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Can the DoD Trust Brazil with American National Security?

Should an important Air Force contract be awarded to a Brazilian company, despite our trade and foreign policy differences with that country?

by
Jaime Daremblum and Seth Cropsey

Bio

May 31, 2011 - 12:00 am
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Next month, the U.S. Air Force is expected to select a bid for a new aircraft to serve in a counterinsurgency attack role for the U.S. and its foreign partners. It seeks an inexpensive light attack and armed reconnaissance and training aircraft for countries that have little need or resources for supersonic jet fighters. One major competitor for the Air Force contract is the Brazilian company Embraer.

Working with international manufacturers is paramount to promoting stronger international relationships. However, potentially partnering with a country that hosts deep anti-American sentiment is concerning at besWarranted or not, the core of this sentiment stems from troubled trade agreements and Brazil’s ever-differing approach to foreign policy, that, at times, diverges in significant ways from U.S. policy.

The absence of a close knit and significant trade relationship between the United States and Brazil is notable. There have been frequent  disputes over subsidies of key agricultural exports. A second reason for Brazil’s “anti-Yanqui” sentiment dates back to the events of the Cold War. This outlook has been intensified both by perceived unfair trade practices after the end of the Cold War and by opposition to U.S. foreign policy following the attacks on September 11.

Many of Brazil’s exports compete directly with American products. Brazil produces and exports coffee, citrus, sugar, beef, and poultry — the same products that the U.S. produces in larger quantities. Although former President Fernando Henrique Cardoso generally supported free trade, there were bitter disputes over subsidies, tariffs, and quotas during the negotiations for a Free Trade Agreement of the Americans (FTAA) that took place while he was in office.

These negotiations faltered, and trade disputes continued during President da Silva’s term. In March 2010, Brazil raised tariffs on U.S. cosmetics, appliances, and cars to counter U.S. cotton subsidies. The disagreements and troubled outlook continued.

Another area of tension between Brazil and the United States relates to Iran. In November 2009, President da Silva invited Iranian President Mahmoud Ahmadinejad to Brazil. In May 2010, da Silva helped broker a deal in which Iran would ship only a portion of its low-enriched uranium to Turkey for reprocessing; the rest would remain in Iranian hands, where it could be further enriched for nuclear weapon production.

The United States must also consider Brazil’s propensity for heavily subsidizing its corporations. Embraer is the world’s third-largest aircraft manufacturer and the producer of both civilian and military aircraft. It was founded in 1969 as a state-owned company. Even after Embraer’s supposed “privatization,” the Brazilian government continued to support the company through massive subsidies. These subsidies were condemned by a World Trade Organization panel.

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