Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 5 - Evidence - Meeting of November 2, 2011
OTTAWA, Wednesday, November 2, 2011
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:20 p.m. to examine and report on the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: The Standing Senate Committee on Foreign Affairs and International Trade will continue its study today on political and economic developments in Brazil and the implications for Canadian policy and interests in the region.
We are very fortunate that His Excellency the Ambassador of Brazil has agreed to come to our committee. He will be the final scheduled witness of our study, until we receive the ministers from Canada. I think having His Excellency here, at this time, is very opportune. We thank him for being here. His Excellency Piragibe Dos Santos Tarragô has been a career diplomat since 1975. His postings abroad include Maputo, in 1976; the United Nations, New York, from 1979 to 1982; Ottawa, from 1983 to 1985; Geneva, from 1990 to 1993; Caracas, from 1993 to 1997; London, from 1999 to 2003; and the United Nations in New York, from 2006 to 2009.
You can see from that curriculum vitae that he has multilateral, bilateral and worldwide experience. That is a distinguished career indeed.
The ambassador has worked mostly in economic matters in his functions in the Ministry of External Relations. He was the main negotiator for Brazil in the NAMA negotiations in the Doha round, 2003-05, and in the TRIPS negotiations in the Uruguay round, from 1987 to 1993. He was spokesman for the producing countries at the International Coffee Organization, from 1999 to 2003.
He was also a Brazilian delegate for many negotiations at the United Nations, including the General Assembly, Security Council reform, the Peacebuilding Commission, ECOSOC, UNCTAD, Group of 77, and the Special Unit for South-South Cooperation, as well as GATT and WIPO.
Joining the ambassador, to assist him, is Minister-Counsellor Mr. Paulo Roberto Amora Alvarenga. We welcome both of you to the table. As you have probably seen, we are looking at the relationship between Canada and Brazil from a political perspective and from an economic perspective. We have had ministerial visits, and we have had the Prime Minister of Canada meet with the President of Brazil in an official visit. Our concern is to strengthen this debate and to find opportunities of mutual cooperation. We welcome you to the table to bring your perspectives. It is the tradition of this committee to not only hear from you but to engage you in questions and answers and a dialogue. Welcome.
His Excellency Piragibe Dos Santos Tarragô, Ambassador, Embassy of Brazil: Thank you, Honourable Senator Andreychuk, for your kind words in introducing me to this distinguished committee. I am very pleased to be here, with my colleague from the embassy, to give you a brief overview of Brazil in the hope that this can help you in your proceedings and as you said, in preparing for a trip to Brazil, as well as to establish closer relations with Brazil's Parliament. We value, very much, this exchange with Canada, not only through the heads of our governments, but also through Parliament.
In my presentation, I will touch briefly on the political situation in Brazil, the economy, external trade, our foreign policy and relations with Canada.
Brazil's recent political scenario has been marked by stability with ample freedom of expression and participation. The return of civilians to power in 1985, the enactment of a new Federal Constitution in 1988 and the experience of six successful elections for presidents, governors, senators and deputies have attested to the high degree of political maturity attained and the consolidation of the rule of law.
On January 1 last, President Dilma Rousseff, of the Workers Party, took office after being elected with 56 per cent of the nearly 100 million votes cast.
The country's political and economic situation has gone through three incremental processes. First, there was political normalization, with the return to power of civilians, the adoption of a general political amnesty, the enactment of a new constitution and the strengthening of political institutions and of democratic values. Second, economic stabilization has been achieved by means of decisive steps taken to keep inflation under control and to secure a basis for sustainable growth. Third, the historically deep imbalances that have characterized Brazil's social structure have been tackled by a set of programs designed to eliminate hunger and reduce poverty.
President Dilma Rousseff has shown determination to deepen such programs by targeting the eradication of extreme poverty, with a view to reducing the gross inequalities still existing in our society. Such disparities are deemed to be also one of the main sources of insecurity, in particular in the big centres.
The president was elected on the back of a coalition formed by 16 parties, which reflects a wide political spectrum, though mostly from the centre and the left. However, Brazil's political configuration is, by and large, less characterized by ideological considerations than by pragmatism and regional interests.
On balance, the first 10 months of President Dilma Rousseff's government can be described as having achieved relative success. The governmental coalition in Congress stood united in approving important decisions. In the consideration of more controversial pieces of legislation, however, it has not been immune to disaggregating forces propelled by regional and/or special interests.
Nevertheless, the coalition has shown resilience when President Dilma Rousseff fired a number of ministers suspected of corruption.
Brazil's economic fundamentals have improved since the adoption of the Plano Real, in 1994, and of a system based on a floating exchange rate, an inflation target and primary fiscal surpluses. Introduced during President Fernando Henrique Cardoso's term, the system has been maintained and reinforced by policies designed to improve social inclusion under President Lula and President Dilma Rousseff's respective administrations.
Historically, Brazil's economic development has been fast, though highly unequal. However, in the most recent cycle of economic growth, social inclusion policies have sharply reduced poverty and the income gap. Key to this outcome have been, among others, improved access to education, real increases in the minimum wages, greater access to credit by consumers, universal access to health services, granting of social security benefits to all rural workers and conditional cash transfers, such as the Bolsa Família, for those at the bottom of the income pyramid.
These measures have lifted millions of people out of poverty, which, in turn, has fuelled domestic consumption. An expanded internal market has helped Brazil to sail through the international financial crisis relatively unharmed.
In order to keep macroeconomic stability, Brazil has applied a number of measures. Chief among them is that of fixing a high nominal interest rate. This, set by the central bank, is currently at 11.5 per cent annually, with a downward bias. It has been key to achieve the annual target for inflation of 4.5 per cent, with flexibility of two points above and below. A lower inflation rate, in turn, has helped the production of annual primary fiscal surpluses around 3.1 per cent of the GDP.
The combination of these two variables plus the floating exchange rate has been instrumental for re-establishing confidence in the Brazilian economy and the resumption of growth. As a result, the country has attracted large sums of foreign direct investment, which are expected to reach US $60 billion in 2011.
In 2010, Brazil's GDP grew by 7.5 per cent, following a modest reduction of 0.7 per cent in 2009 due to the international crisis. For 2011, growth will continue, though at a slower pace. Between 3.5 per cent and 4 per cent growth is expected in both 2011 and 2012.
GDP per capita stands around US$11,800. The unemployment rate, at 6 per cent, has reached its lowest level in 10 years. Real average wages have attained their highest level since 2002.
The Brazilian economy has become service-oriented, but the country is one of the world's largest agricultural producers and has a highly diversified industrial base. Services account for 67 per cent of the GDP; industry, 27 per cent; and agriculture, 6 per cent.
The importance of agriculture transcends its share of the GDP, as it is also one of the main sources of employment. The sector is also export-intensive, and runs large trade surpluses.
Among the main agriculture commodities are soybeans, sugar, oranges, coffee, cotton, tobacco, meat and poultry. The agri-business sector is well developed, with strong links between farmers and the food industry. It has drawn foreign investors, which see the country as a good basis in their strategies to access international markets, as well as the growing Brazilian market.
Also, family farming has taken on increased importance as the principal source of staple foods. It has made a crucial contribution for the drastic reduction in poverty. Brazilian small-scale farmers, who occupy 24 per cent of the agricultural land, are responsible for 38 per cent of the national food production and 74 per cent of rural employment.
On external trade, with a record level of US$384 billion in 2010, foreign trade accounts for less than 20 per cent of the GDP, which I think shows this trend of the domestic market in Brazil, too. In the year to September, trade flows have grown 30 per cent and reached US$357 billion. The trade balance has shown a surplus of US$23 billion, an 85 per cent increase. Primary products constitute 50 per cent of exports. Iron ore, oil and sugar alone account for one third of all exports.
Brazil's foreign trade is geographically diversified, as the top 10 trading partners take only 55 per cent of total trade. China has become Brazil's main trading partner, with 16 per cent of two-way trade, followed by the United States, with 12 per cent. Bilateral trade with Canada accounts for 1.5 per cent.
Trade flows between Brazil and Canada have a great potential to grow. In 2010, Brazil's exports to Canada amounted to US$2.3 billion while imports reached US$2.7 billion. These are Brazilian figures, which are slightly different from the Canadian figures, but the bilateral trade has been growing in 2011 and will reach well above US$6 billion. From January to September, it has already surpassed total flows registered in the entire year of 2010.
The main Brazilian exports to Canada are aluminum oxides, crude oil and raw sugar, covering approximately 60 per cent of the total. Potassium fertilizers, coal and newsprints are responsible for roughly 60 per cent of the imports from Canada.
On foreign policy, President Dilma Rousseff in her inaugural speech reaffirmed Brazil will continue to assign priority to South American and Latin American integration, South-South cooperation, in particular with Africa and the Middle East, and Portuguese-speaking countries. Likewise, emphasis will continue to be placed in emerging countries and new groupings, like IBSA and BRICS, as well as with the United States and the European Union, in the context of a reinvigorated multi-polar world. Brazil will continue to be open for business and trade and will be willing to strengthen ties with all countries, in particular with developed ones like Canada, as they can represent important and diversified sources of trade, investment and technology.
The president has also reaffirmed that respect of human rights will feature high in Brazil's foreign policy. Brazil will continue to support a reform of international governance as to allow for increased participation of emerging countries in the main decision-making bodies, like the United Nations Security Council, the IMF and the World Bank. Brazil believes that it can make a relevant contribution to the solution of the conflicts affecting many parts of the world. It is ready to make available its diplomatic and technical skills whenever it is felt that they can bring cooperation and a positive perspective to the countries in conflict.
Integration of South America will continue to be anchored on concrete projects in infrastructure. Brazil intends to pursue, with its neighbours, common projects in energy, communications, roads and airports, as well as the deepening of the economic and trade ties. President Dilma Rousseff is genuinely committed to giving added impulse to this initiative, as it fits well with her vision of attracting investments, Brazilian and foreign, to develop the vast hinterland of the country and the areas close to the borders. The integration projects are expected to tap the economic potential of the new areas for development.
The strategy of diversifying Brazil's external relations, with special attention to developing countries, has yielded sensible economic benefits. For example, trade with Mercosur members alone has increased tenfold in 20 years since its inception.
The robust external performance would not have been possible without an active strategy of fostering new partnerships. The creation of groupings like IBSA and BRICS, not to mention Mercosur and Unasur, provides a political and institutional framework under which trade and investments can thrive.
On relations with Canada, Brazil has noted with satisfaction the priority assigned by Canada to its relations with the Americas and, in this context, the special attention given to Brazil.
The recent visit from Prime Minister Stephen Harper to my country was successful as it opened new prospects for the intensification of bilateral relations in a host of areas.
Brazil sees Canada as a potential source for cooperation in many fields, such as science and technology, trade, investments, education and defence. The Prime Minister's visit launched two important mechanisms, namely the dialogue on strategic partnership and the CEO forum.
In the dialogue, Brazil and Canada now have a venue to review, at a high level, the main topics of the international agenda in preparation for international and regional conferences and meetings, and to better learn each other's perspectives on bilateral relations and global issues.
In the CEO forum, leaders of our respective private sectors could discuss among themselves and our ministers ways to boost interaction among major business players in both countries and hatch new initiatives for mutual benefit. The dialogue and the CEO forum will also provide significant support for the cooperation on science and technology. The outlook is bright in this area. A bilateral MOU was signed, paving the way for joint cooperation of universities and scientific research centres of both countries. Projects are being developed or considered in sectors like information technology, renewable energies, green technologies, nanotechnology, bio-sciences and ocean sciences. Cooperation between educational institutions of Brazil and Canada is under way. The Governor General shall lead a mission of Canadian universities to Brazil in April 2012.
In addition, as Brazil requires large sums of investment to overcome its infrastructure bottlenecks, opportunities for Canadian business are promising. The Brazilian government has launched an ambitious program to accelerate investments in areas such as housing, urban development, health, education, energy and transport. In the next four years this initiative is expected to generate investments in the amount of US$575 billion.
As you are aware, Brazil will hold two major sporting events, the FIFA World Cup in 2014 and the Olympics in Rio de Janeiro in 2016. The country will require substantial investments in infrastructure and related services. As Canada has accumulated a wealth of expertise in putting together world sports competitions, there will be opportunities for Canadian companies to participate in projects related to those tournaments.
The oil sector may also be of interest to Canadian companies. Brazil is putting into operation offshore fields known as "pre-salt. " Foreign companies have been invited to take part in the exploitation of such fields as well as to supply offshore equipment, ships, platforms and pipes.
In conclusion, there are many opportunities to be explored to the benefit of a more fruitful bilateral relationship, but some hurdles still have to be overcome. In Brazil, Canada's image is still associated with the problems the two countries faced in the past, which are the Embraer-Bombardier dispute and the prohibition of imports of Brazilian beef on account of alleged mad cow disease. Therefore, much still has to be done to improve Canada's standing before the Brazilian public. I personally believe this could be achieved if Canada would participate in projects of high visibility that can be seen as bringing benefits to Brazil.
Brazil has developed projects with other countries of the same development level as Canada. These projects have distinguished in and of themselves to create a positive perception in the Brazilian public. This was the case of the Cerrado project with Japan, a major agricultural development project; defence projects with France; nuclear cooperation with Germany; Mercosur with Argentina and so on.
On global issues, Canada and Brazil could find ways to develop partnerships. A positive experiment has been sketched in Haiti where the two countries have joined efforts to assist in the socio-economic recovery of that country. However, both governments could do more. For instance, they could work together to improve global governance, foster cooperation in our hemisphere and reinvigorate the United Nations, in particular the Security Council.
The Chair: Thank you. You have touched on many areas. I have some questions but I will turn first to our members.
[Translation]
Senator Fortin-Duplessis: First of all, Your Excellency, I must tell you how really pleased I am that you accepted our invitation. I also want to tell you that, in the brief you have just presented, you have painted quite a complete picture of the situation in Brazil.
Here is my first question. In your report, you mentioned that your president, Ms. Rousseff, is in the process of cleaning house. Last Thursday's forced resignation of Orlando Silva testifies to that fact.
Another item in the news that also has to catch our attention is Tuesday's vote in the Brazilian congress on the Access to Public Information Act. The legislation will complement the Transparency Act of 2009, which requires all public administrations to publish the use they are making of public funds online.
Could you tell us a little more about what that act contains? Has corruption in Brazil increased in recent years or is the increase in quality control, the well-publicized charges and the access to incriminating information?
I would like your opinion on that subject; then I will have a second question on something altogether different.
Mr. Tarragô: Madam Senator, thank you for the question. I feel that it is very important to deal with this aspect of Brazilian political life.
Certainly, President Dilma Rousseff has established that her policy is to create an effective government that will serve the Brazilian people well, and whose desires and aspirations match those of Brazilians. She has made it clear that there is to be no doubt as to the ethical or moral conduct of her ministers.
That is the reason why she accepted the allegations published in the Brazilian media. She conducted the investigations necessary to shed light on the accusations of corruption.
Yes, I believe that corruption and access to information are linked.
Today, the press in Brazil has almost total access to government information. Government accounts are open. They can be obtained on the Internet. It is relatively easy to find out about government activities, reports and expenses on the Internet.
But it is difficult to say whether corruption in Brazil has increased or not in recent years. Corruption has always existed. The problem is not just Brazil's; there is corruption in every country. The improvement has been in access to information. Given the increased access to information, it is now more difficult for those involved in corruption to continue it without being observed by the public. So not only is it critical to guarantee access to information, the press must also always be free. In Brazil, we want that to be the case. In her speech last January 1, the president insisted that she was going to guarantee freedom of the press. I feel that it was a signal of her intentions as well as a warning to those in the public sector in Brazil who might want to continue their shady ways. The message is clear.
I will finish by touching on the vote on the bill on access to public information. Brazilian society is discussing the bill. Brazilians are insisting that access to information be as open as possible. I feel that the question will be settled this week with no problem at all.
Senator Fortin-Duplessis: Could it be said that the situation has improved?
Mr. Tarragô: No, that is not the case.
Senator Fortin-Duplessis: The situation has not improved?
Mr. Tarragô: Has what improved?
Senator Fortin-Duplessis: Given that journalists have easier access to information, I am sure that more of it is getting into the papers and giving the impression that there is more corruption. But really, that may not be true.
Mr. Tarragô: No, it is true. Things have improved. Until recently, there have been barriers to the access to information depending on the categories, such as confidential information, secret information and other types of information. The public had to wait for some time before they could have access to information. With the new legislation, wait times will be going down. So access will be easier and wait times for access to confidential or very privileged information will be more reasonable.
Senator Fortin-Duplessis: I have another question but on a completely different topic.
I have read that it is very difficult to fill some of the technical and technological positions in Brazil. Statistics show that you train 40,000 engineers and architects but you need 60,000.
In your brief, you mentioned that, during the Prime Minister's visit, bilateral agreements were signed in order to pave the way for cooperation between universities, scientific research centres and other institutions. There is no question that this initiative can help to train people who are more qualified. But is that enough? Will you have to sign agreements with other countries to fill those 20,000 positions every year?
Mr. Tarragô: We are aware of the problem. President Rousseff started a program called Brazil without borders in order to send Brazilian students abroad to complete their training in technical areas, such as engineering and so on. The program is going to start now and go on for four years. The goal is to send 75,000 Brazilian students abroad. A significant number of students will come to Canada for their studies.
The government is in the process of forging ties with other countries, including France, the U.K. and the U.S., in order to address this need to train new engineers for our industry. I am sure that this initiative will open Brazil's doors to technicians from other countries, which will benefit Brazil's industry.
Senator Fortin-Duplessis: Your Excellency, thank you very much for being so kind as to answer my questions.
Senator De Bané: Mr. Dos Santos Tarragô, the World Bank Group ranked Brazil 127th out of 183 countries in terms of ease of doing business. Brazil is behind countries like South Africa, Mexico, Peru, Colombia, Turkey and Argentina. China ranks 79th and Russia 123rd.
What do you think about Brazil's relatively weak ranking compared to that of other countries in the region? In your opinion, is this ranking valid? I would really like to hear your comments, Mr. Ambassador.
Mr. Tarragô: I agree with you. This is a serious problem for Brazil. We have to find a way to facilitate business operations in general. This is also an issue of public debate in Brazil. It is what we call "the Brazil cost " in Brazil. It is the cost of doing business with Brazil, not only abroad but especially across the country.
A whole host of regulations are in place throughout the government, whether at the federal level, at the state level or at the municipal level. Those regulations hinder Brazilians from starting a business and from doing business. Regulations have piled up and they have not been reviewed thoroughly to streamline the whole process.
I think that, if we had a higher ranking, we would be a different country today.
[English]
Senator De Bané: I understand the members of Mercosur are not allowed to negotiate bilaterally with another country — that it has to be done under the umbrella of the Mercosur trade agreement. In the midst of Mercosur's current trade agenda, which includes possible trade agreements with the European Union, India, Southern Africa Customs Union and South Korea, to what extent is it realistic to consider that the potential agreement with Canada could become, like the countries I have mentioned, a priority for the Mercosur's trade negotiators? Can we have a realistic expectation on that front, as we are both part of the Americas and both of us share the same fundamental values?
Mr. Tarragô: As far as I know, while Canada has not been considered a priority for Mercosur, it has raised its standing among the partners with which Mercosur would like to start free trade negotiations. We are engaged in exploratory talks. I think we already have had two or three rounds of exploratory talks. We could not do more now this year because of the Argentine elections, but another round of talks is foreseen for early next year.
On this question of free trade, I think we have to see the whole forest, not only the one tree. The whole forest means the international financial situation, and how these international crises play out. This will certainly affect the ability of countries to engage more or less in trade negotiations.
Senator De Bané: You have led those economic negotiations in many fora on behalf of Brazil.
Mr. Tarragô: Exactly, at different times. On the Doha round, we missed the opportunity. If we had concluded a Doha round five years ago, this would be already in place today, and perhaps we could have had an effect in terms of the international financial crisis.
Brazil places great importance on multilateral negotiations. Our preference is for multilateral negotiations. Bilateral negotiations come second to multilateral negotiations. We think that most of the barriers that exist in bilateral trade can only be solved at the multilateral level because they are cross-cutting — they affect different areas.
[Translation]
Senator Robichaud: Your Excellency, you talked about agriculture. You said that Brazilian small-scale farms occupy 24 per cent of the land, but that they are responsible for 74 per cent of rural employment. What are the major challenges for those small farms in order to be able to survive in the long term?
Mr. Tarragô: Small farms are part of the plan that President Lula started and that President Rousseff wants to continue. This plan fits in with the context of reducing poverty and improving the standard of living for rural families. It also fits in with the government's major social programs. Let me give you an example. A large part of family farm production is bought by government agencies that are responsible for providing food to children, to school kids and to public hospitals. It is a guarantee of purchase that the government gives to family farmers. It is a long-term guarantee for carrying on this activity.
The government also gives loans to family farmers on favourable terms and with lower interest rates in order to encourage family farming, which is already quite mechanized though you might think of it as small. As a result, productivity stays high. Seventy per cent of Brazilians' food comes from family farms in our country.
Senator Robichaud: Thank you.
[English]
The Chair: Let us go to the touchy question first: irritants. We keep hearing about Embraer and Bombardier, but on the other side we say that both governments have moved on. It is a different world for Canada, it is a different world for Brazil, yet there is this lingering point of view.
When you say "Brazilians, " are you talking about Brazilians in Brasilia — the government, the businesses? I would think there are millions of Brazilians that do not know about the Embraer-Bombardier altercation, like Canada. It seems to be around government and in parliament, where they still go back to talk about that irritant, which has been resolved, by and large. What is the case in Brazil, and what do we have to do?
I know in some other countries if we can reach enough parliamentarians to get them in the loop to understand that it is counterproductive to talk about the past irritants rather than looking forward, we get ahead in our bilateral relationships. Is that what we have to do in Brazil, or are there other solutions to get that image dropped, beyond what you said in your report? I agree with that, but that is long-term — establishing a better relationship, a new dynamic of Canada.
We have had businesses there that have done well. How do we get rid of this albatross that seems to come up every so often — this irritant?
Mr. Tarragô: I completely share your view. I think that much of the responsibility for that falls on the Brazilian press. The journalists in Brazil, perhaps from lack of better information about bilateral relations, always go back to what they have in their files. In their files, they still have the Embraer-Bombardier case, and the episode of the mad cow disease, which got so much press in Brazil at that time. It went to the public television and all media, et cetera. That was really a strong image that was projected on the Brazilian public. In my view, that is why something of high visibility between Brazil and Canada could substitute for these negative episodes. Perhaps the press would then forget and have something new about Brazil and Canada in their files to talk about.
I also agree that raising these issues with Brazilian parliamentarians can help. They have to be apprised of new developments in our bilateral relations. You have an opportunity to discuss with them and show what Canada is ready to do with Brazil. I feel there is a very positive atmosphere in Canada vis-à-vis Brazil. As much as I have been trying to convey that to Brazil, there is nothing better than personal relations and contacts to transmit this to Brazilian parliamentarians, which will then filter to the Brazilian media.
You have to understand one thing, and perhaps this is also true in Canada. Brazil is a country that is developing itself. Whatever happens in relation to the country in all the parts of the world is immediately grabbed by the Brazilian media, especially if it is negative. It sometimes reaches proportions that are far from the reality. This sometimes has a deterrent effect in our bilateral relations in some countries.
In the case of Embraer and Bombardier, the public at large has little information about it. However, the media still has this issue quite lively in their files. I think that problem affects the image of Canada in Brazil. We really want to change that.
I think the visit from Prime Minister Stephen Harper helped, but the visit only touched on our relations in general terms. As you can see from my brief, the establishment of the strategic dialogue and CEO forum are important, but the public in general mostly do not grasp the real meaning of that. The public will grasp something concrete or that is quite visible. Perhaps the two governments should talk more about this with each other and try to devise something.
[Translation]
Senator Fortin-Duplessis: Following on the chair's question, could you tell me whether there are other irritants in addition to the Embraer case and the mad cow episode. Are there other irritants that might prevent Canada and Brazil from having more harmonious relations?
Mr. Tarragô: No, I do not think so. There are some little things but they are manageable.
Senator Fortin-Duplessis: Thank you.
[English]
Senator D. Smith: Before we go — and I am hoping we will go — we all feel very positive about the future potential for more trade and business between Canada and Brazil. On the Embraer point, I am not quite sure why some are still upset. There is an old saying that actions speak louder than words. The fact is Air Canada has bought a lot of Embraer planes. I am not sure any Brazilian airline has bought a lot of Bombardier planes, but I am not complaining about it. Given the fact that Air Canada is a major customer for Embraer, why are some people still irritated at Canada when we are buying their planes?
Mr. Tarragô: I also put the same question to myself. I think we should give more publicity to the fact that Air Canada is one of the main customers of Embraer in Brazil. When you go to Brazil tell your colleagues, because maybe they do not know.
Senator D. Smith: Some of us are mystified as to why we still have a cloud over our heads.
Mr. Tarragô: Perhaps it is the lack of something meaningful in our relations or that people still stick to something negative in the past. I think our Brazil-Canada relations are excellent. We are doing trade, which is increasing, and our cultural exchange and scientific technology are going well but do not have the same visibility as a negative issue like Embraer.
Senator D. Smith: For over 30 years, one of the big highlights of the year in Toronto has been the Brazilian Ball. I have gone on and off over the years; it is a gala affair that raises a lot of money for charity. Canadians feel very good about it. Maybe they do not understand or know that.
Mr. Tarragô: That is true.
Senator Finley: Thank you for an excellent presentation. I would like to focus on one little part of the equation here, which is the upcoming FIFA World Cup of soccer and the Olympic Games. Both are being held in Brazil and I am sure you will do a wonderful job on both. I just hope that the outcome of the World Cup is not the same as it was the last time that it was held in Rio, which I think was 1950. I am sure you will win it anyway.
The 2014 World Cup is three years away and five years to the Olympics. Each person who has been here has stressed the value of infrastructure for this. I see two wells of infrastructure. One is going into the actual sporting venues, the stadiums and so on. The other is the inevitable spinoff with roads, transportation and hotels. Given there are only three to five years before these events, realistically how much opportunity is still available? One would think these are long-term contracts and projects and most of them would have been granted already. Is that the case? Is there genuinely still a lot of opportunity?
Mr. Tarragô: In the case of the FIFA World Cup, the stadiums are being built or refurbished. Much of the ancillary infrastructure has already been started but they are still in the process. I said this to some Canadian companies who were asking themselves the same question. Is there still an opportunity to go there and see if we could take a piece of these contracts? I said yes, because many of the main contractors will subcontract. Then, depending on the specialization of the company, you could also get a piece of the contract. For instance, security equipment will have to be installed in all stadiums, in airports and in many parts of the country. Companies providing this equipment can have opportunities at these events.
Do not leave it to the last moment. Of course, it is still three years until then. I think there is still reasonable time for that for many Canadian companies.
Senator Finley: Do you detect that there is an acceptable level of involvement by Canadian companies in at least attempting to get into these two huge events, or would you characterize it, perhaps, as being a little disappointing?
Mr. Tarragô: I do not know. Minister Edward Fast went to Brazil with a Canadian trade mission last June. One of the objectives was to see precisely that. I do not have feedback about the outcome of that mission. When Prime Minister Harper went to Brazil, he took with him some CEOs and had a major trade event in Brazil. He had a business lunch, with more than 300 Brazilian companies participating, that could address and showcase Canadian experience with these sports events. However, it is up to each and every country to follow up and try to identify niches where they could offer their expertise, products and services. I guess Canadian companies can count on the support of the trade offices that Canada has in Brazil. They are kept abreast of the opportunities offered by these projects. The Canadian trade offices, the consulates, the embassy, the Chamber of Commerce in São Paulo and many Canadian companies have already had offices in Brazil for quite some time. In this case, I guess, it is up to each and every company to find their way into this market.
Senator Finley: I was particularly interested vis-à-vis the timing and the state of completion. We have some decisions to make in this committee report and on our trip to Brazil. I do appreciate your input. Thank you very much.
Senator Mahovlich: When people here talk about Brazil, they talk about Pele. Is Pele involved in the tournament? Is he having a say in the matter down there?
Mr. Tarragô: He has been appointed ambassador.
Senator Mahovlich: Oh, he has?
Mr. Tarragô: For the World Cup.
Senator Mahovlich: Will he be coming to Canada for a sales pitch here? We are looking forward to him.
Senator Finley: We do not have a soccer team, Senator Mahovlich. That is the problem.
Senator Mahovlich: We have a soccer team, but we do not win much.
Mr. Tarragô: You could invite him to a hockey match.
Senator Mahovlich: That is right.
Senator Downe: Ambassador, I want to ask a couple of questions about the program you spoke about earlier, the 75,000 students that the government hopes to send outside the country for education. I understand that the government has asked corporations to fund another 25,000, hoping to send 100,000 out.
My understanding of the program is that the government is paying all of the expenses except tuition. Is that correct?
Mr. Tarragô: I cannot say exactly. The government has allocated a sum of $3.4 million to finance the studies of these students. My understanding is that two agencies are responsible for the program. They are in negotiations with universities in respective countries to see how this can be accommodated — full tuition, half tuition or partial tuition.
The message is that we are in the market, trying to negotiate the best price.
Senator Downe: I hope you could use your good office because if the program ends up not funding tuition, then countries where students do not pay any cost to attend universities are at an incredible advantage compared to Canada where everyone has to pay to attend. Maybe you could make that representation to the government.
Mr. Tarragô: I will do that.
The Chair: I have one final question. You indicated that your international perspective is going south-south in many ways. You are looking to Africa — Angola, Mozambique, et cetera — and to your region. I can understand that from a historical perspective. However, it increasingly seems that we are becoming integrated in this hemisphere. Many positives draw us together, but there are also negatives that do, such as our security. Transnational types of crimes and criminal organizations tend to move around, and they do so in a hemisphere. The contagion in Africa, for example, happens in one country, moves up and down the coast and then moves around to the cape and to the next coast. It baffles me why Canada and Brazil have not seen the commonality of interests faster than they have. Because we are in the same hemisphere, we have the advantage. We can shed some of the old way of looking through the United States. We can look over the United States, or we can combine with them. We can look at Central America and the Caribbean. We are doing it in Haiti. There are many more opportunities. One of our reasons for the study is to ask why we have overlooked each other in the last couple of decades. Why have we not concentrated on strengthening this bilateral relationship?
Mr. Tarragô: Yes. Perhaps the geographical distance between the two countries can be one of the reasons for that. On the question of transnational crimes in our region, the focus is basically on the bordering countries. We are developing bilateral cooperation with these countries to reinforce police and security on our borders, through which most of these crimes go, especially drugs, illegal weapons and contraband.
Brazil is committed to reinforcing security in our area, but we are also ready to consider joining efforts with countries like Canada and other countries in the hemisphere. We are ready to see what kind of joint efforts we could develop together. In Haiti it was a particular situation. It was not simply a question of crime in Haiti, it was the whole country that was unravelling. We were there together to help that country recover.
Each country has a particular situation. I see that Canada is turning its eyes toward Central America. It is natural because Central America is a passage to Mexico and then to North America.
That is not so much the case for Brazil. As I said, Brazil is much more concerned with the neighbouring countries that affect its security. However, we will be ready to look together with Canada into possible joint cooperation.
The Chair: Ambassador, we have run out of time. We went overtime, as a matter of fact. Your interventions here have been extremely helpful. I think we understand the new Brazil, its relative importance in the world and its changing concepts that make it a place for opportunities and a place for hope for more multilateral initiatives that will be in our common interest.
This committee is looking for the narrative of why, in this hemisphere, a country the size of Canada, geographically and otherwise, and a country the size of Brazil have not strengthened even further our relationships.
You have given us some areas to think about. We will come back and perhaps challenge you on some of these areas. That will be to the benefit of both countries and our continuing bilateral and multilateral relationship.
Thank you for indicating to us that, while there are opportunities for business with regard to FIFA and Olympics because of our experiences, there is an urgency. When you graphically tell me that there are three years to FIPA and five years to the Olympics, there is time, but it is now time for Canadian companies and the Canadian government to move. We saw the ministers' visits and the Prime Minister's visit, so it is all timely. We hope to be part of that equation. We know that your contribution to that dialogue has been extremely helpful.
Thank you very much for coming. We hope to continue to see you here in Ottawa and certainly at our committee.
Mr. Tarragô: Thank you very much.
(The committee continued in camera.)