by Larry M. Elkin, CPA, CFP® Palisades Hudson Financial Group.
CAMPINAS, Brazil – It took nine hours to fly from Newark International Airport to São Paulo, and another 90 minutes to drive to this city of 1 million for a brief post-Thanksgiving business trip. But my journey actually began weeks ago, in an office tower in downtown Miami.
My previous Brazilian visa had expired not long after my last trip, forcing me to go through the costly and cumbersome application process for the fourth time since I began visiting 15 years ago. (Brazil’s multi-entry tourist and business visas are typically valid for five years.)
First, I had to go to the consulate nearest my principal residence, in Fort Lauderdale, which is why I went to the consulate in Miami. Applications are accepted by mail, but the turnaround time is at least one month, which was too long for this trip. So I made sure to show up at the consulate at the requisite hour – applications are accepted only between 10 a.m. and noon on weekdays – with my U.S. passport, a set of recent photos, a letter from my firm explaining the purpose of my trip and $161 in cash. I fed the cash into an ATM-like machine in the consulate lobby. The machine regurgitated a receipt, which completed the necessary paperwork.
After dropping off the papers, I then had to wait five days before returning to the consulate, precisely in the designated time period of 3-4 p.m. on a weekday, to pick up my passport with the newly affixed visa.
The entire process is a pain in the tuchas, a word which, while neither English nor Portuguese, is understood by speakers of both. It would be easy to blame the Brazilians for this inconvenience. It would also be wrong.
My need for a visa, and the $161 price tag (less a $1 dollar service fee to the Banco do Brasil), is the result of policies rooted in Washington, not Brasília. If I were visiting Brazil from any European Union country, or from a long list of other nations including Israel, Romania, Russia and Turkey, I could have entered with no visa at all. The United States, however, has refusedto include Brazil in its own visa-waiver program, which allows leisure and business travelers to come to America for up to 90 days with only their home country’s passport, as long as they do not accept employment during their visit. Brazil’s visa policy is simply a mirror of our own. As soon as we drop our visa requirement for Brazilians, Brazil will open its borders to Americans.
From an American viewpoint, Brazil is easily the most politically compatible of the four rapidly developing BRIC countries. I have written here in the past about the corruption that remains prevalent in the other three: Russia, India and China. Brazil also has a Gross Domestic Product of $2.2 trillion, making it the sixth-largest economy in the world. But despite Brazil’s proximity compared to the growing Asian economies, the United States continues to hold the country at a diplomatic distance.
Our visa requirement is supposed to help us keep tabs on travelers who might illegally overstay their welcome in the United States. Brazilians, however, are not overly eager to put down roots in the north. As Paulo Sotero, director of the Woodrow Wilson Center’s Brazil Institute in Washington, told Time, Brazilians prefer their native soil when it comes to long-term residency. The United States “is considered a less attractive place for economic migrants in Brazil, which has almost full employment and a lot more economic opportunity,” Sotero said.
Brazilians come to America to spend money far more often than to make it. In 2010, 1.2 million Brazilians visited the U.S., putting Brazil fifth worldwide in terms of the number of tourists it sends to our shores. Those Brazilian visitors collectively spent $6 billion in the States.
Two years ago, I took my family along for my first vacation trip to Brazil. We had a memorable two weeks seeing the sights in Rio de Janeiro, enjoying the beaches near the northeastern city of Recife and exploring a bit of the Amazon rain forest. As our trip demonstrated, Brazilians and Americans have similar reasons for visiting each other’s countries: to sightsee, to relax, to shop and to dine in venues that can hold their own with rivals anywhere in the world.
When it comes to doing business, however, there are other obstacles that are even more of a hassle than the visa requirement: The U.S. has neither a tax treaty nor a free-trade agreement with Brazil. Both mechanisms play crucial roles in facilitating cross-border business in the 21st century.
Neither the U.S. nor Brazil is categorically opposed to such treaties. For trade, Brazil is a member of the Mercosur bloc (Mercosul in Portuguese) with its neighbors Uruguay, Paraguay, Argentina and Chile, as well as Venezuela. We are part of the North American Free Trade Agreement with Canada and Mexico, and we have a variety of bilateral trade treaties as well. On the tax side, Brazil has agreements with 28 countries, and the U.S. has even more. Many countries, including our NAFTA partners Canada and Mexico, have tax treaties with both the U.S. and Brazil. Brazil is, in fact, the only nation in the world with an economy of $1 trillion or more with which the U.S. lacks a tax treaty. But despite calls for stronger ties from the administrations of both President Obama and his Brazilian counterpart, Dilma Rousseff, no agreements have emerged.
Given our visa and tax treatment of Brazil, it is no surprise that as Brazil’s role in the world has grown, America’s role in Brazil has not. In 2009, China became Brazil’s top trading partner – a position Americans had previously held for eight decades. Meanwhile, the U.S. continues to impose tariffs on two key Brazilian exports: orange juice and ethanol. Brazil, in turn, has announced an array of investment and tax incentives to develop its domestic automobile industry, seeking to reduce the number of cars it imports and, by extension, to cut down on a key area of trade with the U.S. Even so, two-way trade between Brazil and the U.S. totaled $74 billion in 2011, making Brazil our eighth largest trade partner.
Brazil is not likely to ever account for as much of our foreign trade as countries such as Canada or China, nor is it likely ever to be as much of a political and military ally as countries such as the United Kingdom, Israel and Japan. It definitely will never be as physically close a neighbor as Mexico. But none of this means that we shouldn’t strive for a stronger, diplomatically closer relationship.
When it comes to deciding where to do business, shared fundamental values ought to be as important as economic potential. Brazil happens to offer a healthy measure of both.
