancy at Birth: 74.2 years (2015)
Infant Mortality Rate: 12.3 per 1,000 live births (2013)
Adult Literacy Rate: 92.6% (2015)
Poverty Rate: 18% (2013)
Extreme Poverty Rate: 5.9% (2013)
Sources: Area, population, race/ethnicity, and religion statistics from the Instituto Brasileiro de Geografia e Estatística
(IBGE); GDP estimates from the International Monetary Fund (IMF); trade data from Global Trade Atlas; life
expectancy, infant mortality, literacy, and poverty rates from the U.N. Economic Commission for Latin America and
the Caribbean (ECLAC).
Background
Brazil occupies almost half of the continent of South America and is the fifth most populous
country in the world with 203 million citizens.2 The country declared independence from Portugal
in 1822, initially establishing a constitutional monarchy and retaining a slave-based, plantation
economy. Brazil abolished slavery in 1888 and became a republic in 1889, but economic and
political power remained concentrated in the hands of large rural landowners and the vast
majority of Brazilians remained outside the political system. The authoritarian government of
Getúlio Vargas (1930-1945) began the incorporation of the working classes but exerted strict
control over labor as part of its broader push to centralize power. Vargas also increased the state’s
2 Instituto Brasileiro de Geografia e Estatística (IBGE), Estimativas da População Residente no Brasil e Unidades da
Federação com Data Referëncia em 1° de Julho de 2014, August 28, 2014.
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role in the economy and pursued import-substitution industrialization. Brazil enjoyed multiparty
democracy between 1945 and 1964, but experienced polarization and instability as economic
growth slowed, inflation increased, and populism gained strength.
The Brazilian military seized power in a 1964 coup, ushering in two decades of authoritarian rule
(1964-1985). Although repressive, the Brazilian military was not as brutal as those in some other
South American countries. It nominally allowed the judiciary and Congress to function during its
tenure, but stifled representative democracy and civic action, carefully preserving its influence
during one of the most protracted transitions to democracy to occur in Latin America. According
to Brazil’s National Truth Commission, at least 434 people were killed or “disappeared” by the
dictatorship.3 Brazil continued to pursue state-led development during most of the military era,
and industrialization helped foster the transformation of Brazil into a predominantly urban
society.
Brazil restored civilian rule in 1985, and a national constituent assembly, elected in 1986,
promulgated a new constitution in 1988. The constitution, as amended, establishes a liberal
democracy with a strong president, a bicameral Congress consisting of the 513-member Chamber
of Deputies and the 81-member Senate, and an independent judiciary. Power is somewhat
decentralized under the country’s federal structure, which includes 26 states, a federal district, and
some 5,570 municipalities.
Brazil experienced economic recession and political uncertainty during the first decade after the
political transition. Numerous efforts to control runaway inflation failed, and two elected
presidents did not complete their terms; one died before taking office, and the other was
impeached on corruption charges.4
Cardoso Administration (1995-2002)
Brazil’s economic and political situation began to stabilize under President Fernando Henrique
Cardoso, who was elected to serve two terms between 1995 and 2002. A prominent sociologist of
the centrist5 Brazilian Social Democracy Party (Partido da Social Democracia Brasileira,
PSDB), Cardoso’s initial election in 1994 was largely the result of the success of the anti-inflation
“Real Plan” that he implemented as finance minister under President Itamar Franco (1992-1994).
The plan consisted of a new currency (the real) pegged to the U.S. dollar, a more restrictive
monetary policy, and a severe fiscal adjustment that included a 9% reduction in federal spending
and an across-the-board tax increase of 5%. Prices immediately began to stabilize, with annual
inflation falling from 2,730% in 1993 to about 18% in 1995.6
Cardoso continued the economic reform push after taking office, privatizing some state-owned
enterprises and gradually opening the Brazilian economy to foreign trade and investment. These
policies contributed to stronger growth rates for a few years, but macroeconomic stability
remained elusive. Following the 1997 East Asian and 1998 Russian financial crises, concerns
3 Comissão Nacional da Verdade, Relatório, Volume 1, December 2014, p. 963.
4 Brazil: A Country Study, ed. Rex A. Hudson, 5th ed. (Washington, DC: Library of Congress, 1998).
5 The PSDB was founded as a center-left party by dissidents from the social democratic wing of the Party of the
Brazilian Democratic Movement (Partido do Movimento Democrático Brasileiro, PMDB). It has moved to the right
since implementing market-oriented economic reforms during the Cardoso Administration. Power and Zucco, 2009, op.
cit.
6 CRS Report 98-987, Brazil's Economic Reform and the Global Financial Crisis, by J. F. Hornbeck.
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about Brazil’s overvalued exchange rate and substantial fiscal deficits sparked a massive capital
flight. Brazil adopted a floating exchange rate, and the real lost 40% of its value.7
Although Cardoso’s popularity declined as Brazil struggled with these economic challenges, most
analysts credit him with laying the foundation for the macroeconomic stability that Brazil has
experienced since he left office. In the aftermath of the 1998-1999 financial crises, Brazil adopted
the three main pillars of its macroeconomic policy: a floating exchange rate, a primary budget
surplus,8 and an inflation-targeting monetary policy. Cardoso also established a series of targeted
income transfer programs designed to alleviate poverty. These economic and social policies have
been maintained and built upon by subsequent administrations.
Lula Administration (2003-2010)
Luis Inácio Lula da Silva—known as Lula—was elected president of Brazil in 2002, his fourth
attempt at the presidency as the candidate of the PT, which he helped found as a metalworker and
union leader. During his first term, Lula maintained the market-oriented economic policies
associated with his predecessor. He tightly controlled expenditures, raised the primary budget
surplus, and granted additional autonomy to the Central Bank. At the same time, he placed greater
emphasis on reducing poverty, reorganizing and expanding some of the social programs that had
been initiated under Cardoso. The most high-profile program, Bolsa Familia (“Family Grant”),
provides monthly cash transfers to poor families that ensure their children attend school and
receive proper medical care. Lula’s agenda stalled toward the end of his first term as several top
PT officials were implicated in a vote-buying scheme. The scandal ultimately led to the
convictions of 25 people—including Lula’s former chief of staff—in 2012.9 Nevertheless, Lula
was reelected in 2006.
After primarily focusing on maintaining economic stability during his first term, Lula established
a larger role for the Brazilian state in economic development during his second term. He
expanded Bolsa Familia and launched new social welfare programs. He also continued to raise
the minimum wage, which, adjusted for inflation, increased nearly 64% during his eight years in
office.10 In response to the global financial crisis, the Lula Administration implemented a series of
stimulus measures designed to offset declines in global demand with increased domestic
consumption. Analysts have credited the administration’s timely policy response for mitigating
the effects of the crisis and facilitating recovery;11 the Brazilian economy contracted by 0.2% in
2009 before rebounding with 7.6% growth in 2010.12 Moreover, Lula won legislative approval for
a new regulatory framework that increased the state’s role in the exploitation of Brazil’s
considerable offshore oil reserves and is designed to ensure that those resources are used to fuel
long-term economic and social development.
Although some observers criticized Lula for not doing more to advance certain policy reforms,13
most give him credit for improving social inclusion in Brazil. Between 2001 and 2011, the
7 Ibid; Riordan Roett, “How Reform has Powered Brazil’s Rise,” Current History, February 2010.
8 The primary balance is equal to government revenues minus expenditures prior to subtracting debt payments.
9 “Brazil Politics: Supreme Court Gives Tough Sentences in ‘Mensalão’ Trial,” Economist Intelligence Unit, October
26, 2012.
10 Cristiano Romero, “O Legado de Lula na Economia,” Valor Online (Brazil), December 29, 2010.
11 See, for example, International Monetary Fund (IMF), “IMF Executive Board Concludes 2010 Article IV
Consultation with Brazil,” August 5, 2010.
12 IMF, World Economic Outlook Database, April 2015, April 14, 2015.
13 See, for example, “Brazil's Presidential Election: Lula's Legacy,” Economist, September 30, 2010; and Paulo Kliass,
(continued...)
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percentage of the population living in poverty fell from 37.5% to 20.9%, and the percentage
living in extreme poverty fell from 13.2% to 6.1%.14 Income inequality was also reduced, with
the Gini coefficient15 falling from 0.64 to 0.56 during the same time period.16 While these
advances were partially the result of stronger economic growth driven by a boom in international
demand for Brazilian commodities, government policy also played a role. According to a 2012
study, about 28% of the decline in income inequality in Brazil between 2001 and 2009 was
attributable to increases in the minimum wage, and another 13% of the decline was attributable to
the Bolsa Família program.17
Rousseff Administration (2011-Present)
President Dilma Rousseff of the center-left PT was inaugurated to a second four-year term on
January 1, 2015. Although she was originally elected in 2010 after promising to maintain the
popular socioeconomic policies of President Lula, Rousseff struggled to address the country’s
deteriorating economic situation during her first term. She also had to contend with popular
unrest, including mass demonstrations in June 2013, during which more than 1 million citizens
took to the streets to express frustration with the stagnation in their living standards, call for better
quality public services, and denounce corruption.18 While the political opposition sought to
capitalize on Rousseff’s failure to meet citizens’ rising expectations during the 2014 election
campaign, Rousseff and the PT appear to have convinced many Brazilians that the opposition
candidates would end popular social welfare programs and threaten the considerable
socioeconomic gains made in Brazil since 2003. She held off two strong challengers and was
narrowly reelected with 51.6% of the vote in a second round runoff.19
Now over seven months into her second term, Rousseff continues to face significant economic
and political challenges. On the economic front, Rousseff is attempting to keep her campaign
promises to protect social welfare programs and maintain low unemployment while implementing
austerity measures that many economists assert are necessary to encourage investment and
ultimately boost growth (see “Economic Challenges”). Rousseff’s political standing has declined
precipitously as economic conditions have continued to deteriorate and a major corruption
scandal has implicated numerous officials in the governing coalition. In August 2015, 8% of
Brazilians approved of her job performance while 71% disapproved (see “Political
Challenges”).20
(...continued)
“Lula's Political Economy: Crisis and Continuity,” North American Congress on Latin America (NACLA), March/April
2011.
14 U.N. Economic Commission for Latin America and the Caribbean (ECLAC), Statistical Yearbook for Latin America
and the Caribbean, 2013, December 2013, p. 65.
15 The Gini coefficient is a value between zero and one, where zero represents complete equality and one represents
complete inequality.
16 ECLAC, December 2013, op. cit., p. 70.
17 Pedro H. G. Ferreira de Souza, Poverty, Inequality and Social Policies in Brazil, 1995-2009, U.N. Development
Programme, International Policy Centre for Inclusive Growth, Working Paper Number 87, Brasilia, February 2012, p.
19, http://www.ipc-undp.org/pub/IPCWorkingPaper87.pdf.
18 “Brazil’s Stormy June: Not Turkey or Egypt,” Latin American Security & Strategic Review, June 2013.
19 Tribunal Superior Eleitoral, “Estatísticas Eleitorais 2014,” October 26, 2014.
20 Alexandre Aragão, “Reprovação de Dilma Cresce e Supera a de Collor em 1992,” Folha de São Paulo, August 6,
2015.
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Economic Challenges
President Rousseff will likely spend much of her second term focusing on domestic economic
challenges. With a gross domestic product (GDP) of $1.9 trillion,21 Brazil is the largest economy
in Latin America and the seventh-largest economy in the world. Annual economic growth
averaged over 4% between 2003 and 2010, driven by a boom in international demand—
particularly from China—for Brazilian commodities such as meat, sugar, soybeans, iron ore, and
crude oil. The initial expansion was reinforced by domestic consumption from Brazil’s fast-
growing middle class, which now accounts for a majority of the population.22 As commodity
prices began to fall, however, Brazil’s economic growth slowed.
During her first term, Rousseff sought to offset the weaker international economic situation by
stimulating domestic consumption and protecting domestic industry. Her administration
implemented a series of short-term tax cuts and provided subsidized credit through state banks.
Although those measures initially helped keep unemployment near historic lows, they also eroded
the country’s primary budget surplus and helped push inflation to the upper edge of the
government’s targeted boundary (4.5% with a 2-point tolerance band). To mitigate the increase in
inflation, the Rousseff Administration held down fuel and electricity prices, which, in turn,
deterred investment in the energy sector. Economic growth continued to slow, falling from 3.9%
in 2011 to 0.1% in 2014.23
Facing further economic deceleration and the threat of Brazil losing its investment grade credit
rating, President Rousseff has begun to implement a major shift in economic policy. Following
her reelection, she appointed a new economic team to implement a series of austerity measures
designed to stabilize the country’s debt levels, encourage investment, and ultimately boost
growth. The fiscal adjustment has included a partial budget freeze, restrictions on certain pension
and unemployment benefits, and reversals of several of the tax cuts granted during her first term.
The Rousseff Administration has also allowed fuel and electricity prices to rise—although the
domestic price of gasoline remains below the price on the international market.24 At the same
time, the Brazilian Central Bank has continued to raise the benchmark interest rate, and has
announced its intention to bring inflation back down to 4.5% by the end of 2016.25
Many economists and international investors have advocated for quicker and more far-reaching
economic adjustments. The International Monetary Fund (IMF), for example, maintains that
Brazil needs to address structural impediments, such as infrastructure bottlenecks, a relatively
closed economy, and a complex and burdensome tax system, in order to boost its growth
potential.26 While Rousseff has announced a $57 billion (198.4 billion reais) infrastructure plan,
which includes selling concessions to the private sector to upgrade, build, and operate highways,
railways, ports, and airports, she lacks domestic support for other changes.27 Rousseff did little to
prepare her political base for an economic adjustment, having campaigned against austerity
measures during the 2014 election. The Brazilian Congress, nominally controlled by Rousseff’s
21 IMF, World Economic Outlook Database, April 2015, April 14, 2015.
22 Neri, June 2011, op. cit., p. 35.
23 IMF, World Economic Outlook Database, April 2015, April 14, 2015.
24 Jeb Blount and Marta Nogueira, “Exclusive: Petrobras Drags Heels on Brazil Fuel-Price Policy – Sources,” Reuters,
August 3, 2015.
25 Mario Sergio Lima and Raymond Colitt, “Brazil’s Goal is 4.5% Inflation in December 2016, Tombini Says,”
Bloomberg, December 17, 2014.
26 IMF, Brazil: 2014 Article IV Consultation—Staff Report, IMF Country Report No. 15/121, May 2015.
27 Alonso Soto and Luciana Otoni, “Brazil Raises Rate of Return on Roads, Other Projects,” Reuters, July 10, 2015.
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coalition, has repeatedly sought to delay or reverse the Administration’s fiscal adjustments. As a
result of these delays and weaker than forecasted revenue collection, the Brazilian government
has had to lower its 2015 primary surplus target from 1.1% of GDP to 0.15% of GDP.28
While Brazil has held onto its investment grade credit rating thus far, economic conditions have
continued to deteriorate. Unemployment reached 8.1% in March-May 2015, up from 7% during
the same period of 2014.29 Median wages have yet to fall, but the cost of living has increased as a
result of persistently high inflation. The IMF has revised down its forecast for the Brazilian
economy and now expects it to contract by 1.5% in 2015 before returning to growth with a 0.7%
expansion in 2016.30
Political Challenges
The fallout from a major corruption scandal has taken a toll on Rousseff’s political standing.
According to Brazilian prosecutors, beginning in 2004, several construction and engineering
firms colluded to systematically drive up the price of bids for contracts with the state-owned oil
company, Petróleo Brasileiro S.A. (Petrobras). At least $3 billion from the inflated contracts was
allegedly funneled to corrupt executives at the construction firms and Petrobras and to 50
politicians from six political parties. As of August 2015, Brazilian authorities had indicted 117
individuals, brought criminal charges against 13 companies, and arrested five politicians—
including top officials in Rousseff’s PT.31 Rousseff served as the chairwoman of Petrobras from
2003-2010, but prosecutors have yet to find evidence that she was aware of the corruption
scheme. Anti-corruption legislation enacted during Rousseff’s first term has been used to
facilitate the investigation, and Rousseff recently reappointed the top prosecutor involved in the
case. Nevertheless, many Brazilians hold her accountable for the scandal.32
As more information about the corruption scandal has come to light and economic conditions
have continued to deteriorate, Rousseff’s popularity has declined significantly. Between February
and August 2015, her approval rating fell from 23% to 8% and her disapproval rating increased
from 44% to 71%. Rousseff’s August 2015 disapproval rating was the highest recorded for a
Brazilian president since the reestablishment of democracy, exceeding that of President Fernando
Collor (1990-1992) just prior to his impeachment.33
Rousseff has also lost political support in the Brazilian Congress. While her nine-party electoral
coalition won 304 (59%) of the 513 seats in the Chamber of Deputies and 53 (65%) of the 81
seats in the Federal Senate in the 2014 elections, Rousseff has struggled to advance her policy
agenda. Brazilian presidents have traditionally constructed governing majorities by distributing
control of government resources to allied political parties through legislative earmarks and
positions in ministries and state enterprises. Rousseff has fewer resources to distribute, however,
as a result of her administration’s austerity policies. Her lack of popular support has further
reduced her leverage to negotiate with the parties in her coalition. Consequently, Rousseff has lost
28 Alonso Soto, “Brazil Slashes Fiscal Surplus Goal as Downturn Hits Revenues,” Reuters, July 22, 2015.
29 IBGE, “Continuous PNAD: Unemployment Reaches 8.1% in the Quarter Ended May 2015,” July 9, 2015.
30 IMF, World Economic Outlook Update: Slower Growth in Emerging Markets, a Gradual Pickup in Advanced
Economies, July 9, 2015.
31 David Segal, “Petrobras Oil Scandal Leaves Brazilians Lamenting a Lost Dream,” New York Times, August 7, 2015.
32 Joe Leahy, “Brazil Corruption Clampdown May Yet Prove to be Rousseff’s Legacy,” Financial Times, August 6,
2015; “Brazil’s Rousseff Reappoints Top Prosecutor in Petrobras Probe,” Reuters, August 8, 2015.
33 Alexandre Aragão, “Reprovação de Dilma Cresce e Supera a de Collor em 1992,” Folha de São Paulo, August 6,
2015.
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several important congressional votes, and some allied legislators have begun to distance
themselves from the President. Chamber of Deputies President Eduardo Cunha, a member of the
nominally allied and ideologically heterogeneous Party of the Brazilian Democratic Movement
(Partido do Movimento Democrático Brasileiro, PMDB), has formally broken with the governing
coalition, as has the center-left Democratic Labor Party (Partido Democrático Trabalhista, PDT),
which holds 19 seats in the Chamber and 7 seats in the Senate. Rousseff has even struggled to
maintain the support of some PT legislators, many of whom oppose her shift in economic policy.
A number of political leaders have begun to discuss the possibility of impeaching President
Rousseff. While some have sought to tie her to the Petrobras corruption scandal, others suggest
she could be impeached as a result of a separate probe into the government’s accounting
practices. In August 2015, 66% of Brazilians surveyed said the Brazilian Congress should begin
impeachment proceedings against President Rousseff.34 Chamber of Deputies President Eduardo
Cunha reportedly has been consulting with opposition legislators about how to move forward
with an impeachment trial, although some observers maintain Cunha is attempting to deflect
scrutiny over his own alleged involvement in the Petrobras corruption scandal. Senate President
Renan Calheiros, also of the PMDB, has voiced opposition to impeachment, making it unlikely
that Rousseff will be forced out of office unless prosecutors find evidence directly implicating her
in the corruption scandal.35
U.S.-Brazil Relations
The United States and Brazil have traditionally enjoyed robust political and economic relations.
The countries have at least 20 active bilateral dialogues, which serve as vehicles for policy
coordination on issues of mutual concern, including trade, energy, security, racial equality, and
the environment.36 The United States and Brazil have also begun to engage more frequently on
international issues given Brazil’s expanded global reach as the seventh-largest economy in the
world. The Obama Administration now considers Brazil a “major global player” and an
“indispensable partner” on issues ranging from international development to climate change.37
Nevertheless, bilateral ties have been strained from time to time as the countries’ occasionally
divergent national interests and independent foreign policies have led to disagreements. In 2014,
for example, Brazil opposed international efforts to diplomatically isolate Russia after it annexed
Crimea and largely refrained from openly criticizing the Venezuelan government’s harsh response
to political protests. While Brazil did not support the actions of the Russian and Venezuelan
governments, its aversion to sanctions and preference for dialogue led it to approach the issues
much differently than the United States.38 Similarly, Brazilian officials have expressed dismay
that the U.S. Congress has not yet approved reforms to the IMF that would provide greater voting
34 Ibid.
35 Isadora Perone Ricardo Brito, “Em Jantar, Senadores Tucanos e do PMDB Ensaiam Aproximação,” Estado de São
Paulo, August 5, 2015; “Impeaching Rousseff Would Set Brazil on Fire: Senate Chief,” Reuters, August 11, 2015;
Simon Romero, “Scandals in Brazil Prompt Fears of a Return to Turmoil,” New York Times, August 12, 2015.
36 U.S. Department of State, Bureau of Western Hemisphere Affairs, “U.S. Relations with Brazil,” fact sheet, July 29,
2015.
37 White House, Office of the Press Secretary, “Remarks by President Obama and President Rousseff of Brazil in Joint
Press Conference,” June 30, 2015.
38 Oliver Stuenkel, Why Brazil Has Not Criticized Russia over Crimea, Norwegian Peacebuilding Resource Centre,
Policy Brief, May 2014; “Brazil Defends Quiet Diplomacy Towards Venezuela,” Latin News Daily Report, April 4,
2014.
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power to Brazil and other emerging economies.39 The IMF reforms, which have been pending for
nearly five years, are currently being considered in Congress; the foreign operations
appropriations bill reported in the Senate, S. 1725, would authorize the reforms, but bill reported
in the House, H.R. 2772 , would not.
Disclosures about NSA activities in Brazil have impeded bilateral cooperation since 2013. The
reports, which indicated that the NSA had spied on President Rousseff and Brazil’s state-owned
oil company, Petrobras, in addition to engaging in broader electronic surveillance, led Brazil to
indefinitely postpone a state visit to Washington that Rousseff was scheduled to make in October
2013. They also appear to have contributed to the Brazilian government’s decisions to terminate a
$2 billion contract with Microsoft, award a $400 million contract to build a geostationary satellite
to France’s Thales over U.S.-based Space Systems/Loral, and award a $4.5 billion fighter jet
procurement deal to Sweden’s Saab AB over Boeing.40 At the September 2013 U.N. General
Assembly, Rousseff denounced alleged NSA activities as a breach of international law and a
threat to democratic governance, stating, “In the absence of the right to privacy, there can be no
true freedom of expression and opinion, and therefore no effective democracy.” She also asserted
that “friendly governments and societies that seek to build a true strategic partnership ... cannot
allow recurring illegal actions to take place as if they were normal. They are unacceptable.”41
The United States and Brazil have sought to gradually move past the surveillance dispute over the
past year. In October 2014, the U.S. and Brazilian governments signed a memorandum of
understanding designed to resolve a long-running trade dispute over U.S. cotton support programs
(see “Cotton Dispute”). Rousseff appointed her former ambassador to the United States as foreign
minister following her reelection and asserted that “it is of great importance that we improve our
relationship with the United States” during her January 2015 inaugural address, which was
attended by Vice President Biden.42 She also rescheduled her visit to the United States that had
previously been postponed, meeting with President Obama at the White House in June 2015. In
the lead up to Rousseff’s visit, the Brazilian Congress approved two pending defense cooperation
agreements (see “Defense”) and a tax information exchange agreement that meets the
requirements of the Foreign Account Tax Compliance Act (FATCA, P.L. 111-147).
U.S. Foreign Assistance and Trilateral Development Initiatives
As a middle-income country, Brazil does not receive large amounts of U.S. assistance. The
United States provided Brazil with $18 million in FY2012, $15.2 million in FY2013, and $13.9
million in FY2014 (see Table 1). The Obama Administration requested $3.4 million in assistance
for Brazil in FY2015, but country allocations for this fiscal year are not yet available.
39 Ian Talley, “U.S. Inaction Sows Dissent in Monetary Fund—Representatives of Emerging Economies at the IMF Say
They Have Waited Too Long for the Congress to Act,” Wall Street Journal, April 15, 2014. For more information on
the potential reforms, see CRS Report R42844, IMF Reforms: Issues for Congress, by Rebecca M. Nelson and Martin
A. Weiss.
40 Brazilian Congress, Federal Senate Committee on Foreign Relations and National Defense, Directions for Brazil-
United States Relations, testimony of Paulo Sotero, Director of the Brazil Institute of the Woodrow Wilson
International Center for Scholars, April 3, 2014; Anthony Boadle and Brian Winter, “Exclusive – Russia, U.S.
Competing for Space Partnership with Brazil,” Reuters, June 15, 2015.
41 President Dilma Rousseff, Statement by H.E. Dilma Rousseff, President of the Federative Republic of Brazil, at the
Opening of the General Debate of the 68th Session of the United Nations General Assembly, September 24, 2013.
42 President Dilma Rousseff, Discurso da República, Dilma Rousseff, durante Compromisso Constitucional Perante o
Congresso Nacional, January 1, 2015.
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The Obama Administration has requested $1.4 million in assistance for Brazil in FY2016.
$500,000 would be used to support Brazil’s national HIV/AIDS strategy and the goals of the
President’s Emergency Plan for AIDS Relief (PEPFAR).43 Another $625,000 would be used to
provide professional training to members of Brazil’s military. The remaining $240,000 would be
used to enhance Brazil’s strategic trade control compliance and enforcement of maritime and port
security. Although the Administration did not request any funding for conservation programs in
the Brazilian Amazon, the House and Senate Appropriations Committees both recommend
providing $10.5 million for such programs in the reports (H.Rept. 114-154 and S.Rept. 114-79)
accompanying their respective FY2016 Department of State, Foreign Operations, and Related
Programs appropriations bills (H.R. 2772 and S. 1725).
In addition to supporting aid programs in Brazil, the U.S. Agency for International Development
(USAID) has begun working with Brazil’s development agency, the Brazilian Cooperation
Agency (Agência Brasileria de Cooperação, ABC), in third countries. Under these so-called
trilateral development initiatives, the United States and Brazil share expertise and funding in
order to accomplish common goals. In Haiti, Honduras, and Mozambique, for example, USAID
and the ABC have collaborated on agricultural productivity and food security programs designed
to reduce poverty, hunger, and malnutrition. The Administration’s FY2016 foreign aid request
includes some funding to collaborate with Brazil on renewable energy and citizen security
programs in Central America.44
Table 1. U.S. Assistance to Brazil: FY2012-FY2016
In thousands of U.S. dollars
FY2015
FY2016
Account
FY2012
FY2013
FY2014
(req.)
(req.)
Development Assistance
12,800
11,462
12,500
2,000
0
Global Health Programs (State)
1,300
881
500
500
500
International Narcotics Control and Law
3,000
2,000
0
0
0
Enforcement
Nonproliferation Anti-terrorism, Demining,
300
270
240
240
240
and Related programs
International Military Education and Training
638
572
618
625
625
Total
18,038
15,185
13,858
3,365
1,365
Sources: U.S. Department of State, Congressional Budget Justifications for Foreign Operations, Fiscal Years 2014,
2015, and 2016.
Notes: FY2015 country allocations are not yet available.
Commercial Relations
Trade policy has often been a contentious issue in U.S.-Brazilian relations. Over the past two
decades, Brazil’s trade policy has prioritized regional integration through the Common Market of
43 For more information on PEPFAR, see CRS Report IF10184, The President’s Emergency Plan for AIDS Relief
(PEPFAR): Summary of Recent Developments, by Tiaji Salaam-Blyther.
44 U.S. Department of State, Congressional Budget Justification, Foreign Operations, Appendix 3, Fiscal Year 2016,
February 27, 2015, http://www.state.gov/documents/organization/238222.pdf.
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the South (Mercosur)45 and multilateral negotiations at the World Trade Organization (WTO).46
Brazil is the industrial hub of Mercosur, which was established in 1991 and also includes
Argentina, Paraguay, Uruguay, and Venezuela. While the bloc was created with the intention of
incrementally advancing toward full economic integration, only a limited customs union has been
achieved thus far. The group has also been plagued by internal disputes and frequent rule
changes. Instead of serving as a platform for insertion into the global economy as originally
envisioned, Mercosur has evolved into a more protectionist arrangement, shielding its members
from external competition. Beginning in the 1990s, the United States sought to incorporate
Mercosur and other sub-regional trade blocs into a hemisphere-wide Free Trade Area of the
Americas (FTAA).47 The initiative was effectively killed in 2005, however, when the United
States was unable to persuade Brazil and the other members of Mercosur to continue the
negotiations.
At the WTO, Brazil has played a key role in the Doha Round of multilateral trade negotiations
that began in 2001.48 It has led the G-20 group of developing nations in insisting that developed
countries reduce agricultural tariffs and subsidies. Brazil has also resisted calls by the United
States and other developed countries for increased access to developing nations’ industrial and
services sectors. In 2013, Brazil’s widely respected diplomat and trade representative Roberto
Azevêdo was appointed Director General of the WTO. He has sought to revive the Doha Round,
successfully negotiating a small-scale agreement on trade facilitation measures in December
2013. Negotiations on more sensitive issues like agriculture reportedly remain stalled.49
Some Brazilian analysts have argued that the international trading system is undergoing a
significant transformation and that Brazil should reconsider its trade policy.50 They maintain that
large-scale agreements like the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and
Investment Partnership (TTIP)51 could establish new and more comprehensive rules for trade and
investment. By setting new global standards, the agreements could effectively bypass the current
round of WTO negotiations and threaten Brazil’s ability to shape the international trading system.
The agreements could also place Brazilian companies at a competitive disadvantage and threaten
the global market share of Brazilian exports. In order to remain relevant and take advantage of
changing opportunities, these analysts argue that Brazil should conclude trade negotiations with
the European Union (EU) and consider pursuing a trade agreement with the United States.
45 For background information on Mercosur, see CRS Report RL33620, Mercosur: Evolution and Implications for
U.S. Trade Policy, by J. F. Hornbeck.
46 João Augusto de Castro Neves, Brazil's Slow and Uncertain Shift from Protectionism to Free Trade, Inter-American
Dialogue, Working Paper, January 2014, http://www.thedialogue.org/uploads/CastroNeves_Trade.pdf.
47 For background information on the FTAA see CRS Report RS20864, A Free Trade Area of the Americas: Major
Policy Issues and Status of Negotiations, by J. F. Hornbeck.
48 For more information on the Doha Round, see CRS Report RL32060, World Trade Organization Negotiations: The
Doha Development Agenda, by Ian F. Fergusson.
49 “The World Trade Organization: Unaccustomed Victory,” Economist, December 14, 2013. For more information,
see CRS Report IF10002, The World Trade Organization at 20, by Ian F. Fergusson.
50 See, for example, Renata Agostini, “Acesso do Brasil ao Fluxo Global de Comércio Fica entre Menores do G20,”
Folha de São Paulo, June 26, 2015; “Chances Perdidas,” Correio Braziliense, January 2, 2014; Sonia Filgueiras,
“Olhar do Planalto – Sob o Risco do Isolamento,” Brasil Econômico, December 18, 2013; Vera Thorstensen and Lucas
Ferraz, The Impacts of TTIP on Brazil, Fundação Getulio Vargas, Study Sponsored by the Confederação Nacional da
Industria (CNI), November 2013.
51 For more information on these agreements, see CRS Report R42694, The Trans-Pacific Partnership (TPP)
Negotiations and Issues for Congress, coordinated by Ian F. Fergusson; and CRS Report R43387, Transatlantic Trade
and Investment Partnership (T-TIP) Negotiations, by Shayerah Ilias Akhtar and Vivian C. Jones.
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While some members of the Rousseff Administration agree that Brazil should accelerate its trade
agreement negotiations, others maintain that opening up Brazil to more foreign trade would
decimate Brazilian industry.52 In recent months, the Brazilian government has placed renewed
emphasis on concluding an agreement between Mercosur and the EU and has begun to move
forward with trade negotiations with other nations.53 Further policy shifts will likely depend on
how the TPP and TTIP negotiations advance and economic conditions in Brazil.
Bilateral Trade and Investment
Despite differences in trade policy and the lack of a free trade agreement, U.S.-Brazil trade has
grown considerably over the past decade (see Figure 2). Between 2004 and 2014, U.S.-Brazil
merchandise trade increased 74% to $72.8 billion. U.S. goods exports to Brazil increased 206% to
$42.4 billion and U.S. goods imports from Brazil increased 43% to $30.3 billion. As a result of
the relatively faster growth of U.S. exports compared to imports (which declined significantly in
the aftermath of the financial crisis), the United States has run a trade surplus in goods with Brazil
since 2008. In 2014, the surplus was valued at $12.1 billion.54 Top U.S. goods exports to Brazil
included refined oil products, heavy and electric machinery, civilian aircraft and parts, and
medical equipment. Top U.S. goods imports from Brazil included crude oil, iron and steel,
civilian aircraft, machinery, and coffee. In 2014, Brazil was the United States’ ninth-largest
trading partner, and the United States was Brazil’s second-largest trading partner, behind China.55
U.S.-Brazil services trade has grown even more quickly than merchandise trade, increasing by
406% between 2004 and 2013 (the most recent year for which data are available). In 2013, total
trade in services amounted to $34 billion. The United States continued to run a substantial trade
surplus, valued at $19.3 billion, as U.S. services exports to Brazil totaled $26.6 billion and U.S.
services imports from Brazil totaled $7.3 billion. Travel, transport, telecommunications, and
intellectual property charges were the top categories of U.S. services exports to Brazil while
business services was the top category of U.S. imports from Brazil.56 In 2014, nearly 2.3 million
Brazilians visited the United States, spending an estimated $13 billion on travel and tourism.57
Brazil benefits from the Generalized System of Preferences (GSP) program, which provides
nonreciprocal, duty-free tariff treatment to certain products imported from designated developing
countries. Legal authorization for the GSP program expired on July 31, 2013, but the program
was reauthorized and extended through 2017 after Congress passed and the President signed into
law the Trade Preferences Extension Act of 2015 (P.L. 114-27) in June 2015.58 In 2012, the last
52 “Brasil Debe Acelerar Pactos Internacionales de Comercio: Jefe de Gabinete,” Reuters, November 19, 2014; “Brazil
Trade Minister Says Opening Up Trade Would Be ‘Disaster’ – Paper,” Reuters, September 27, 2014.
53 Patrícia Campos Mello and Renata Agostini, “Governo Negocia Compras Públicas e Apressa Seis Acordos
Comerciais,” Folha de São Paulo, August 7, 2015.
54 U.S. Department of Commerce data, as made available by the U.S. International Trade Commission, Interactive
Tariff and Trade DataWeb, June 2015.
55 U.S. Department of Commerce and República Federativa do Brasil, Secretaria de Comércio Exterior (SECEX) data,
as made available by Global Trade Atlas, June 2015.
56 U.S. Department of Commerce, Bureau of Economic Analysis, “U.S. Trade in Services, by Country or Affiliation
and by Type of Service,” November 2014.
57 U.S. Department of Commerce, International Trade Administration, National Travel and Tourism Office, 2014
Market Profile: Brazil, June 2015, http://travel.trade.gov/outreachpages/download_data_table/
2014_Brazil_Market_Profile.pdf.
58 For more information on GSP, see CRS Report RL33663, Generalized System of Preferences: Background and
Renewal Debate, by Vivian C. Jones.
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full year that the GSP program was in effect, Brazil was the third-largest beneficiary. The
country’s duty-free imports to the United States under the GSP program were valued at $2.3
billion, equivalent to about 7% of all U.S. imports from Brazil in 2012.59 Some observers have
questioned the inclusion of Brazil and other upper-middle-income countries in the GSP program;
the European Union removed such countries from its GSP program as of 2014.60
Figure 2. U.S. Trade with Brazil: 2004-2014
In billions of U.S. dollars
50
40
30
20
10
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-10
-20
Goods Exports
Goods Imports
Services Exports
Services Imports
Goods Trade Balance
Services Trade Balance
Source: CRS presentation of U.S. Department of Commerce data.
Notes: 2014 services trade data are not yet available.
Foreign direct investment (FDI) between the United States and Brazil currently flows mostly in
one direction, toward Brazil. As of 2014, the accumulated stock of U.S. FDI in Brazil was $70.5
billion, with significant investments in manufacturing and finance, among other sectors. The
stock of Brazilian FDI in the United States totaled $616 million in 2014.61
Cotton Dispute62
In October 2014, Brazil and the United States appeared to resolve a more than decade-long
dispute over U.S. government support for cotton farmers. In 2002, Brazil went to the WTO to
challenge several provisions of the U.S. cotton program. A WTO dispute settlement panel ruled in
Brazil’s favor in 2004, finding that certain U.S. agricultural support payments and export
59 U.S. Department of Commerce data, as made available by the U.S. International Trade Commission, Interactive
Tariff and Trade DataWeb, March 2014.
60 European Commission, “New GSP as of 2014,” December 18, 2013.
61 U.S. Department of Commerce, Bureau of Economic Analysis, “Balance of Payments and Direct Investment Position
Data,” November 2014.
62 For more information on the U.S.-Brazil WTO cotton dispute, see CRS Report R43336, Status of the WTO Brazil-
U.S. Cotton Case, by Randy Schnepf.
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guarantees were inconsistent with its WTO commitments. Although Congress modified
agricultural support programs in 2005, a WTO compliance panel ruled in 2007 that the U.S.
actions were insufficient. Following a ruling from a WTO arbitration panel, Brazil announced in
March 2010 that it intended to impose retaliatory measures against the United States worth $829
million. This included $591 million in higher tariffs on a range of U.S. products and $239 million
through suspension of certain intellectual property rights obligations.
The United States reached a temporary agreement with Brazil in June 2010 to avoid the WTO-
sanctioned retaliatory measures. Under the agreement, the United States pledged to make some
short-term changes to its export credit guarantees and provide the Brazil Cotton Institute with
$147 million annually for a fund to assist Brazilian cotton farmers with technical assistance,
marketing, and market research. In exchange, Brazil agreed to temporarily suspend its retaliation
with the intention of reaching a permanent agreement with the United States after Congress had
an opportunity to adjust the subsidy program in a reauthorization of the farm bill.63
The U.S. government stopped complying with the temporary agreement in 2013, making only a
portion of the required monthly payment in September 2013 and then stopping payments
altogether as of October 2013. Secretary of Agriculture Tom Vilsack reportedly asserted that the
partial payment was required by budget sequestration and that he had no authority to continue
making payments once the farm bill expired at the end of September 2013.64 The suspension of
payments led the Brazilian government to once again explore retaliatory measures.65
In February 2014, President Obama signed into law a new farm bill (P.L. 113-79). According to
the conference report accompanying the act (H.Rept. 113-333), the legislation included several
substantive changes to U.S. cotton support programs and the export credit guarantee program in
order to resolve the dispute with Brazil. Nevertheless, Brazil’s Foreign Trade Board (Câmara de
Comércio Exterior, CAMEX) asserted that the farm bill contains elements that will continue to
distort the international cotton market, and authorized the Brazilian government to request a
WTO panel to assess whether the farm bill brings the United States into compliance with
previous rulings.66
Rather than requesting a new WTO compliance panel, Brazil reached a settlement with the United
States. According to the memorandum of understanding signed in October 2014, the United
States agreed to make a final one-time payment of $300 million to the Brazil Cotton Institute and
make some additional changes to its export credit guarantee program. In exchange, Brazil agreed
not to challenge U.S. cotton support programs at the WTO prior to September 30, 2018.67
Energy Ties
Energy is another important area of U.S.-Brazilian cooperation. Brazil is the world’s second-
largest producer of ethanol (after the United States). It has also discovered large offshore oil
63 Swell Chan, “U.S. and Brazil Reach Agreement on Cotton Dispute,” New York Times, April 6, 2010; Ana Nicolaci
da Costa, “Brazil Suspends Retaliation in U.S. Cotton Row,” Reuters, June 17, 2010.
64 William Mauldin, “U.S. to Stop Brazil Farm Payments; Sequester Will Stop Assistance Related to Cotton Dispute,”
Wall Street Journal, August 7, 2013.
65 República Federativa do Brasil, Ministério do Desenvolvimento, Indústria e Comércio Exterior, Câmara de
Comércio Exterior (CAMEX), Resolução N° 105, de 18 de Dezembro de 2013.
66 CAMEX, “CAMEX Autoriza Abertura de Painel na OMC sobre Legislação Agrícola Norte-Americana,” February
19, 2014.
67 The Memorandum of Understanding Related to the Cotton Dispute (WT/DS267) is available at http://www.ustr.gov/
sites/default/files/20141001201606893.pdf.
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deposits that have the potential to turn the country into a major oil and gas producer. President
Obama and President Rousseff launched a Strategic Energy Dialogue in 2011 to facilitate greater
cooperation in the development of safe, secure, and affordable energy. During their June 2015
meeting, they agreed to renew the dialogue and endorsed cooperation on biofuels; oil and natural
gas; civil nuclear energy; renewable energy; and energy-related science. They also announced a
joint goal of increasing the share of renewables—beyond hydropower—in the Brazilian and U.S.
electricity generation mixes to 20% by 2030.68
Biofuels
In response to sharp increases in global oil prices in the 1970s, the Brazilian government began a
national program to promote the production and consumption of sugarcane ethanol. Today, most
cars in Brazil are capable of running on pure ethanol, which is available at nearly every fueling
station, or gasoline, which is required to include an 18-27.5% ethanol blend.69 The Brazilian
ethanol sector has struggled in recent years, however, due to poor harvests and lower demand
resulting from the Brazilian government’s policy of capping gasoline prices to hold down
inflation.70 Consequently, the ethanol industry has seen lower levels of investment and
production. The Brazilian government has sought to provide some relief to the ethanol industry
by raising gasoline prices, increasing the ethanol blend requirement, and reducing taxes on
ethanol. Nevertheless, some analysts maintain that the lack of transparency and certainty
regarding how gasoline prices are determined are likely to continue to discourage investment in
the industry.71 In 2014, Brazil produced 497,000 barrels per day of ethanol, which was an increase
of 3.6% compared to 2013.72
In 2007, the United States and Brazil, the world’s two largest ethanol-producing and consuming
countries, signed a memorandum of understanding to promote greater cooperation on ethanol and
other biofuels. 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.73
Since then, the United States and Brazil have moved forward on all three facets of the agreement.
Bilaterally, the U.S. and Brazilian governments have attempted to improve methods for modeling
the sustainability of biofuels, including their effects on greenhouse gas emissions and land use,
and have exchanged information on how to maximize fuel economy in flex-fuel vehicles. They
are also coordinating efforts to develop sustainable aviation biofuels. At the same time, the U.S.
and Brazilian governments are working together in third countries and have provided joint
technical assistance designed to strengthen policy frameworks, implement blending laws, and
develop domestic production capabilities in the Dominican Republic, El Salvador, Guatemala,
Haiti, Honduras, Jamaica, and Senegal. Multilaterally, the United States and Brazil have worked
68 White House, Office of the Press Secretary, “Joint Communique by President Barack Obama and President Dilma
Rousseff,” press release, June 30, 2015; and White House, Office of the Press Secretary; “Fact Sheet: The United States
and Brazil – A Mature and Multi-Faceted Partnership,” press release, June 30, 2015.
69 “Brazil’s President Signs Higher Ethanol Blend into Law,” Reuters, September 25, 2014.
70 “Brazil Offers Tax Breaks to Ethanol Exporters,” EFE News Service, Septembe 10, 2014.
71 Claire Casey, “Is Brazil the Energy Power of the Future (and Always Will Be)?” Americas Quarterly (Summer
2013).
72 Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP), Oil, Natural Gas and Biofuels Statistical
Yearbook 2015, July 2015.
73 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, http://www.state.gov/p/wha/rls/158654.htm.
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with other members of the Global Bioenergy Partnership (GBEP) to promote the sustainable
production and use of modern bioenergy.74
In addition to these efforts, Brazil and the United States have taken steps to liberalize trade in
ethanol. In December 2011, the Brazilian government issued a resolution to extend its duty-free
treatment of imported ethanol until December 31, 2015.75 Similarly, the U.S. Congress allowed a
54-cent-per-gallon duty on imported ethanol to expire at the end of 2011. Prior to its expiration,
the duty served as a significant barrier to direct imports of Brazilian ethanol in most years.76
Nevertheless, total bilateral ethanol trade has declined since then, falling from 33,000 barrels per
day in 2011 to 10,000 barrels per day in 2014. In 2014, the United States exported 7,000 barrels
per day of fuel ethanol to Brazil and imported 3,000 barrels per day from Brazil.77
Oil
Since 2007, Brazil has discovered substantial new offshore oil fields that have the potential to
turn the country into one of the top five oil and gas producers in the world.78 The new discoveries
are so-called “pre-salt” reserves, located beneath layers of rock and salt more than 18,000 feet
below the ocean surface.79 In 2014, Brazil’s proven oil reserves stood at 16.2 billion barrels
(equivalent to 1% of global reserves), and Brazilian oil production reached 2.3 million barrels per
day (equivalent to 2.9% of global production).80
In December 2010, the Brazilian Congress approved a new regulatory framework for developing
the approximately 70% of pre-salt reserves that had not already been auctioned off.81 The new
framework increased the role of the Brazilian government and is designed to ensure that the
country’s resources are used to fuel long-term economic and social development. Among other
provisions, the framework established state-owned Petrobras as the sole operator for all new
offshore projects; replaced the existing concessionary model with a production sharing regime;
guaranteed Petrobras a minimum 30% stake in all joint ventures; created a public company—
Petrosal—to manage the development of the offshore reserves; increased local content
requirements; and created a new social fund overseen by the Brazilian Congress to direct offshore
revenues toward four key areas: education, infrastructure, science and technology, and poverty
reduction.82 The Brazilian Congress continued to debate legislation regarding the distribution of
oil royalties until March 2013.
74 White House, Office of the Press Secretary, “Fact Sheet: The U.S.-Brazil Strategic Energy Dialogue,” April 9, 2012.
75 Ministério do Desenvolvimiento, Indústria e Comércio Exterior, Câmara de Comércio Exterior (CAMEX),
Resolução N° 94, de 8 de Dezembro de 2011.
76 Although some Brazilian ethanol was allowed to enter the United States duty-free after being reprocessed in
Caribbean Basin Initiative (CBI) countries, such imports could only account for up to 7% of the U.S. ethanol market. A
2.5% ad valorem tariff on ethanol imports to the United States remains in place permanently unless the Harmonized
Tariff Schedule code is changed.
77 U.S. Energy Information Administration (EIA), “Petroleum & Other Liquids: Data,” May 28, 2015.
78 Mark S. Langevin, Brazil’s Hydrocarbon Bonanza: Can the State Manage Pre-Salt Production for National
Development and Geopolitical Power? Brazil-Works, Discussion Paper, May 2012.
79 EIA, Country Analysis Briefs: Brazil, December 29, 2014, http://www.eia.gov/beta/international/analysis_includes/
countries_long/Brazil/brazil.pdf.
80 BP, BP Statistical Review of World Energy, June 2015, p. 6, http://www.bp.com/content/dam/bp/pdf/Energy-
economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf.
81 Langevin, 2012, op. cit.
82 “Brazil Congress Passes Oil Industry Overhaul,” Reuters, December 1, 2010; “The Impact of Pre-Salt: A Long-Term
Perspective,” Oxford Analytica, May 2010.
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The delay in approving the new regulatory framework and royalty distribution law prevented
Brazil’s National Agency of Petroleum, Natural Gas, and Biofuels (Agência Nacional do
Petróleo, Gás Natural e Biocombustíveis, ANP) from auctioning new concessions for nearly five
years. As a result, oil production did not increase as quickly as originally predicted and actually
declined from 2011-2013. The ANP held its first auction of pre-salt concessions under the new
regulatory framework in October 2013. While it reportedly had expected more than 40 companies
to participate, only 11 companies signed up for the auction, and a consortium of five companies
(Petrobras, Royal Dutch Shell, Total, China National Petroleum Corporation, and China National
Offshore Oil Corporation) was the sole bidder.83
Many energy analysts maintain that Brazil needs to modify its regulatory framework in order to
attract the investment necessary to develop its reserves and accelerate production. Brazil’s energy
minister and some Petrobras officials agree with that assessment and have called for changes,
such as loosening local content requirements and reversing the requirement that Petrobras hold a
30% minimum stake in all projects. Some Brazilian officials are concerned that investigations
into the Petrobras corruption scandal, including those being conducted by the U.S. Department of
Justice and the Securities and Exchange Commission (SEC), could impede investment and hinder
Petrobras operations.84 This has led to a renewed focus on regulatory changes that would allow
foreign companies to play a larger role in developing Brazil’s offshore resources. While the
Brazilian Congress has begun considering potential changes, President Rousseff has voiced
opposition to such reforms.85
U.S.-Brazilian oil trade has expanded significantly over the past decade (see Figure 3). U.S.
crude oil imports from Brazil grew rapidly from 51,000 barrels per day in 2004 to 295,000 barrels
per day in 2009. They have declined since then, however, as U.S. consumption has fallen and
U.S. domestic production has increased. In 2014, the United States imported 145,000 barrels per
day of crude oil from Brazil, which was equivalent to about 2% of total U.S. crude imports. U.S.
exports of refined products to Brazil have also grown quickly, increasing nearly 700% from
27,000 barrels per day in 2004 to 215,000 barrels per day in 2014. As a result, U.S. refined
product exports to Brazil have exceeded U.S. crude imports from Brazil for the past two years.86
Brazil has been forced to increasingly rely on imports as its consumption has grown more quickly
than its production and refinery capacity. Some energy analysts expect this trend to continue until
at least 2017, when two new Brazilian refineries are scheduled to begin operations.87
83 “Weak Libra Interest Rounds Out a Rough Week for Brazil’s Rousseff,” Latin News Daily Report, September 20,
2013; “Brazil’s Oil Revolution Gets Off to a Slippery Start,” Latin News Daily Report, October 22, 2013.
84 Valdo Cruz, “Investigação dos EUA Preocupa Planalto,” Folha de São Paulo, November 11, 2014.
85 Paul Kiernan, “Brazilian President Stands by Oil Rules; Energy Minister, Petrobras Favor Loosening Regulations,
But Rousseff Pushes Back,” Wall Street Journal, May 14, 2015;
86 EIA, “Petroleum & Other Liquids: Data,” May 28, 2015.
87 Jeb Blount, “Analysis: Petrobras Fuel Woes Make Brazil Dependent on U.S., India,” Reuters, January 22, 2014.
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Figure 3. U.S. Oil Trade with Brazil: 2004-2014
In thousands of barrels per day
350
300
250
200
150
100
50
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
U.S. Crude Oil Imports
U.S. Petroleum Product Exports
Source: CRS presentation of U.S. Energy Information Administration (EIA) data.
Security Cooperation
Although U.S.-Brazilian cooperation on security issues has traditionally been limited, law
enforcement and military ties have increased over the past decade. Areas of coordination include
counternarcotics, counterterrorism, and defense.
Counternarcotics
Brazil is not a major drug-producing country, but it is the world’s second-largest consumer of
cocaine hydrochloride and likely the world’s largest consumer of cocaine-base products. It also
serves as a transit point for illicit drugs destined for Europe.88 Security analysts contend that
organized crime in Brazil has increased in scope and scale over the past decade as the drug trade
has expanded. Some of the country’s large, well-organized, and heavily armed criminal groups,
such as the Red Command (Comando Vermelho, CV) and the First Capital Command (Primeiro
Comando da Capital, PCC), have reportedly begun to operate transnationally, eliminating
intermediaries in order to control cross-border trafficking.89
88 U.S. Department of State, Bureau of International Narcotics and Law Enforcement Affairs, 2015 International
Narcotics Control Strategy Report (INCSR), Volume I: Drug and Chemical Control, March 18, 2015,
http://www.state.gov/j/inl/rls/nrcrpt/2015/vol1/238949.htm.
89 Robert Muggah and Guztavo Diniz, Securing the Border: Brazil’s “South America First” Approach to Transnational
Organized Crime, Igarapé Institute, Strategic Paper 5, October 2013, http://pt.igarape.org.br/wp-content/uploads/2013/
(continued...)
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In recognition of these challenges, Brazil has taken several steps to improve its antidrug efforts.
In 2004, it 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 sought to improve security along the
15,719 kilometer border that it shares with 10 nations, including the region’s cocaine producers—
Bolivia, Colombia, and Peru. Under its Strategic Border Plan, introduced in 2011, the Brazilian
government has deployed inter-agency resources, including unmanned aerial vehicles (UAVs), to
monitor illicit activity in high-risk locations along its borders and in the remote Amazon region. It
has also signed agreements and carried out joint operations with neighboring countries. In 2014,
Brazilian authorities reportedly seized 25.6 metric tons of cocaine and 159.6 metric tons of
marijuana.90
In 2008, the U.S. and Brazilian governments signed a memorandum of understanding designed to
enhance the capacity of Brazilian authorities to combat drug trafficking and reduce domestic drug
demand. To these ends, the United States provided training to Brazilian law enforcement on
topics such as investigative techniques and money laundering and provided support to
nongovernmental organizations creating anti-drug community coalitions in 2014.91 U.S.
counternarcotics assistance to Brazil amounted to $3.5 million in FY2012, $1.9 million in
FY2013, and $15,000 in FY2014.92 The Obama Administration did not request any
counternarcotics assistance for Brazil in FY2015 or FY2016.93
Counterterrorism94
According to the State Department’s Country Reports on Terrorism, there are no confirmed
operational cells of al Qaeda or Hezbollah in the Western Hemisphere, but ideological
sympathizers provide financial and moral support to those and other terrorist groups in the Middle
East and South Asia.95 In 2010, for example, the U.S. Treasury Department sanctioned
Hezbollah’s chief representative in South America, Bilal Mohsen Wehbe, for transferring funds
collected in Brazil to Hezbollah in Lebanon. According to the Treasury Department, Wehbe and
an associate raised more than $500,000 from Lebanese businessmen in the tri-border area of
Argentina, Brazil, and Paraguay following the 2006 conflict between Israel and Hezbollah.
Wehbe also reportedly had overseen Hezbollah’s counterintelligence activity in the tri-border area
and had worked for the office of Iranian Supreme Leader Ayatollah Ali Khamene'i.96
The U.S. government has worked with Brazil to address concerns about the tri-border area and
strengthen the country’s counterterrorism capabilities. The countries of the tri-border area and the
(...continued)
10/SP_05_EN_Securing-the-border_7th_oct.pdf.
90 INCSR, 2015, op. cit.
91 Ibid.
92 U.S. Department of State, USAID, and U.S. Department of Defense data as presented by the Foreign Assistance
Dashboard, accessed August 2015.
93 U.S. Department of State, Congressional Budget Justification, Foreign Operations, Appendix 3, Fiscal Year 2016,
February 27, 2015, http://www.state.gov/documents/organization/238222.pdf.
94 For more information on terrorism concerns in Latin America, see CRS Report RS21049, Latin America: Terrorism
Issues, by Mark P. Sullivan and June S. Beittel.
95 U.S. Department of State, Office of the Coordinator for Counterterrorism, Country Reports on Terrorism 2014, April
2015, http://www.state.gov/j/ct/rls/crt/2014/239409.htm.
96 U.S. Department of the Treasury, “Treasury Targets Hizballah Financial Network,” press release, December 9, 2010.
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United States created 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 2007. Within Brazil,
the United States has supported efforts to implement the Container Security Initiative (CSI) at the
port of Santos, and U.S. agencies have trained Brazilian airline employees on identifying
fraudulent documents. U.S. authorities also have provided training to officials from each of the
three Brazilian law enforcement agencies with counterterrorism responsibilities on topics such as
infrastructure security, crisis incident management, and digital network security. These training
programs are designed to enhance the Brazilian government’s investigative capabilities and
support efforts to prevent terrorist attacks at the 2016 Summer Olympic Games.97
The State Department’s Country Reports on Terrorism for 2014 recognized the Brazilian
government’s continued support for counterterrorism-related activities, including pursuing
investigative leads provided by the U.S. government regarding terrorist suspects. Brazil lacks
antiterrorism legislation, however, which reportedly hinders prosecutions of potential terrorists.98
Like many other Latin American nations, Brazil 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. Nevertheless, Brazil’s Chamber of
Deputies approved a bill in August 2015 that would define terrorism and make terrorism, terrorist
financing, and the intent to commit terrorism autonomous offenses.99 The bill still needs to be
approved by the Federal Senate and President Rousseff in order to become law.
Defense
U.S.-Brazil military cooperation has increased significantly in recent years. In the aftermath of
the January 2010 earthquake in Haiti, U.S. and Brazilian military forces engaged in their largest
combined operations since World War II. Later that year, the U.S. and Brazilian governments
signed a Defense Cooperation Agreement designed to promote cooperation in areas such as
research and development, technology security, and acquisition of defense products and services,
and a General Security of Military Information Agreement designed to facilitate the sharing of
classified defense and military information.100 In an effort to elevate defense ties further,
President Rousseff joined with President Obama in 2012 to launch a presidential-level Defense
Cooperation Dialogue. While the cooling of bilateral relations in the aftermath of the NSA
revelations affected U.S.-Brazilian defense ties, military-to-military cooperation at the operational
and tactical levels reportedly remained strong.101 The Defense Cooperation Agreement and the
General Security of Military Information Agreement, which had been awaiting approval from
Brazil’s Congress since 2010, were adopted and entered into force in June 2015 prior to President
Rousseff’s trip to the United States.
97 U.S. Department of State, Office of the Coordinator for Counterterrorism, Country Reports on Terrorism 2014, April
2015, http://www.state.gov/j/ct/rls/crt/2014/239409.htm.
98 Ibid.
99 Câmara dos Deputados, “Aprovado Texto-base de Projeto que Prevê Pena de até 30 Anos para Terrorismo,” press
release, August 12, 2015.
100 U.S. Department of Defense, Office of the Secretary of Defense, “Fact Sheet: U.S.-Brazil Defense Cooperation,”
March 14, 2011.
101 General John F. Kelly, Commander, United States Southern Command, Posture Statement before the 113th
Congress House Armed Services Committee, February 26, 2014, p. 21, http://www.southcom.mil/newsroom/
Documents/2014_SOUTHCOM_Posture_Statement_HASC_FINAL_PDF.pdf.
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As previously noted, the United States provides security assistance, including military training, to
Brazil. This assistance is designed to strengthen military-to-military relationships, increase the
professionalization of Brazilian forces, and enhance Brazil’s capacity to assume a larger role in
peacekeeping operations and in combating terrorism. The U.S. Department of Defense and the
U.S. Department of State provided nearly $2 million in military training assistance to about 110
Brazilians in FY2014. The Brazilian government paid for another 124 Brazilians to receive over
$8 million in U.S. training through the Foreign Military Sales (FMS) program. In FY2015, the
State and Defense Departments plan to provide $662,000 in military training assistance to about
50 Brazilians. They plan to train 72 more Brazilians with $1.5 million in Brazilian funding
through the FMS program.102
Promotion of Racial Equality
While Brazilians have experienced significant improvements in economic and social conditions
over the past decade, racial disparities persist. Afro-Brazilians, who comprise about half of the
Brazilian population,103 account for less than 25% of Brazilians that have completed post-
secondary degrees and 17% of Brazilians that have completed graduate degrees.104 In 2010, the
median income of Afro-Brazilians was 64% of the median income of white Brazilians.105 Even
after controlling for education, occupation, and location, white Brazilians reportedly receive
higher wages than Afro-Brazilians.106 Moreover, Afro-Brazilians are disproportionately the
victims of Brazil’s high levels of crime and violence. In 2010, the homicide rate for Afro-
Brazilians was 36.5 per 100,000—nearly two and a half times the rate of other Brazilians.107
In order to reduce racial disparities, the Brazilian government has enacted a series of
antidiscrimination and affirmative action measures. Brazil became the first Latin American
country to endorse racial quotas in government service in 2002, and became the first country in
the world to establish a special secretariat with a ministerial rank to manage racial equity
promotion policies in 2003. In 2010, Brazil enacted the Statute of Racial Equality, which offers
tax incentives for businesses that undertake racial inclusion, calls on the government to adopt
affirmative action programs, and reaffirms that African and Afro-Brazilian history should be
taught in all elementary and middle schools, among other provisions. In 2012, Brazil adopted a
law that requires federal universities to reserve half of their admissions spots for students who are
Afro-Brazilian, indigenous, or graduates of public high schools (which tend to serve the poorest
students). The law gradually increases the admissions spots required to be reserved from 12.5% in
2013 to 50% in 2016, with half of the reserved spots set aside for low-income students of all races
with the highest grades and the other half divided in accordance with the racial makeup of each
state.108 Most recently, President Rousseff enacted a law in June 2014 that reserves 20% of jobs in
102 U.S. Department of Defense and U.S. Department of State, Foreign Military Training, Fiscal Years 2014 and 2015,
Volume I, 2015, http://www.state.gov/documents/organization/243026.pdf.
103 According to Brazil's 2010 census, 43.1% of Brazilians self-identify as pardo (“mixed race”) and 7.6% self-identify
as preto (“black”). IBGE, Censo Demográfico 2010, November 2011.
104 Tatiana Dias Silva and Fernanda Lira Goes, Igualdade Racial no Brasil: Reflexões no Ano Internacional dos
Afrodescendentes, Instituto de Pesquisa Econômica Aplicada (IPEA), Rio de Janeiro, 2013, p. 20.
105 IBGE, 2011, op. cit.
106 Dias & Goes, 2013, op. cit., p.21.
107 Daniel R. C. Cerqueira and Rodrigo Leandro de Moura, Vidas Perdidas e Racismo no Brasil, IPEA, Nota Técnica
N° 10, Brasília, November 2013, p. 6.
108 Simon Romero, “Brazil Enacts Affirmative Action Law for Universities,” New York Times, August 30, 2012;
“Rousseff Decrees Affirmative Action,” Latin News Daily Report, October 16, 2012.
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the Brazilian executive branch and state-owned enterprises for Afro-Brazilians.109 Although race-
based affirmative action policies are controversial among some sectors of the Brazilian
population,110 they have been upheld as constitutional by the Brazilian Supreme Court.
In March 2008, Brazil and the United States signed an agreement known as the United States-
Brazil Joint Action Plan to Eliminate Racial and Ethnic Discrimination and Promote Equality.
The initiative recognizes that Brazil and the United States are multi-ethnic, multi-racial
democracies, and seeks to promote equality of opportunity for the members of all racial and
ethnic communities. To that end, Brazil and the United States share best practices through
activities such as training programs, workshops, technical expert exchanges, scholarships, and
public-private partnerships.111 The initiative has focused on expanding access to education for
students of African descent, eliminating racial health disparities, mitigating environmental
impacts in communities of African descent, addressing challenges in criminal justice systems, and
guaranteeing equal access to economic opportunities.112 Congress recommended providing
resources to continue and strengthen the initiative in FY2015 according to H.Rept. 113-499,
which is considered part of the explanatory statement accompanying the Consolidated and
Further Continuing Appropriations Act, 2015 (P.L. 113-235).
Amazon Conservation
The Amazon Basin is estimated to span more than 6.8 million square kilometers. It produces
about 20% of the world’s fresh water discharge and contains the largest remaining rainforest on
Earth.113 In addition to supporting significant biological diversity, the Amazon Rainforest is a
global sink for carbon emissions and an important asset in the mitigation of climate change. The
forest biomass is estimated to hold about 100 billion tons of carbon, which is equivalent to more
than 10 years of global fossil fuel emissions.114
About 69% of the Amazon Basin, which is shared by seven nations,115 lies within Brazil.116 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. Partially
as a result of these incentives, the human population grew from 6 million in 1960 to 25 million in
2010. Forest cover in the Brazilian Amazon has declined to about 80% of its original area as a
result of settlements, roads, logging, farming, and other activities in the region.117
109 “Brazil Enacts 20 Percent Quotas for Blacks in Federal Jobs,” Agence France Presse, June 9, 2014.
110 See, for example, Diogo Schelp, “Queremos Dividir o Brasil como na Foto?” Veja, September 2, 2009; and Julia
Carvalho, “O Grande Erro das Cotas,” Veja, August 29, 2012.
111 U.S. Department of State, Bureau of Western Hemisphere Affairs, “U.S.-Brazil Joint Action Plan Promotes Racial
and Ethnic Equality,” April 11, 2012.
112 U.S. Department of State, Office of the Spokesperson, “Steering Group Meeting of the U.S.-Brazil Joint Action Plan
to Eliminate Racial and Ethnic Discrimination and Promote Equality,” media note, July 17, 2013.
113 United Nations Environment Programme (UNEP), Global International Waters Assessment: Amazon Basin, GIWA
Regional Assessment 40b, Kalmar, Sweden, 2004, http://www.unep.org/dewa/giwa/areas/reports/r40b/
giwa_regional_assessment_40b.pdf.
114 Eric A. Davidson et al., “The Amazon Basin in Transition,” Nature, vol. 481 (January 19, 2012), p. 321.
115 The seven nations that share the Amazon Basin are Brazil, Bolivia, Colombia, Ecuador, Guyana, Peru, and
Venezuela. The Amazon Rainforest extends beyond the Amazon Basin into Suriname and French Guiana.
116 UNEP, 2004, op. cit.
117 Davidson et al., 2012, op. cit., p. 321.
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Recognizing that continued destruction of the Amazon Rainforest is damaging to Brazil’s global
image and could threaten hydroelectricity generation and agricultural production,118 the Brazilian
government has implemented a series of policies designed to slow deforestation. In 2002, for
example, it created the Amazon Protected Areas Program, which now includes some 600,000
square kilometers of forest.119 Likewise, the Brazilian government adopted a plan to reduce the
rate of Amazon deforestation by 80%—based on the 1996-2005 average—to 3,925 square
kilometers per year by 2020. To meet this target, the Brazilian government has increased
surveillance and financed sustainable development projects.120 Brazil appears to be on track to
achieve its goal, as annual deforestation has fallen from 27,772 square kilometers in 2004 to
4,848 square kilometers in 2014 (see Figure 4).121 A 2012 study found that about half of the
reduction in deforestation in the Brazilian Amazon between 2005 and 2009 was attributable to the
Brazilian government’s conservation policies, though lower commodity prices also contributed to
the decline.122 President Rousseff and President Obama issued a “U.S.-Brazil Joint Statement on
Climate Change” during their June 2015 meeting, which included a Brazilian pledge to restore
and reforest 120,000 square kilometers of forests by 2030.123
Despite recent progress, Brazil’s deforestation rate increased by nearly 29% between 2012 and
2013. Although it fell by about 18% between 2013 and 2014, the deforestation rate remains
higher than it was in 2012. Some analysts have attributed the increase in deforestation to
government policy changes. In 2011, President Rousseff signed a law transferring responsibility
for environmental oversight of nonfederal lands from Brazil’s federal environmental protection
agency to local officials. The federal government maintains that local officials are better placed to
manage such resources, but critics argue that local authorities lack the necessary finances and are
more susceptible to intimidation and corruption.124 In 2012, the Brazilian Congress approved a
major overhaul of the forest code—a law that requires rural landowners to set aside 20%-80% of
their land for natural vegetation. President Rousseff vetoed some of the most controversial
provisions of the legislation, but the final version relaxed conservation requirements for
environmentally sensitive areas like river banks, reduced reforestation requirements for land that
had already been deforested, and decreased the total amount of forest that must be preserved.125
Supporters of the reform assert that it was necessary in order to bring farmers into compliance
with the law, and argue that the updated forest code remains among the strictest regulations of
private property in the world.126 Rousseff’s decision to appoint two climate change skeptics who
118 See, for example, Fabiana Frayssinet, “Climate Change-Brazil: Farmers ‘Have Good Reason to Worry’,” Inter Press
Service, September 21, 2011; “Amazon Rainforest Begins to Fail to Regulate Climate – Scientist,” BBC Monitoring
Americas, November 5, 2014; and Mario Osava, “Brazil: Deforestation in the Amazon Aggravates Energy Crisis,”
Inter Press Service, April 3, 2015.
119 “Brazil to Spend $216 Mn on Protected Areas in Amazon,” EFE News Service, May 22, 2014.
120 República Federativa do Brasil, Ministério do Meio Ambiente, Plano de Ação para Prevenção e Controle do
Desmatamento na Amazônia Legal (PPCDAm): 3ª Fase (2012-2015), Brasília, June 2013.
121 República Federativa do Brasil, Ministério da Ciência, Tecnologia e Inovação, Instituto Nacional de Pesquisas
Espaciais (INPE), Projeto PRODES, Monitoramento da Floresta Amazônica Brasileira por Satélite, December 2014.
122 Juliano Assunção, Clarissa C. e Grandour, and Rudi Rocha, Deforestation Slowdown in the Legal Amazon: Prices
or Policies, Climate Policy Initiative, Working Paper, Rio de Janeiro, February 6, 2012,
http://climatepolicyinitiative.org/wp-content/uploads/2012/03/Deforestation-Prices-or-Policies-Working-Paper.pdf.
123 White House, Office of the Press Secretary, “U.S.-Brazil Joint Statement on Climate Change,” press release, June
30, 2015.
124 Paulo Prada, “Special Report: Brazil Backslides on Protecting the Amazon,” Reuters, August 3, 2012.
125 “Brazil President Makes Final Changes to Forestry Law,” Agence France Presse, October 18, 2012.
126 Reese Ewing, “Interview-Brazil Land Use Bill to Make Forests Profitable,” Reuters, June 1, 2011.
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have clashed with environmentalists to her cabinet has raised further questions about her
administration’s commitment to conservation.127
Figure 4. Deforestation in the Brazilian Amazon: 2004-2014
In square kilometers
30,000
25,000
20,000
15,000
10,000
5,000
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: CRS presentation of data from the Brazilian government’s Instituto Nacional de Pesquisas Espaciais
(INPE).
The United States has provided assistance to Brazil designed to support tropical forest
conservation through the promotion of sustainable 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 other organizations working throughout the Amazon Basin to conserve the
forest’s biodiversity. USAID provided Brazil with $10.8 million in FY2012, $9.6 million in
FY2013, and $10.5 million in FY2014 to continue those programs.128 The Obama Administration
did not request any funds for conservation efforts in Brazil in FY2015 or FY2016. Nevertheless,
the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235) recommends
providing $10.5 million for environmental programs in the Brazilian Amazon this fiscal year.
Likewise, the reports (H.Rept. 114-154 and S.Rept. 114-79) accompanying the FY2016 foreign
aid appropriations bills reported in each house (H.R. 2772 and S. 1725) would provide $10.5
million for conservation programs in the Brazilian Amazon.
In addition to providing foreign aid, the United States has signed a debt-for-nature agreement
with Brazil under the Tropical Forest Conservation Act of 2008 (P.L. 105-214). According to the
127 Hector Velasco, “Rise of Brazil’s Ranching Queen Sparks Green Protests,” Agence France Presse, December 24,
2014; Simon Romero, “Climatologists Balk as Brazil Picks Skeptic for Key Post,” New York Times, January 6, 2015.
128 USAID data, as presented by the Foreign Assistance Dashboard, November 2014.
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2010 agreement, the United States is reducing Brazil’s debt payments by $21 million over five
years. In exchange, the Brazilian government is committing those funds to activities to conserve
protected areas, improve natural resource management, and develop sustainable livelihoods in
endangered areas outside of the Amazon Rainforest such as the Atlantic Rainforest, Caatinga, and
Cerrado ecosystems.129
Author Contact Information
Peter J. Meyer
Analyst in Latin American Affairs
pmeyer@crs.loc.gov, 7-5474
129 U.S. Department of State, Office of the Spokesman, “Debt-for-Nature Agreement to Conserve Brazil’s Tropical
Forests,” August 12, 2010. For more information on the Tropical Forest Conservation Act, see CRS Report RL31286,
Debt-for-Nature Initiatives and the Tropical Forest Conservation Act: Status and Implementation.
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