Brazil & Foreign Trade Barriers

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“The United States and Brazil: Unfriendly Giants?”

Jeremy Bjorn Swanson
July 23,2006
ECO 4955
Executive Summary:
This composition will examine the relationship between the United States and Brazil. Interactions and exchange relations between the two nations have been stressed. Trade barriers are the main cause for these tensions; specific exchange obstructions shall be discussed, potential effects of removing these barriers, and the implications it may have on the companies involved with the 2006 FAU Field Experience. The following notions have been deducted through researching materials listed in works cited and personal opinion.

Over the past half century the world has gone through a great deal of change. International trade has played an integral part of uniting formerly warring nations once the mutual benefits of globalization were discovered. The WTO, GATT, MERCOSUR and other trade organization are all superlative examples of successful multi-national treaties. Despite the verified success various countries have had with foreign exchange, there are still major economic powers that remain apprehensive about the results of removing trade barriers. An interesting example of two major economies, whose governments chose to maintain two distinctly different post-world war international trade policies, is the United States of America and Brazil. Both nations are the largest economy on their respective continent. They are geographically similar in size and are located in close proximity to one another. In addition to this, during the 1960s the two countries shared a comparable trade/gross domestic product ratio. This ratio averaged 9.7% for the United States and 13.1 percent for Brazil. Over the past forty years the United States has opened its market to the globalization of finance and trade. The national remuneration for this adaptability was significant, as positive results were via increased employment rate and higher levels of income. Conversely, aside from its MERCOSUR participation, Brazil has remained relatively inaccessible for international barter. The nation’s involvement in MERCOSUR boosted the country’s productivity drastically and helped raise the standard of living. Brazil must continue to restructure its trade strategies if they wish to remain globally competitive. [pic]

(Exports of Goods and Services, 1999-2003)
Normally, when a country such as the United States invests a substantial sum of money into a foreign country there is a positive reaction in the volume of bilateral trade. However, this has not been the case with Brazil and the United States. It is imperative that these countries cease their petty squabbling and find a common ground for business negotiations. The economic health of countries which border one another or are in close regional proximity, are greatly affected by the other’s political stability and economic success. For this reason, the social structure and fiscal success of both Brazil and the U.S. ultimately depend on the success of the FTAA, WTO, and two way trades between one another. This essay will observe U.S.- Brazilian Trade Relations, disclose many of Brazil’s existing trade barriers, and ponder the potential benefits of a closer, more amicable affiliation.

Trade Summary
Bilateral trade between Brazil and the United States swelled since the 1990s; U.S. exports to Brazil dropped off in 1997 but the imports proliferated like never before. Petroleum, electric machinery, iron, steel, and footwear are common items for which the United States solicits Brazil for. Conversely, the outflow of U.S. goods to Brazil generally consist of more refined and technologically advanced products such as computers, sophisticated electric machinery, and large aircraft. In spite of a large trade deficit between the two countries, the stock of U.S. foreign direct investment in Brazil is close to 40 billion dollars....
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