Latin CEO / March 2000
By Larry Luxner
São Paulo-born diplomat Rubens Antonio Barbosa, 61, was appointed last August as Brazil's ambassador to the United States. Previously, he spent five and a half years as ambassador to the United Kingdom. He recently spoke with Latin CEO at the Brazilian Embassy in Washington.
Q: What is your biggest challenge as Brazil's ambassador to the US?
A: "With globalization and instant communication, the role of an ambassador has changed over time. To be an ambassador in the U.S. from any country is a big challenge. For me, the challenge in being posted to Washington is to try to differentiate Brazil from the other 180 countries represented here. The importance of Brazil is not appreciated in the United States. We are underestimated here. I'm not worried about public opinion or the man in the street, because the stereotypes of Brazil are generally favorable, and most people generally have little interest in foreign policy. What matters is what a CEO or the media or Congress thinks about Brazil."
Q: What are your priorities?
A: "The first of my six priorities as ambassador is foreign trade; the second is information. That means raising our profile, showing that Brazil is far more important than countries like Russia or China from a trade point of view. My other priorities are Congress, NGOs, think tanks and financial institutions like the World Bank, the Inter-American Development Bank and the International Monetary Fund."
Q: In retrospect, how did the January 1999 devaluation affect the Brazilian economy?
A: "Our currency was way overvalued. When we devalued the real by over 30%, everybody was worried. They were anticipating 4-6% negative growth. But by the end of the year, our GDP had grown 0.5%, inflation was only 8.5%, and the country is booming. The main objective of our government is to keep stability, and not let inflation come back. We hope to have 4% growth this year, and the same or more in coming years. The fundamentals are there. The problem is the world economic system."
Q: How would you characterize U.S.-Brazilian trade relations?
A: "Brazil is the largest recipient of U.S. investment in the developing world -- more than either China, India, Russia or Mexico. In 1999, bilateral trade came to $26 billion, with a deficit on the Brazilian side. Yet over 80 of our products are restricted. For example, the Commerce Department just released a very harsh decision practically banning Brazilian cold-rolled steel. This is unfair. We've explained to them 200 times to them that we represent only 0.5% of the steel market, and still we're taxed ridiculously."
"Developed countries want us to open up, but in Brazil's case there's no other country penalized like this. Nobody will dispute that the United States is one of the most open countries in terms of trade. But it's a coincidence that Brazil exports to the U.S. products -- such as soybeans, ethanol, sugar, orange juice and steel -- that are competitive with U.S. industry. So local companies increase pressure on the government to restrict Brazilian access to the U.S. market."
Q: Isn't Argentina also moving to protect its markets from cheaper Brazilian exports?
A: "Yes. We think this is unfair as well. Argentina has a fixed exchange-rate policy, and this generates difficulties between our two countries. Because of the recession, Argentine-Brazilian trade dropped 25% last year. Mercosur is still a priority among its members, from time to time, we have problems. This year, our economy will grow by 4% and we'll once again start buying Argentine products."
Q: Do you think a common currency for Mercosur -- whether it's the dollar or something else -- could become reality anytime soon?
A: "The objective is that by 2006, we'll have a fully implemented customs union. But to reach the stage where you can have a common currency takes time. In Europe, it took 40 years. Even so, Denmark, the U.K. and Sweden are not part of that monetary system."
Q: Is there any resentment on Brazil's part that the United States wants to take the lead in negotiations towards a Free Trade Area of the Americas?
A: "Brazil has a concrete interest in FTAA negotiations, which do not necessarily coincide with U.S. interests. Sometimes you're working in the same direction, but don't necessarily share the same position. We are interested in liberalizing trade throughout the Americas, but we want all countries to liberalize, not only us."
Q: Will President Cardoso be able to push through the social, tax and fiscal reforms he says Brazil needs to improve its economy?
A: "Even though Cardoso's own party has only 25% representation in Congress, his popularity is going back up. It dropped a lot after the harsh measures he had to take after the Russian crisis. Now the population perceives that things are improving. When we inaugurated the Real Plan in 1994, the mere fact that we reduced inflation meant the inclusion of over 10 million people into the market economy. Why? Because the purchasing power of the people doubled. We are now inflation-free. It's a new experience in my lifetime. Only now in the last few years are we learning to live without inflation."