The Carter administration's warning Wednesday to Brazil that its "protectionist" trade policies may bring it into collision with the United States and other industrialized nations has heated up an issue that has been quietly simmering for months.
Brazilian government and business leaders have reacted with a mixture of annoyance and apprehension of a speech, delivered on behalf of Assistant Secretary of the Treasury Fred Bergsten to U.S.-Brazil Chamber of Commerce, criticizing Brazil for its export subsidies and import restrictions.
While the message was not new, its timing raised some eyebrows here. As Bergsten's warning was being read, an 11-member U.S. delegation headed by White House emissary Alan Wolff was meeting in Brasilia with senior Brazilian officials in an effort to reach an agreement on trade issues.
The United States last year exported goods worth $2.4 billion to Brazil and imports $2.1 billion. That represented a decline from the record figures of 1974, when one-quarter of all Brazilian imports came from the United States and U.S.-Brazilian trade totaled $4.8 billion.
The Brazilian position has been that the United States, not Brazil, has erected protectionist barriers that have led to a stagnation in trade. It argues that the United States has systematically sought to exclude footwear, textiles, scissors, packaged meats, food oils and other manufactured and semimanufactured Brazilian goods from the American market.
"Just as the United States has complaints about Brazil, we too have many complaints about the United States," said Brazilian Finance Minister Mario Henrique Simonsen in response to the Bergsten speech. "The entire U.S. Trade Act is a unilateral decision on problems of a multilateral nature" that are part of GATT, the General Agreement on Tariffs and Trade.
"The United States sells agricultural products to Poland, gives them-20-years to pay, and calls it good business practices," complained Bank of Brazil export director Benedito Fonseca Moreira. "If we do the same thing, they call it a subsidy."
During his December visit, Bergsten raised the issues of export subsidies and import restrictions with Simonsen and other Brazilian authorities. The Brazilians were told then that legal authority for the Treasury Department to waive countervailing duties on subsidized exports would expire at the end of 1978 and were urged to take action before the Carter administration lost this "flexibility."
U.S. and Brazilian trade teams have been meeting intermittently since then in an effort to resolve the problem.
The Brazilians have argued, both in talks with the United States and at the multilateral GATT negotiations in Geneva, that they are a developing country, and as such should receive special advantages from industralized nations. The U.S. view is that Brazil, whose annual foreign trade has grown from $2 billion in 1964 to over $24 billion last year, is now a member of the "international middle class," able to compete without subsidies.
Brazilian officials freely acknowledge that "fiscal incentives" and other subsidies are granted to manufactured goods ranging from simple car radios to ships. They say this is a "temporary measure approved by GATT and adopted in response to the quadrupling of world oil prices four years ago, which pushed Brazilian oil imports to over $4 billion a year.
The same rationale is used to explain the policy of import restrictions that has been in effect since 1974. Brazilian imports have doubled since then, from $6 billion to $12 billion, but import quotas and tariffs that Bergsten classified as "extraordinarily high" have also been instituted.
The decline in U.S.-Brazilian trades also dates from that time. Brazil last year exported twice as much to the nine nations of the European Common Market as it did to the United States, and imported virtually the same amount.
"Ever since (President Ernesto) Geisel came into office in 1974, Brazilian policy has been to diversify its trade relationships, especially with West Germany and Japan," said a foreign diplomat in Brasilia. "They are seen as more complementary trading partners because they need Brazil's raw materials more and can exercise less leverage than the U.S."
The Brazilians are in a vulnerable position at the moment, and continued disagreement with industrailized nations could have serious consequences.
"The Brazilians are caught between a rock and a hard place right now," explained a banker here. "Because of the drought in the south, their agricultural exports are going to go way down this year. So they need an increase in manufactured exports to pick up at least some of the slack so they can meet the payments on that incredible foreign debt of theirs."