Free Trade Support Waning in Brazil

When President Bush imposed tariffs against foreign steel last week, he exempted Brazil’s steel industry to drum up support there for one of his objectives: the Free Trade Area of the Americas.

Robert Zoellick, the U.S. trade representative, will find when he visits Brazil this week to build on that effort that Bush’s gesture failed, Brazilian government and industry representatives said.

“I would be very surprised if Brazil were at all amenable to serious FTAA negotiations, much less taking a leadership role,” said William Barringer, the lawyer who represented Brazilian steelmakers, including Companhia Siderurgica Nacional and Companhia Siderurgica de Tubarao, during a U.S. investigation of imports.

Bush put tariffs of up to 30% on most steel imports. He did not put a quota on steel slab, the raw material used by U.S. steel-rolling mills that is imported mostly from Brazil.

Instead, he set a quota for slab, giving Brazil a 2.8-million-ton limit on slab shipments, equal to the country’s 1999 highest-ever export level.

Brazil and the U.S. do about $30billion a year in two-way trade, of which less than $2 billion is steel, according to U.S. Commerce Department data.

A U.S. trade official, briefing reporters ahead of Zoellick’s trip on condition of not being named, said the need for Brazilian leadership in the Americas trade negotiations played a part in deciding to mitigate the effect of the steel action on the country’s industry.