5 insights from the Brazil-US relationship after the US elections

LiderCom gathered experts from FTI Consulting to analyze the panorama of the US elections and its consequences to Brazil and the world

American elections have never sparked more global interest than in 2020. Thus, what are Brazil’s perspectives and Brazilian companies with the USA’s new president’s election? From the theme American election prospects – Impacts on the business environment between the United States, Latin America, and Brazil, Aberje promoted another meeting of LiderCom – a group of leaders of Corporate Communication –, with Ana Heeren and Nelson Litterst, both from FTI Consulting, a strategy consulting firm based in Washington, United States.

In addressing the main lessons that can be learned from these elections, FTI’s Executive Director of Government Affairs, Nelson Litterst – a former special advisor on legislative affairs for the White House during the George W. Bush administration – presented an overview of the elections and outlined what can be expected for the future, including in the US-Brazil relationship. Check out the five key themes:

Biden and Bolsonaro

The new US president will need Brazil as an ally, but he should press on issues related to the environment

The directors of FTI Consulting believe that, due to the pandemic, the next US administration will be more focused on domestic issues in the country. In any case, Latin America will have an essential role in international relations since one of Biden’s objectives is to strengthen ties with democratic nations in this region. Experts estimate that there will be an incentive to consume US products and services, aiming to combat their international outsourcing from an economic point of view.

Ana Heeren, director-general of FTI Consulting for Latin America and the Caribbean, says that if the US government approves an economic stimulus package to combat the pandemic’s impact, it will have a major impact on Latin American countries. “If it manages to strengthen its economy through these packages, the country will have more capital to trade products and services with countries in this region and will consolidate international relationships,” she said.

Heeren mentioned the relationship between the Brazilian president Jair Bolsonaro and Joe Biden. “We know that Bolsonaro was a strong ally of the Trump administration and that the Brazilian president wanted the re-election of the current president. But the bilateral relationship does not only occur between heads of state; there are many people within the US government, in commerce and government agencies, who have maintained contact with different spheres of the Brazilian government. This diplomatic relationship will not end,” she said.

In her analysis, Biden will need Brazil as an ally, but to get what he expects from this alliance, he must pressure the environment’s issues. “The United States needs Brazil as a trade ally, especially when we analyze the relationship between the US government and China,” she said, adding that Biden would like Brazil to lead the environmental agenda alongside the United States. “But presidents will have to reach consensus.

I think we will see a political clash in this relationship, but nothing serious from a commercial point of view.” Many FTI Consulting’s clients are interested in the potential that a commercial treaty between the USA and Brazil would have. “We already know that Biden has an extensive relationship with Latin American countries, and we can expect greater openness concerning immigration. One of the focuses for the region will be the strengthening of the relationship with democratic countries and the monitoring of countries that do not follow democratic features, such as Venezuela”.

5G in Brazil

New technology in Brazil will be the scene of a dispute between the US and China

In October, Brazil signed a Clean Networks agreement with the United States so that no provider of the 5G mobile phone network in Brazil had ties with the Chinese government. In contrast, the US government is signaling to invest in Brazilian telecommunications companies. But what can be expected from Biden’s strategy to spread this new technology?

In the analysis of FTI’s Executive Director of Government Affairs, Nelson Litterst, there will be an apparent decrease in Trump’s rhetoric about the Chinese. “I don’t think there will be any action to loosen restrictions against China. Both [Democratic and Republican] parties are concerned with privacy and national security issues and are also monitoring companies like Huawei and ZTE.”

“Biden will have to be careful with this aspect of international relationships. We can conclude that both parties are concerned with China and the spread of 5G,” he said. “The signing of the document by Brazil was a somewhat symbolic act. It was a good sign for his future administration, as it means that Brazil is willing to cooperate with some US projects,” said Ana Heeren.

Amazon and climate issues

There will be rhetorical pressure for Brazil to commit to climate issues, but trade threats are unlikely

In his previous speeches, Biden had already stressed that he would be more strict with environmental guidelines, including referring to the Amazon and possible cooperation between countries to protect the biome. FTI director Nelson Litterst emphasized that the US government has criteria that classify countries that respect international environmental standards and map those that violate them. “Democrats will put pressure on countries that do not have a strong commitment to the environment, and other global leaders will help the US government in this process. But I think that the future US administration will not take drastic actions to reinforce this commitment, particularly when we focus on Brazil. There will be joint pressure from countries to point the finger at those who do not do enough to the environment, according to their perspectives.”

“I agree with Nelson; I don’t think Biden will take direct action to reinforce the democratic agenda regarding the environment in other countries. I don’t think Biden will use trade deals as a resource to pressure these nations, as Trump did. Especially because there are not many trade agreements with Brazil that allow the USA to do this,” said Heeren.

Another critical point for this topic is that Brazil is close to joining the OECD, an institution known for causing countries to sign agreements that do not initially interest them, stipulating several criteria to its members, especially when the focus is on the environment, intellectual property, and human rights. “If Brazil chooses to join the OECD, Biden may use this to reinforce Brazil’s commitment to the environment and other issues relevant to the Democratic agenda. Also, there will be pressure from other nations to Brazil as environmental, social, and corporate governance becomes an increasingly important issue.”

Brazilian corporate sector

Companies cannot sit back and wait for traditional foreign trade channels to work

One of the major current concerns in the corporate sector concerns environmental, social, and governance (ESG) issues. During the meeting, Litterst emphasized that if a company wants to operate in the US market in the future, it will have to be in line with the criteria stipulated about this topic. “At the moment, there are projects in Congress to consolidate relationships with Brazilian companies and several politicians want to deepen this relationship.”

Besides, Heeren emphasized that many companies have used diplomatic channels to make their views known to Washington politicians. “I think these channels are going to weaken during the new administration. Brazilian companies will need to have the initiative to seek support from the US government if the relationship between countries does not develop. If your company has a branch in the USA, contact the politician in the region where your company operates, as he will certainly be interested in talking. Companies cannot sit back and wait for traditional foreign trade channels to work. This is a good corporate practice in any situation and is not exclusive to the current political situation.”

Biden vs. Obama

More pragmatic than Obama, Biden’s governance dynamics are expected to be more controlled and not as fast. The US today is very different from the country governed by Obama: more protectionist and conservative, more focused on domestic issues and, on foreign relations, more focused on China, rather than the Middle East

On occasion, the director-general of Aberje Hamilton dos Santos commented that some see the Biden administration as a continuation of the Obama administration. Many consider Biden to be a predictable politician, which is positive for the market. “In your opinion, what are the main differences between Biden and Obama? Can Biden do something that surprises us?” he asked.

Nelson Litterst replied that the main difference is that Biden is more institutionalist than Obama. “This means that Biden has great admiration for the Senate. Biden is very close to Mitch McConnell, who is the leader of the Republican party in the Senate. If Republicans win a majority in the Senate, McConnell will be the Republican Senator with the most power to act. Biden and McConnell are friends, so this can be beneficial for the relationship between the presidency and the Senate”, he said.

“I think Biden is more pragmatic than Obama, but I believe that his governance dynamics will be much more controlled and will not be as fast. Also, Obama believed he had a relevant majority in the government to be able to approve projects, and Biden will have to work with the growth of Republican representation in the Senate and the House. Biden will have to evaluate the projects he wants to try to go through both institutions,” he said.

“Biden will have a lot of problems to solve. Biden will take on the United States very different from what it used to be. The United States is much more protectionist and conservative, particularly after the pandemic began. Unlike Obama, Biden will have to focus much more on the internal public than on foreign affairs, due to its current situation. Both presidents take on very different situations, so it is difficult to compare them,” said Ana Heeren.