MARGOLIS: Are the United States and Brazil at war on trade? AMARAL: No, but we need to treat trade matters objectively. We are competitive. We do not have subsidies on exports. There’s been no surge in Brazilian exports to the U.S. market. I know of no grounds to justify the United States’ applying safeguards against us. And yet we are looking at a large potential loss of trade, and we have to evaluate this to decide whether this merits a stronger recourse.
How do the recent U.S. trade restrictions affect Brazil? We will lose $92 million a year in direct sales of [finished] steel goods. We also will have to forgo around $1 billion in expected sales of semifinished steel to the U.S. market over the next three years. This is a sizable loss.
Do you anticipate a chain reaction to the U.S. trade measures around the world? That would be very bad. However, we are ready to defend our industry. There will be some 14 or 15 million tons of steel out there seeking other markets, due to the U.S. restrictions and the reaction to those measures in Europe. We must take care that this steel doesn’t get dumped in Brazil at a time when we are facing our own obstacles selling to America.
What do you say to U.S. Trade Representative Robert Zoellick when he argues that the United States is not protectionist but an open economy that is simply resorting to temporary safeguards? We have no non tariff barriers. Our highest tariff is 35 percent. Our average tariff is 12 percent. We have nothing close to 75 percent or 100 percent tariffs on any imports. The United States does, and for that matter so do Europe and Japan. Every time we increase exports of any single good, there is always some restriction slapped on at the other end. In steel, there are antidumping safeguards. For orange juice and alcohol, we are hit with an excise tax. Shoes in the past and textiles to this day have all met restrictions. There’s a kind of unwritten rule: whenever Brazil increases its exports, the U.S. market answers with protectionism.
So where does this leave the Free Trade Area in the Americas [FTAA]? If in the beginning Brazil was very timid and defensive about creating FTAA, today the impression one gets is that it’s the United States that is having difficulties dealing with the real issues. There’s a great expectation on the part of the Americas that the FTAA will bring a true partnership for shared prosperity, and not just short term gains and a lopsided vision of regional commerce.
You recently accused the United States of practicing “geriatric protectionism.” What did you mean? Before you had protection for nascent industries. But the U.S. mills are no longer competitive, and they show no signs of becoming competitive. At home, we invested $10 billion in restructuring our own steel industry. It is highly competitive. Since the 1980s we took part in voluntary restraints on steel exports to the United States, and it did no good at all. The U.S. plants were not restructured. Not only are they noncompetitive, they are imposing a higher price on North American consumers and compromising other U.S. industries that depend on steel. This is damaging to us, to industries that buy this steel, and damaging to U.S. competition. No one wins.
