Free trade deal between US and Brazil 'may be unlikely'

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A US-Brazil free trade agreement may not be on the cards any time soon.

Brazil may be disappointed by the latest comments from US trade officials suggesting a free trade deal between the two nations could be increasingly unlikely.

Speaking during a webinar with Brazilian government representatives viewed by BN Americas, US trade assistant Daniel Watson said an agreement is not high on the US government's agenda.

"President Joe Biden has made it clear that we are not going to make new trade deals right now, and the priority is on domestic investment projects," he added.

The remarks came after secretary for bilateral and regional negotiations at Brazil's foreign ministry Pedro Miguel Costa e Silva said the South American nation is still very interested in extending trade with the US.

Two weeks before the US general election last year, former president Donald Trump agreed a bilateral 'mini' trade deal between the two nations to increase trade, strengthen regulatory practices and reduce corruption.

The pact, announced at the US-Brazil Connect Summit, was a simple contract between parties and therefore did not require approval from the US Congress.

At the time, then-secretary of state Mike Pompeo said: "The American people benefit from a set of deeper, closer ties with all of our friends in the western hemisphere and in South America, and it is not possible to have a solid, capable, deep set of relationships there without an anchor like Brazil."

However, with the arrival of new president Joe Biden, the momentum towards a more formal agreement has slowed significantly.

As such, Brazil has been increasingly relying on exports to China, with soybean and iron ore products in particular making up a large proportion of its sales to the Asian giant. This is a situation with which the Latin American nation is unhappy.

"If this continues in the medium term, we may reach a point of exhaustion. Brazil must seek major commercial diversification," Jose Augusto de Castro, the head of foreign trade association AEB, told BN Americas.

Indeed, research organization Ipea suggested a US-Brazil trade deal could add 0.41 per cent to Brazil's GDP and boost exports by 90 per cent, leading it to remain hopeful of extending trade ties with the economic superpower.

However, research director of the China-Brazil Business Council Tulio Cariello commented: "We have to consider that for the US to negotiate free trade with Brazil is not advantageous right now."