Radical tax simplification: The impossible dream?

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Radical tax simplification: The impossible dream?
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Brazil and the United States: A New Beginning?

On April 12, Brazil and the United States signed in Washington, DC, a bilateral defense agreement, the first between both countries since 1977. The main goal of the agreement is to promote cooperation in research and development, logistics support, technology security, acquisition of defense products and services, and engagement in combined military training and joint military exercises.

While the treaty does not entail major practical shifts in the military relationship, it may pave the way for a significant increase in negotiations between both countries’ arms industries. At the moment, Boeing is competing with French and Swedish companies in a $4 billion deal to sell fighters jets to the Brazilian Air Force. Likewise, Brazilian Embraer is vying to offer training planes to the U.S. Air Force.

The timing of the agreement has some political significance. After a short honeymoon, Presidents Obama and Lula have drifted apart after disagreements on a number of issues, ranging from Brazil’s lack of condemnation of the situation of political prisoners in Cuba, to the solution to the crisis in Honduras, and the talks on a new round of sanctions on Iran at the U.N. Security Council. Even the initial rescue efforts by the U.S. after the earthquake in Haiti in January were seen with a mild feeling of mistrust by Brazil, which leads the U.N. mission in that country.

The bilateral defense agreement is not likely to alter the stances that the two countries hold on these issues, but it does send three important political signals:

First, the agreement will help dampen the anti-American rhetoric that is present in portions of the Lula administration, mainly those controlled by his party, the PT, by reestablishing a much needed framework of cooperation between Brazil and the U.S. In light of the upcoming Brazilian presidential election in October, when controversies on foreign policy are most likely to surface, the agreement may be used as a litmus test on any candidate’s foreign policy platform.

Second, the deal is part of an effort by Brazil to show neighboring countries that it is possible to engage with the U.S. in a cordial and strategic way while maintaining regional agreements such as the UNASUR and the South American Defense Council. The Brazilian government, when announcing the defense agreement with the U.S., explicitly mentioned the regional bloc’s charter as the cornerstone of any future negotiations.

By doing this, Brazil is trying to avoid criticism for having called an emergency meeting of the UNASUR when Colombia signed a military agreement with the U.S., which granted American military aircrafts access to a few of its air force bases. Although this agreement was seen with suspicion by many South American countries –and blatantly opposed by Venezuela—it was Brazil who took the lead in promoting the discussion.

Brazil claims that it would be much easier to avoid future disagreements in the region if every bilateral agreement between the U.S. and South American countries abided by the UNASUR charter. In practice this means that in the future countries will have to look to Brasilia on these matters. However, for many countries, such as Chile, this will not be acceptable.

The third motivation behind the deal has to do with a more fundamental and long-term goal of Brazilian diplomacy. By reaching an important agreement with the U.S., Brazil is trying to move away from the general belief that its role as an emerging power and a frequent challenger of the post-Cold War global order is nothing more than revamped anti-American rhetoric. Despite the presence of elements of anti-Americanism in Brazilian politics, there are important areas in which Brazil and the U.S. can find common ground.

Will the deal end future disagreements between both countries? Certainly not. For example, the talks on the Iranian nuclear program will likely create more tension between Brazil and the U.S. in the following weeks. Moreover, there are many unresolved issues in the bilateral agenda that still need to be addressed, like trade disputes and cooperation on biofuels.

Nevertheless, this agreement between Brazil and the U.S. has a symbolic weight. It is the first since 1977 and it may well pave the way for more cooperation between the two largest democracies in the western hemisphere.