The "trade preference" framework helps explain Brazil's trade strategy. (3) Brazil's tradepreferences in order of priority are: 1) expand and strengthen Mercosul, where Brazilis the undisputed industrial hub and political leader; 2) advocate developing countryinterests in the Doha Round, especially on agricultural issues, and; 3) resist what itviews as a welfare reducing, U.S.-designed FTAA, and to a lesser extent, also apreferential trade arrangement with the European Union unless it serves as a counterinfluence to the FTAA. regional or multilateral). It is comprehensive by its inclusion of issuesthat go beyond market access such as services trade, intellectual property rights,government procurement, and investment. In the Western Hemisphere, this implies taking on theUnited States. The foreign policy aspect of trade policy may also be seen in the emphasis ondeepening developing country trade relations. Today Brazil's macroeconomic priorities still constraintrade and other policy choices. Brazil's Balance of Merchandise Trade, 1988-2004

	Brazilian Trade with the World

Brazil has a modern, diversified economy, with services accounting for 53%of GDP, followed by industry and manufacturing at 37%, and agriculture at 9%. Depending on how agribusiness is measured, it contributes to some 30% of GDP. Brazil is the number one producer of raw sugar, oranges, and coffee in the world, andthe second largest producer of soybean, beef, poultry, and corn. (18) It is alsoa major producer of steel, aircraft, automobiles, and auto parts. Together they account for overone-third of Brazil's world trade and each, interestingly, is the dominant tradingpartner of a different region or trade group (NAFTA, Mercosul, and the EuropeanUnion). Importantly, natural resource-based goods dominate in all categories. Free Trade Area of the Americas (FTAA)

The FTAA is a proposed free trade area that would include 34 nations (allexcept Cuba) of the Western Hemisphere. For Brazil, opening up theU.S. U.S.-Brazil Trade Trends

Brazil is the 15th largest U.S. export market, but a distant second to Mexicoas the United States' largest trading partner in Latin America. barriers to entry, such as citrus and steel. U.S.-Brazil Bilateral Trade Issues and Disputes

Brazil and the United States have a number of specific trade issues that aretaken up at all levels of trade negotiations. (32) 
Brazil has raised its major concerns over broad U.S. policies such as the ByrdAmendment, which directs duties from trade remedy (antidumping) cases to affectedindustries, the calculation of antidumping margins, and what it considers to bediscriminatory treatment inherent in U.S. expansion of preferential trade agreementsin Latin America (NAFTA, Chile, CAFTA-DR). The Byrd Amendment was foundto be in violation of WTO rules. Although repealed by Congress on February 1,2006, the program remains in effect until October 1, 2007. Brazil also objects to product-specific barriers thatinclude restrictive tariff rate quotas (TRQs -- sugar, orange juice, ethanol, andtobacco), subsidies (cotton, ethanol, and soybeans), and trade remedy cases (steel andorange juice). Tariffs Structures. Orange Juice. Tobacco. High Tariffs. Prohibited Imports. Export and Financing Subsidies. Services Trade and Investment. Brazil mayactually have more to lose, however, because as much as both countries couldimprove their economic well-being from greater trade liberalization, as a developingcountry, Brazil seems to have the most to gain from not only reducing foreignbarriers to its exports, but unilaterally opening its economy further, particularly aspart of completing its ongoing economic reform agenda.
As the largest and one of the most influential countries in Latin America, Brazil has emergedas a leading voice for developing countries in setting regional and multilateral trade agendas. TheUnited States and Brazil have cultivated a constructive relationship in pursuit of their respectiveefforts to promote trade liberalization, including attempting to broker a compromise with theEuropean Union in the World Trade Organization (WTO) Doha Round and forming bilateralworking groups on trade (and other) issues. Still, they approach trade policy quite differently, areat odds over how to proceed regionally with the Free Trade Area of the Americas (FTAA), and shareconcerns over specific trade policies and practices.
Brazil's trade strategy can be explained only in part by economic incentives. Its "tradepreferences" also reflect deeply embedded macroeconomic, industrial, and foreign policies. WhereasU.S. trade strategy emphasizes the negotiation of comprehensive trade agreements on multiple fronts,Brazil is focused primarily on market access issues as they pertain to its economic dominance inSouth America. Brazil exercises this priority in all trade arenas, such as pursuing changes toagricultural policies in the WTO, expanding the Southern Common Market (Mercosul) in SouthAmerica, and resisting the FTAA for lack of a balance conducive to Brazilian interests.
Brazil has a modern, diversified economy in which services account for 53% of GDP,followed by industry and manufacturing at 37%, and agriculture at 9%. Agribusiness (commodityand processed goods) account for some 30% of GDP, explaining Brazil's emphasis on agriculturalpolicies in trade negotiations. Brazil is the world's largest producer of sugar cane, oranges, andcoffee, and the second largest of soybean, beef, poultry, and corn. It is also a major producer of steel,aircraft, automobiles, and auto parts, yet surprisingly, a relatively small trader by world standards. The United States is Brazil's largest single-country trading partner.
Brazil is critical of U.S. trade policies such as the Byrd Amendment (repealed, but programin effect until October 1, 2007), which directs duties from trade remedy cases to affected industries,the administration of trade remedy rules, and what it considers to be discriminatory treatment in theU.S. expansion of free trade agreements in Latin America. It also objects to product-specific barrierssuch as tariff rate quotas on sugar, orange juice, ethanol, and tobacco; subsidies for cotton, ethanol,and soybeans; and prolonged antidumping orders on steel and orange juice. U.S. concerns focus onBrazil's comparatively high tariff structure, especially on industrial goods, Mercosul's commonexternal tariff program, and Brazil's refusal to address issues of critical importance to the UnitedStates such as services trade, intellectual property rights, government procurement, and investment.
Despite these differences, both countries recognize the potential for important gains to be hadfrom mutually acceptable trade liberalization at all levels. As a developing country with anopportunity for considerable growth in both exports and imports, however, Brazil may have the mostto gain from addressing both foreign barriers to its trade, and unilaterally opening its economyfurther.