Commercial Relations: Brazil and United States

Rebeca Duran

Staff Writer
The Brazil Business

Updated

7 March 2014

Bonded since Brazilian independence, the United States and Brazil have been developing diplomatic and commercial relations during the years. Even with the Brazilian approach to South-South Ties and its claims for the third world insertion in the international scenario, his North American friend is still a very important player in the Brazilian economy.

First Steps to Establish Relations

Brazil has never been invisible to Latin American countries, and neither to the rest of the world. With a territory of approximately 8.5 million square kilometers and a population of 198 million inhabitants, this giant country has always caught foreign eyes since its discovery. Nowadays, the country concentrates on other impressive numbers, with a GDP of 2.4 trillion USD, Brazil has the largest economy in Latin America and the seventh largest economy in the world.

All of that explains why the country has received North American attention since its independence in 1822. In that year, Brazil finally had cut its colonial chains with Portugal, declaring its independence from this European decadent empire, but the declaration wasn’t recognized right away. European nations were hostile to it, and it was only in 1824 that one nation decided to accept the new Brazilian status.

That nation was the United States, and, with the launch of the Monroe Doctrine, condemned any European colonizer intervention in the Americas. Since then, Brazil and United States shared a long history of relations, which has been generally positive. The relations between both countries may have confronted some foreign policy disagreements, but were never interrupted. Their engagement on some issues, like security, energy, and the environment, colored the relations during the years, but, mainly, it was the economic bond between these two nations that kept them united.

Commercial Exchange: Brazil and United States

The trade balance between the United States and Brazil always has a main characteristic: deficit to Brazil and superavit to the United States. But, that has never hindered the trade relations between the parties. On one hand, the countries' relation may not be equal if the final result of the trade balance is considered.

Although, on the other hand, the relation can be classified as mutualistic, considering that both countries have their necessities supplied: the North American country acquired the Brazilian commodities it needs, and the South American giant's dependence on the manufactured and technological goods derived from the United States are attended.

Importation to Brazil from the United States

United States is one of the members of the economic bloc NAFTA, and for that reason, the main destinations of the country's exportations were delivered to the other parties of the bloc (32.9% of U.S. products). However, Brazil is ranked as the seventh main buyer of U.S. products in the world.

Mechanical equipment, especially parts for turbo jets, correspond to the main importations from the United States. In 2013, it was responsible for 19.5% of the total imports, followed by diesel fuel (18.8%), electrical machinery (7.9%), organic chemicals (6.4%), plastics (6.1%), precision instruments (5.8%), various chemical products (4.5%), and pharmaceuticals (3.7%).

Exporting from Brazil to United States

With a share of 12.6% of the Brazilian foreign trade, the United States closed 2013 as the second leading trade partner of Brazil. Between 2009 and 2013, Brazil's trade with the United States grew 70.2%, from 35.6 billion USD to 60.7 billion USD, the Brazilian exports grew by 58%, and imports derived from the United States by 79.7%.

The main products exported from Brazil to U.S. are manufactured goods (50.3% of the total of exports amount), being commodities equivalent to 29.8% and semimanufactured goods to 19.3% of the total exports. Crude oil fuels were the main Brazilian item exported to the United States, representing in 2013 14.7% overall, followed by iron and steel products (12.7%), mechanical machinery (11.7%), aircraft (5.6%), beverages (4.5%), wood pulp (4.2%) and coffee (4.0%).

The Bilateral Relations

The economic relations between Brazil and the United States are extremely important. Major actors of the Americas, the bond established by them created mechanisms to improve the goods and people movement from one country to another, in order to increase the business opportunities and the countries' dialogue among economic and financial issues.

Mechanisms of Cooperation

• Economic Partnership Dialogue: focused on the promotion of technical consultative services for commercial initiatives in all scales (bilateral, regional, or global).
• Commission on Economic and Trade Relations: searches for the countries' cooperation in economic and trade issues.
• Economic and Financial Dialogue: aims to find consensus in the establishment of international trade policies.
• Strategic Energy Dialogue: tries to promote mutual energy security, create new jobs and industries, and decrease carbon pollution.
• Commercial Dialogue: searches for strategies to increase trade and investment through the discovery of impediments and their elimination.
• Consultative Committee on Agriculture: tuned to increase agricultural trade and cooperation.
• CEO Forum: allows United States and Brazilian executives to advise policymakers of both countries to increase bilateral commercial relations.
• Partnership for the Development of Aviation Biofuels: forum for technical exchange on certification and standards for renewable fuels.
• 2011 Air Transport Agreement: tries to remove the limits on flight frequencies between the two countries.
• Joint Standing Committee on Nuclear Energy Cooperation: discussion of policy and technical aspects of civil nuclear energy and nuclear nonproliferation between United States and Brazil.