Brazil, the United States, and the China Challenge

In a recent op-ed published in O Estado de S. Paulo, Rodrigo Guedes Nunes (our lead Brazil attorney) and I proposed some practical steps Brazil’s government could take to strike the right notes with the Biden administration. Given the close links between Biden’s predecessor and Brazil’s President Jair Bolsonaro, it is essential for Brazil to boldly and quickly signal its intention to cooperate with America on issues where common ground exists.

One such issue is the challenge presented by China. While COVID-19 realpolitik appears to be forcing Bolsonaro to tone down his criticisms, he has been a “longtime China skeptic.” As an ardent anti-communist, efforts to contain China should not be a hard sell on Bolsonaro. Brazil could curry favor in Washington by adding a Latin American voice to those who express concern about China’s militarization of the South China Sea, increasing bellicosity toward Taiwan, and human rights abuses in Xinjiang, among other matters.

While China obviously does not want a more vocal Brazil, it simply would not be able to give Latin America’s largest economyand a massive importer of Chinese products—the cold shoulder. As it does with the United States and many of its allies, China would need to balance the benefits of continuing engagement with Brazil with any irritation caused by a more critical foreign policy. Because of this, alignment with the United States on China policy is unlikely to have much of a downside for Brazil, while allowing it to position itself as a regional power with corresponding sensibilities.

Brazil also needs to be mindful of and properly read the protectionist mood in the United States. While Brazil’s potential as a replacement to Chinaand other undemocratic Asian nations such as Vietnamin some sectors should be highlighted, Brasilia must recognize there is a strong American desire to reshore at least some of the production lost over the past decades to overseas competitors. Brazil should encourage its businesses to seek opportunities to establish joint ventures and subsidiaries in the United States—joining companies such as EmbraerPetrobras, and Itaú.

To take just one example of additional opportunities that might exist, the world’s most famous footwear brands rely on Brazilian companies to manufacture products for sale in Brazil. These Brazilian companies are sophisticated operations that rival some of the Taiwanese and Korean companies that manufacture in Asia for the top brands. In fact, just as the Taiwanese and Koreans have set up facilities in Southeast Asia, Brazilian companies have established operations elsewhere in Latin America. What prevents one of these footwear companies from setting up a factory in, say, Louisiana, with the aim of supplying the North American market?

Finally, Brazil should take a broad view when it comes to diplomatic efforts in the United States. State and local authorities are key in establishing proper conditions to attract foreign investment to a particular area. Many matters of reciprocity, such as driving privileges, require agreements with state governments, not the feds. In addition, it is in the lower levels of government that most future leaders are forged, as the new president and vice president demonstrate. Some countries are fully aware of these realities and cultivate relationships with state, county, and city officials. If Brazil is to develop a stronger relationship with America, it must be present in our state capitals and major cities.

While on the topic of the Biden administration and international trade, I cannot resist making a plug for our upcoming February 3rd (FREE) webinar on the same. For more information on this webinar and to register, please go here.