WWD.com/fashion-news/fashion-features/brazil-8217-s-lula-bush-talk-trade-742533/
government-trade
government-trade

Brazil’s Lula, Bush Talk Trade

WASHINGTON — Brazilian President-elect Luiz Inacio Lula da Silva, who met with President Bush on Tuesday, said he is committed to creating a Western Hemispheric trade zone, but warned that Brazil will fight for the elimination of unfair...

WASHINGTON — Brazilian President-elect Luiz Inacio Lula da Silva, who met with President Bush on Tuesday, said he is committed to creating a Western Hemispheric trade zone, but warned that Brazil will fight for the elimination of unfair subsidies and trade barriers, particularly in the agricultural sector.

“The protectionism of rich countries who use subsidies and trade restrictions is seen as the number one main cause that gets in the way of growth for developing countries,” Lula said at a news conference at the National Press Club.

As the first elected leftist leader in Brazil, Lula is trying to shore up confidence among international investors about his economic policies and reassure them he will not default on Brazil’s massive foreign debt. Brazil is Latin America’s largest economy and the eighth largest in the world.

Among the topics Lula discussed with Bush was the hemispheric free-trade zone among the U.S. and 33 Latin American countries known as the Free Trade Area of the Americas. The U.S. and Brazil will co-chair the negotiations to complete the agreement that’s scheduled for 2005.

But Lula has already voiced opposition to the comprehensive pact, accusing the U.S. of trying to annex Latin America through the pact. White House press secretary Ari Fleischer told reporters that Bush talked to Lula “about general economic conditions in South America,” and noted the “mutual interest in keeping trade a centerpiece of United States-Brazilian relations.”

On Tuesday, Lula said: “We are ready to negotiate [the FTAA] under equal conditions. We will be as tough as the Americans are in negotiations, but when we come to an agreement, we will be loyal to our commitments.”

The 34 countries involved in FTAA talks are currently trying to advance market access negotiations and exchanging initial offers on tariff reductions.

In addition to the politically sensitive issue of textile and apparel tariff phaseouts in the U.S. and other countries during FTAA negotiations, trade officials will have to decide how to drop barriers on agricultural products — one of Lula’s top priorities. A dispute between Brazil and the U.S. over cotton subsidies is one example of the kind of trade barriers Lula vowed to fight.

Brazil requested consultations with the U.S. under World Trade Organization rules on Sept. 27 to discuss its claims that the U.S. was providing illegal cotton subsidies to U.S. farmers that were causing serious injury to Brazilian growers by depressing world cotton prices. A resolution between Brazil and the U.S. was not reached during consultations last week in Geneva. Brazil must now decide whether to request the establishment of a WTO panel to rule on its claims.