U.S. Treasury Secretary Jacob J. Lew discussed ways to expand trade and investment with his Brazilian counterpart as he sought to repair ties with Latin America’s biggest economy.
“Both countries recognize the great potential benefit from working together to meet the challenges of generating jobs, sustaining growth and helping support macroeconomic stability,” Lew said after meeting with Brazilian Finance Minister Guido Mantega yesterday in Sao Paulo. He said U.S. companies are seeking to provide financing and expertise for Brazil’s plans to modernize infrastructure.
Lew, in his first Latin American trip since he took office a year ago, also met with Brazilian central bank President Alexandre Tombini before traveling to Mexico City, where he will hold talks today with President Enrique Pena Nieto and top economic officials. He also discussed the crisis in Ukraine and highlighted the need for the U.S. to pass legislation to expand the voting rights of emerging markets in the International Monetary Fund.
The Brazil leg of Lew’s trip marks the highest-profile visit of a U.S. official to Latin America’s most populous country since relations began to sour last year. President Dilma Rousseff canceled her state visit to the U.S. in September after documents released by former U.S. government contractor Edward Snowden indicated she was among heads of state whose communications were monitored by the National Security Agency.
“The U.S. is trying to regain some presence in the region,” said Michael Shifter, president of Inter-American Dialog, a Washington-based policy group. “Lew’s trip is an attempt to at least keep relations with Brazil on track and avoiding the risk of them totally derailing. The administration realizes there’s a risk of losing touch.”
Brazil in December chose Sweden’s Saab AB over Chicago-based Boeing Co. to supply it with 36 jet fighters worth $4.5 billion. Rousseff’s government said last month it would ask a panel at the World Trade Organization to determine whether U.S. rules on cotton comply with WTO recommendations.
“The Brazilians are looking for trust-building measures,” said Carl Meacham, director of the Americas Program at the Center for Strategic and International Studies.
The world’s second-largest emerging economy has stepped up efforts to tighten regulations for information-technology companies such as Google Inc. (GOOG), pushing for them to set up local data centers.
“There are fewer folks in Brazil trusting American suppliers of technological components,” Meacham said.
The U.S.-Mexico relationship is warmer, with President Barack Obama visiting the country last month. Obama was last in Brazil three years ago. Talks today with Pena Nieto, Finance Minister Luis Videgaray and Central Bank Governor Agustin Carstens will probably focus on the government’s economic program and the 12-nation Trans-Pacific Partnership trade negotiations.
In both Brazil and Mexico, Lew may also be discussing volatility in developing nations’ financial markets, said Walter Molano, who focuses on Latin America as head of research at investment bank BCP Securities LLC in Greenwich, Connecticut. Molano is predicting “tough times ahead for emerging markets.”
The World Bank in January cut 2014 growth projections for Brazil to 2.4 percent from 4 percent, and for Mexico to 3.4 percent from 3.9 percent.
Since Pena Nieto took office in December 2012, Mexico has undergone an energy revolution. In December, the nation passed a constitutional amendment to end state-owned Petroleos Mexicanos’s oil monopoly, which had been in place since the nation seized fields from U.S. and British oil companies in 1938.
Latin America’s second-largest economy is also allowing more competition in the phone and broadcast industries, where billionaire Carlos Slim’s America Movil (AMX) SAB has about 70 percent of Mexico’s mobile-phone customers and Grupo Televisa SAB (TV) gets about 70 percent of Mexico’s broadcast-television audience.
Also on the table will be fighting drug cartels.
“There obviously will be discussions about cooperation on the drug front,” said Riordan Roett, director of Latin American Studies at Johns Hopkins University’s School of Advanced International Studies in Washington. “The Pena Nieto administration made it very clear that, unlike previous administrations, they do not want the drug war to be front and center in the bilateral relationship with the United States.”
Pena Nieto’s administration has captured or killed the heads of Mexico’s biggest cartels since taking office, most recently arresting Joaquin “El Chapo” Guzman, the most-wanted drug baron in the world.
To contact the editors responsible for this story: Chris Wellisz at email@example.com Scott Lanman