Bloomberg News

Obama and Rousseff to Talk Energy and Trade at the White House

April 09, 2012

President Barack Obama will host Brazilian President Dilma Rousseff at the White House where the two leaders will work today to expand oil production, increase bilateral trade, and spur job growth in both countries.

Obama is looking for opportunities to help U.S. businesses profit from Brazil’s oil discoveries, the biggest in the Americas since 1976, and from the $200 billion in road, airport and hotel improvements needed before the 2014 World Cup and 2016 summer Olympics.

“The two Presidents will continue their focus on deepening energy cooperation, including on oil and gas exploration, through the Strategic Energy Dialogue that they launched last March,” said Deputy National Security Adviser Ben Rhodes.

Obama, 50, won’t give Rousseff, 64, Brazil’s first female president, a formal state dinner. The one day of talks will fall short of the official state visit that Obama accorded Britain’s Prime Minister David Cameron last month. For Rousseff, leader of the world’s sixth-biggest economy, the visit includes a working lunch at the White House today, a meeting with Secretary of State Hillary Clinton, and then events with U.S. and Brazilian business executives hosted by the U.S. Chamber of Commerce.

The state of the economies in both countries, will serve as the backdrop for the talks, said Mauricio Mesquita Moreira, an economist at the Inter-American Development Bank (ITAD:US) in Washington.

Economies Top Agenda

Employers in the U.S. added 120,000 jobs in March, after an increase of 227,000 in February, the Labor Department said April 6. It was the fewest jobs added in five months. Unemployment fell to 8.2 percent from 8.3 percent as discouraged workers left the labor force.

Rousseff may raise a trade balance with the U.S. that swung from a $6.4 billion surplus for her country in 2007 to an $8.2 billion deficit last year as the real rallied and growth in Brazil spurred demand for imports, Moreira said.

Rousseff has pushed central bankers to react to slower growth by cutting interest rates to almost record lows even as inflation remains above the 4.5 percent target, where it’s been since September 2010.

She ''wants better access to the U.S market, particularly in a moment when the Brazilian manufactures are under a lot of pressure,’’ said Moreira.

The two leaders may find agreement on currency, as both countries have criticized China’s policy on its yuan for depressing their own exports and leading to trade imbalances. “There’s clearly a common interest between the U.S. and Brazil in pressing China to follow a more market-led exchange rate policy,” Moreira said.

Aircraft Sales

Rousseff also may raise concern over defense contracting, he said. Brazil expressed “surprise” when the U.S. Air Force in February canceled a $355 million contract it awarded Sao Jose dos Campos-based planemaker Embraer SA (EMBR3) after an American rival sued the military.

Embraer, the world’s fourth-biggest airplane maker, said March 26 that it expects the U.S. government to seek new bids within weeks on a contract for light attack aircraft that was taken from the company in February. The company has said it has a great chance of winning the work again if the contract requirements are maintained.

There are opportunities for defense contractors in both countries. Rousseff will decide by mid-year on a fighter plane for her country, a contract for as much as $4 billion that Boeing Co. (BA:US) is vying to win, a U.S. State Department official said March 1.

The “Energy Dialogue,” a formal initiative that Obama announced when he visited Brazil last year, focuses on four areas: biofuels; renewable energy and energy efficiency; oil and natural gas; and nuclear energy and nuclear security.

To contact the reporter on this story: Hans Nichols in Washington at hnichols2@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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