U.S.-Brazil Maritime Agreement
U.S. Secretary of Transportation Rodney E. Slater and Brazilian Transport Minister Eliseu Lemos Padilha signed a new bilateral maritime agreement in Rio de Janeiro on October 20, 1999, during Secretary Slater’s South America Transportation Trade Mission. Signing the agreement culminates a major improvement in U.S.-Brazil maritime relations.
The new three-year agreement will ensure equal access for each country’s national-flag carriers to the other country’s government-controlled cargo. The agreement calls for liberalization of the maritime sector and provides for nondiscriminatory treatment of each side’s carriers with respect to maritime-related services and facilities and other issues such as shipping taxes.
In February, Maritime Administrator Clyde J. Hart, Jr. led a U.S. negotiating team in talks with his Brazilian counterpart aimed at resolving a serious dispute over previous discriminatory practices by Brazil in international ocean shipping. Most importantly, Brazil agreed to eliminate a tax preference favoring shipments carried on vessels of a new Brazilian ship registry. This commitment had enabled the United States to restore Brazil’s exemption from U.S. special tonnage tax fees.
Resolution of the dispute over discrimination in shipping taxes paved the way for completing work on the new maritime agreement. A bilateral agreement signed in 1996 had not been ratified by the Brazilian Congress. Brazilian authorities then imposed an "industrial production tax" on government-controlled cargoes moved by U.S. carriers. Having a new agreement in place will restore unfettered access for U.S. carriers to these cargoes.
The need for such an agreement reflects the historically broad scope of preference cargoes in Brazil. In recent years, the Brazilian government has taken steps to reduce the share of preference cargoes in its trade, making more of the ocean shipping market available to free competition among all shipping companies.
The agreement effectively resolves problems that had been of serious concern to the United States, and it does so by setting forth broad principles to be observed reciprocally by both countries’ governments. To further the spirit of cooperation, the agreement provides for timely consultations whenever necessary on particular issues that may arise in the future.
The Department of Transportation has enjoyed strong support throughout the negotiating process from the State Department, the American Embassy in Brazil, and the U.S. maritime industry, including carriers and shippers. The agreement is expected to provide the foundation for a strong bilateral maritime relationship and for continued efforts to further open shipping markets in U.S.-South American trades.
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