Brazil and the United States Deepen Defense Relations with Commerce and Industrial Sectors
By Marcos Ommati/Diálogo November 03, 2016The first Brazil-United States Defense Industry Dialogue [DID] convened an unprecedented number of senior government, industry, and military leaders from both countries to analyze ways to deepen defense sector cooperation and facilitate bilateral defense trade. The dialogue facilitated a wide range of engagement, from strategic discussions about long-term threats and capabilities, to technical presentations on practical commercial issues. Participants defined a concrete plan of actionable next steps and the governments signed a four-way agreement institutionalizing the forum going forward. During the DID, held on September 30th at Itamaraty Palace in Brasília, the countries signed a letter of intent to expand bilateral partnership and open the doors for potential new business between their defense industries. Brazilian Defense Minister Raul Jungmann and U.S. Ambassador to Brazil Liliana Ayalde participated in the meeting. Acting U.S. Under Secretary for International Trade Kenneth Hyatt; John Kreul, U.S. Department of Defense’s Senior Director for Western Hemisphere Affairs at the Office of the Under Secretary of Defense for Policy; Brazilian Deputy Secretary of Foreign Trade Abrão Neto, from the Ministry of Industry, Foreign Trade, and Services (MDIC, per its Portuguese acronym); and Brazilian Secretary of Defense Products Flávio Basílio signed the letter of intent. The DID institutionalized engagement between the U.S. and Brazilian Defense and private sectors to enable governments and industry to exchange information and ideas; increase technology cooperation and collaboration in the defense sector; deepen mutual understanding of our defense industries; and discuss long-term defense priorities. “The letter of intent officially establishes a deeper level of dialogue between the defense industries of both countries with the objective of identifying business opportunities for both,” said Minister Jungmann during an exclusive interview with Diálogo. He explained that Brazil’s current economic situation is fitting to pursue strategic partnerships that are beneficial to Brazil and to the U.S. Defense sector, highlighting that Brazil’s Defense Industrial Base has the capacity to participate as a supplier for several U.S. projects. “We can develop several projects in the area of technological cooperation with the United States, in addition to being able to seek mutual certification mechanisms for defense products that will be beneficial and of extreme importance for both countries,” added Minister Jungmann. An ambitious bilateral defense policy agenda “The Defense Industry Dialogue is an important part of our overall ambitious bilateral defense policy agenda with Brazil. When Secretary Carter met with Minister of Defense Jungmann at the Conference of the Defense Ministers of the Americas in Trinidad and Tobago, on October 11th, they specifically discussed how the DID supports our broader defense trade cooperation objectives and plans for closer cooperation on peacekeeping in Africa and military-to-military cooperation,” said Kreul. Ambassador Ayalde spoke of the importance of facilitating face-to-face engagement between sector businesses. “The most important aspect of today’s event is that the different parts needed to achieve binational projects are sitting together. Not just today; it is an institutionalized process to define the future,” she said. “Whether we talk about the digital sector, the defense sector, or any other sector, it should be absolutely clear that the United States is committed to a strong and dynamic relationship with Brazil, and I am committed to continue to strengthen this relationship through better relations in trade and investment.” Strengthening defense industry relations More than 150 U.S. and Brazilian government representatives and defense industry experts participated at the event. [Department of Commerce] acting Undersecretary Hyatt, who led the U.S. delegation of representatives from the departments of Trade, Defense, and State, highlighted the significance of having both government and business leaders at the table. “The first Brazil and U.S. Defense Industry Dialogue is an important step towards expanding our bilateral commitment in this important sector, and it lays the foundation for more extensive collaboration between our two nations,” he said.” There is huge potential for increased investment and inter-sectoral trade … We cannot wait to identify new and mutually beneficial opportunities,” he added. Cooperation between Brazilian and U.S. industries For Neto, the letter of intent provides opportunities to expedite pragmatic results in defense materiel business between the two countries. “The Brazilian Ministry of Industry and Trade and the U.S. Department of Commerce [DoC] have a document in place, the MDIC-DoC, which turns ten this year. The partnership in the defense field could benefit cooperation and the promotion of trade and investment between Brazilian and U.S. industries,” he said. In addition to fostering trade, the Brazil-United States DID was designed to strategically incorporate the private sector in discussions about defense. “Many U.S. defense firms have already formed successful ventures with Brazilian partners. The Defense Industry Dialogue will help us scale up our existing engagement and do even more together,” said Commercial Attaché at the U.S. Embassy in Brasília, Landon Loomis. During the event, the Armed Forces of Brazil introduced some of its strategic projects for U.S. industries to see how they could participate in bidding processes to leverage their businesses. In turn, the United States discussed its medium-term defense plans and shared information about how they might participate in the global value-added chain as a supplier of components for U.S. products. In addition to establishing regular meetings between the two countries’ defense industries, the DID included several panel discussions regarding the reality of each country’s defense industry, including the major challenges each faces and near-term strategic projects. Topics such as best practices for business partnerships; export compliance; supply chains; military specification certifications; and, strategic defense modernization programs were also discussed. Important trade partners During his visit to Brazil, acting Under Secretary Hyatt also participated in the U.S. Department of Commerce’s Third Annual Health Information Technology Trade Mission to Brazil in São Paulo. U.S. companies and public trade institutions attended the event aimed at helping U.S. companies access the Brazilian Health IT market. He also met with prominent Brazilian government counterparts to discuss bilateral trade priorities and with Brazilian private sector representatives interested in the next SelectUSA Investment Summit, scheduled to take place from December 5th to 9th. Brazil is an important trading partner for the United States; in 2015, both nations traded up to US$ 59.5 billion in bilateral goods. Brazil continues to be one of the United States’ largest Latin American defense industry trade partners, second only to Mexico. Brazil’s defense budget has more than doubled since 2003, reaching US$ 23.2 billion in 2015, and represents the largest defense budget in Latin America and the Caribbean.