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Strengthening Trade and Investment Ties by Kathleen McInerney, Director, Brazil - U.S. Business Council featured at the 2nd International Conference: Brazil: A pathway into the future from the Emerging Markets Institute at Cornell University's Samuel Curtis Johnson Graduate School of Management and Better Brazil
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Strengthening Trade and Investment Ties
Premier business advocacy organization in Washington D.C;
Forging consensus between the two private sectors and communicating to both governments with a unique bilateral voice.
U.S section of the Council;
Operates under the administrative aegis of the U.S. Chamber of Commerce;
Represents major U.S. companies that invest in or have business in Brazil;
Brazil section
Managed by the Brazilian National Confederation of Industry.
About us
Our objectives
Advocate in Brazil and the United States for members’ interests;
Promote substantive interaction between members and leading policy and decision makers in Brazil and the United States;
Deliver timely information to members and facilitate member input into policy formulation and program development;
Advance members’ policy priorities through task forces, working groups, coalitions, and joint programs with government and private sector stakeholders.
Our leadership
Chairman of the Board Greg PageCargill Chairman & CEO
Chair EmeritusAmbassador Anthony S. Harrington
Albright Stonebridge Group President & CEO
Our members
Economic Basics:
Population of 200 million people;
Land mass slightly larger than the area of the Continental U.S.;
Currently the 6th largest economy in the world in terms of GDP;
Although growth has slowed in the last two quarters, Brazil weathered the economic crisis better than most world markets and forecasts predict a strong 2013;
Culturally diverse with extraordinary geographic variety;
Agricultural sector rivals that of the U.S.
Why Brazil?
Among the BRICs:
Per capita income is twice that of China;
Geographic proximity to the U.S.;
Historically a key political ally;
Culturally and geographically similar to the U.S.;
In terms of GDP according to the CIA estimates: Brazil's 2011 GDP was 2.324 trillion, Russia’s 2.414 trillion (2011 est.), and India $4.515 trillion (2011 est.).
Why Brazil?
BRICs Forecast
The five largest economies in the world in 2050, measured in GDP nominal (millions of USD), according to Goldman Sachs.[18]
Forecasts vary, but sometime in the decade after 2014—Brazil is likely to become the world’s fifth-largest economy, overtaking Britain and France.
Bilateral Private Sector
Brazilian State Capitalism
Business Sector Areas of Concern
Presidential-level Dialogues
Economic and Commercial Bilateral Dialogues
Brazil & the United States
Brazil Business Concerns with the United States:
WTO cases against the U.S. on cotton and OJ;
Agricultural Subsidies (cotton, ethanol*, soybeans);
Restrictive Tariff Rate Quotas (sugar, OJ, ethanol).
U.S. Business Concerns with Brazil:
High tariffs & complicated taxes;
Enforcement of Intellectual Property Rights;
Onerous licensing & Regulatory Requirements;
Transparency & bureaucracy.
* Ethanol tariff and blenders credit expired December 2011 in the U.S. and tariffs in Brazil have been suspended until 2015.
Business Sector Concerns
Brazil’s Macro Scene
Best Prospects
World Cup and Olympic Games
Best practices to ensure success
Resources for doing business in Brazil
Doing Business in Brazil
Political Economy:
Focus on state-led growth (infrastructure and PAC investments);
BNDES central role in financing infrastructure;
Increasing government involvement through “national champions”;
New industrial policy that heavily favors domestic production;
Potential for improved relations with United States;
Upcoming major events including World Cup (2014) and Olympics (2016);
Brazil’s macro scene
.
Brazil’s macro scene
Challenges:
High level of red tape;
Complex tax system and high rates;
Difficult to get copies of laws and regulations in English;
Regional affiliations;
Inflexible and burdensome labor laws;
Volatile regulatory and legal environment.
2012 Best Prospects
Agricultural Equipment
Aviation/aerospace
Defense
Energy
Environmental technologies
IT hard/software
Infrastructure
Insurance
Medical Equipment
Safety and Security Equipment
Smart Grid/Metering
Sporting Goods
Telecom
Transportation
Tourism
Water and wastewater
2014 World Cup
Will be held in 12 Brazilian cities;
Investments budgeted to be:
Infrastructure: US$ 51 billionStadiums: US$2.7 billionAirport renewals: US$3 billion-----------------------------------------TOTAL: US$56.7 billion
This figure does not include the proposed High Speed Train Rio/Sao Paulo, valued at US$20 billion, which likely will not be ready by 2014.
As delays mount, the total spending is expected to go beyond the budgeted figures listed above.
2016 Olympic Games
First Olympic Games ever to be held in one city
Investments from 2010-2016 may reach US$50 billion in infrastructure, construction, transportation, public security, education and training, among others;
Most of the large-scale investments will occur through Public-Private Partnerships (PPPs) under Brazil’s Growth Acceleration Program (PAC);
Majority of contracts will be awarded to Brazilian firms, but with opportunities for U.S. partnerships and suppliers;
Political alignment on all levels will facilitate the procurement process;
Two sets of opportunities, one through government procurement, the other through Olympic Committee procurement.
Tips for Success
Complex system—advisable to hire local experts;
Requires an intimate knowledge of the local environment, including “Custo Brasil”.;
Location matters—be sure you investigate all 26 states + Brasilia;
Best done for SMEs through a local agent or distributor;
Whether your company is a bank, a realtor, an engineering firm or any type of industry or service provider, it is best to secure local partners;
Get an interpreter—that speaks Portuguese!;
Tax code is complex, accounting practices difficult, best to have a Brazilian firm and a local firm that understands Brazil;
Labor market is competitive and labor law favors the employee; be sure you understand how best to structure your presence on the ground.
Resources
The U.S. Foreign Commercial Service
Brasilia: Devin Rambo, Principal Commercial [email protected]: 55-61 -3312-7401 / Fax: 55 –61 3312-7656
Belo Horizonte: Ruy Baptista, Commercial [email protected]: 55/31/3213-1574 / Fax: 55/31/3213-1575
Sao Paulo : Brian Brisson, Senior Commercial [email protected]: 55-11 5186-7401 / Fax: 55-11 5186-7445
Recife: Adierson Azevedo, Commercial [email protected]: 55-81 3416-3075 / Fax: 55-81 3416-3075
Rio de Janeiro : Alan Long, Principal Commercial [email protected]: 55-21 3823-2417 / Fax 55-21 3823-2424
ResourcesAmerican Chamber of Commerce for Brazil: 13 branches across Brazil Membership organization Trade missions, matchmaking, helping to identify service providersCamila [email protected]
American Chamber of Commerce, Rio de Janeiro:Helio Blak, Diretor [email protected] www.amchamrio.com
Invest Sao PauloSergio [email protected]
Rio NegociosMarcelo Haddade, Directorwww.rio-negocios.com/en/[email protected]