U.S. vice president warns Brazil not to lag behind on trade

RIO DE JANEIRO (Reuters) - U.S. Vice President Joe Biden encouraged Brazil on Wednesday to open its economy further to keep up with free trade trends worldwide, at the start of a visit aimed at boosting business between the two largest economies in the Americas.

Much of the future relationship with the United States will depend on whether Brazil, whose economy still remains relatively protected by high tariffs and other barriers, can make trade easier, Biden said in a speech to local authorities and business leaders at a wharf by Rio’s port.

Citing U.S. efforts to deepen trade and investment ties with China, Europe, and other, faster-growing countries on Latin America’s Pacific coast, he pressed Brazil to keep up.

“It’s up to Brazil to decide whether to pursue this path and seize the opportunities,” Biden said.

The three-day visit, part of a week-long swing by Biden through South America and the Caribbean, comes as Washington gears up for a state visit by President Dilma Rousseff later this year.

Brazil’s economy - the world’s seventh-biggest - is slowly rebounding from a two-year lull following a decade of growth. Brasilia is seeking more clout with the United States and other major economies it increasingly sees as its peers.

After divergences over trade, Middle East policy and other differences during the administrations of their predecessors, Rousseff and U.S. President Barack Obama have gradually forged closer diplomatic ties in hopes that their nations can become larger markets for one another.

Rousseff, however, has remained a vocal critic of loose U.S. monetary policy, which she believes hurts Brazil’s economy by strengthening its currency making Brazilian products more expensive abroad.

Nevertheless, the two countries have made incremental progress in commercial areas ranging from agriculture to energy to aviation and space technology.

Biden hailed the economic growth and social programs that over the past decade lifted 40 million Brazilians out of poverty. That success, he said, is a model for developing countries still struggling with the “false choice” between business-friendly policies and progressive social practices.

“You have demonstrated there is no need to choose between a market-based economy and smart social policies,” Biden said.

Biden urged Brazil, which has historically refrained from criticizing authoritarian regimes from Cuba to the Middle East, to be more vocal in the defense of democracy. While praising Brazil’s successful emergence, Bided said “what goes with that is the worldwide responsibility to speak.”

STRENGTHENING TIES

In recent weeks, leaders of major U.S. and Brazilian companies have been lobbying both governments to work on more of the small agreements that over time could add up to wholesale progress for bilateral business.

“Everybody’s looking for building blocks to bring the countries closer together,” said one U.S. official who spoke on condition of anonymity. “It’s indicative of how people are trying to give greater structure to our trade and investment.”

Rousseff is expected to make a state visit to Washington in October, the first by a Brazilian leader in two decades. While she has already been on official business to the United States as president, the full state visit will last longer and involve more and closer diplomacy.

Biden will tour a research facility operated by state-run energy company Petroleo Brasileiro SA, or Petrobras. On Thursday, he is scheduled to visit a hillside Rio slum before flying to Brasilia, the capital, for meetings Friday with Rousseff and Brazilian Vice President Michel Temer.

Among many pending business issues between the United States and Brazil are a longstanding effort to ease visa restrictions for travel between the two countries, lingering disagreements over trade barriers and a push by U.S. companies for protection of intellectual property rights in a Brazilian marketplace rife with pirated software and technology.

Meanwhile, Washington is still urging Brazil to back Boeing Co., the U.S. aerospace manufacturer, on a planned purchase to upgrade its fighter jet fleet. Brazil, for its part, is eager to get U.S. backing for long-coveted permanent seat on the United Nations Security Council.

After a visit by Obama to Brazil in March 2011, the White House said it recognized Brazil’s ambitions at the United Nations, but stopped short of backing its call for a place on the council.