United States to Have Free Trade Agreement with Brazil

The new trade agreement the US wants to reach with Brazil may not look like the United States-Mexico- Canada Agreement (USMCA), but it will indeed boost trade between the two countries, say analysts.

Brazil
Brazilian President Jair Bolsonaro (left) addressing the media alongside President Donald Trump.

President Donald Trump has begun laying the groundwork to wrap up a new trade agreement with Brazil, dismantling all the barriers obstructing the trade between the two countries.

Trump told reporters recently that his administration is working on a ‘free trade agreement’ with Brazil.

The new trade agreement the US wants to reach with Brazil may not look like the United States-Mexico- Canada Agreement (USMCA), but it will indeed boost trade between the two countries, say analysts.

Brazil and the United States exchanged more than US$100 billion in goods and services in 2018.

Unlike his predecessors Brazilian president Jair Bolsonaro dislikes China and is a pro-America. He reportedly told US Secretary of State Mike Pompeo that “former Brazilian presidents were enemies of the US for some reasons but he would be a friend”.

In addition, Bolsonaro, whose presidential campaign was similar to that of President Trump, has often complained that China is buying Brazil.

The U.S. goods trade surplus with the South American country was US$8.3 billion in 2018, a 7.2% increase ($563 million) over 2017. The United States has a services trade surplus of an estimated $21 billion with Brazil in 2018, up 7.1% from 2017, according to Office of the US Trade Representative.

However, it is not clear whether Brazil can remove tariffs on US goods without convincing its partners at Mercosur, the South American trade bloc, also composed of Argentina, Uruguay, and Paraguay.

Some analysts say Mercosur might come in the way of Bolsonaro’s efforts to reach a trade deal with the United States.

Mercosur has recently concluded talks on a free trade agreement with the European Union. But the deal has now hit a roadblock, with the French President Emanuel Macron threatening to oppose the trade deal saying Bolsonaro had lied about climate change efforts at the G20 summit in Japan.

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