Wayzata World Factbook 1995/World Factbook - 1995 Edition - Wayzata Technology (1995).iso/mac/text/Build/orig BACKGR/BNOT0015.TXT

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National Trade Data Bank
ITEM ID     : ST BNOTES BRAZIL
DATE        : Oct 28, 1994

AGENCY      : U.S. DEPARTMENT OF STATE
PROGRAM     : BACKGROUND NOTES
TITLE       : Background Notes - BRAZIL

Source key      : ST
Program key     : ST BNOTES
Update sched.   : Occasionally
Data type       : TEXT
End year        : 1992
Date of record  : 19941018
Keywords 3      :
Keywords 3      : | BRAZIL

US DEPARTMENT OF STATE
BACKGROUND NOTES:  BRAZIL

OFFICIAL NAME:  FEDERATIVE REPUBLIC OF BRAZIL

PROFILE

Geography
Area (1989):  8,511,965 sq. km. (3,290,000 sq. mi.). Cities (1989):
Capital--Brasilia (pop. 1.8 million).  Other cities--Sao Paulo (11
million), Rio de Janeiro (6 million), Belo Horizonte (2.3 million),
Salvador (2 million), Fortaleza (1.8 million), Recife (1.4 million), Porto
Alegre (1.4 million), Curitiba (1.4 million). Terrain: Dense forests in
northern regions, incl. Amazon Basin; semiarid along northeast
coast; mountains, hills, and rolling plains in the southwest (incl. Mato
Grosso); and coastal strip. Climate: Mostly tropical or semitropical
with temperate zone in the south.


People
Nationality:  Noun and adjective--Brazilian(s). Population (1989 est.):
150.1 million. Annual growth rate (1989):  2.1%.

Density:  17.6 per sq. km. (45.6 per sq mi.). Ethnic groups:
Portuguese, Italian, German, Japanese, African, Indians, principally
Tupi and Guarani linguistic stock. Religion:  Roman Catholic (89%).
Education:  Literacy--78% of adult population. Health:  Infant mortality
rate--109/1,000. Life expectancy--61.3 yrs.  Work force (1989, 62.5
million):  Agriculture--35%. Industry--25%.  Services--40%.  Trade
union membership--about 6 million.


Government
Type: Federative Republic.  Independence: September 7, 1822.
Constitution: Promulgated October 5, 1988.

Branches: Executive--president (chief of state and head of
government) popularly elected to a single 5-year term.
Legislative--Senate (81 members popularly elected to 8-year terms),
Chamber of Deputies (495 members popularly elected to 4-year
terms). Judicial--Supreme Federal Tribunal.

Political parties (with congressional representation):  Brazilian
Democratic Movement Party (PMDB), National Reconstruction Party
(PRN), Liberal Front Party (PFL), Democratic Social Party (PDS),
Democratic Workers Party (PDT), Workers Party (PT), Brazilian Labor
Party (PTB), Liberal Party (PL), Brazilian Socialist Party (PSB),
Communist Party of Brazil (PC do B), Brazilian Communist Party
(PCB), Christian Democratic Party (PDC), Brazilian Social Democratic
Party (PSDB).  Suffrage:  Compulsory from 18-70.

Subdivisions: 26 states, federal district (Brasilia).

Defense: 2.6% of 1990 government budget.

Flag: A yellow diamond on a green field; a blue globe with 23 white
stars and a band with "Ordem e Progresso" centered on the
diamond. The globe represents the sky and the vastness of the
states and capital, and green and yellow signify forest and mineral
wealth.


Economy
GDP (1988): $352 billion. Annual real growth rate (1985-88): 5%. Per
capita GDP (1988): $2,434.

Natural resources: Iron ore, manganese, bauxite, nickel, uranium,
gemstones, oil.

Agriculture (12% of GDP): Products--coffee, soybeans, sugarcane,
cocoa, rice, beef, corn, oranges, cotton, wheat. Land--17% arable,
cultivable, or pasture.

Industry:  Types--steel, chemicals, petrochemicals, machinery, motor
vehicles, consumer durables, cement, lumber, shipbuilding.

Trade (1988): Exports--$33.8 billion.  Major markets--US 26%, Japan
7%, Netherlands 8%, FRG 4%, Italy 4%, Argentina 3%.
Imports--$14.7 billion.  Major suppliers--US 21%, FRG 10%, Japan
7%, Argentina 5%, France 4%.

Official exchange rate: Cr 72.3=US$1 (Aug. 1990; changes
frequently).

Foreign direct investment and reinvestment in Brazil (registered with
Central Bank as of June 1988):  $30.7 billion. Sources--US $8.7
billion (28%); FRG $4.8 billion (16%) Japan $2.9 billion (10%)
Switzerland $2.9 billion (9%), UK $1.9 billion (6%), Canada $1.4
billion (5%).

Fiscal year:  Calendar year.


Membership in International Organizations
UN and some of its specialized and related agencies, World Bank
and the International Monetary Fund; General Agreement on Tariffs
and Trade (GATT); Inter-American Development Bank (IDB);
Organization of American States (OAS), Rio Pact, Latin American
Integration Association (ALADI); International Sugar Organization
(ISO); International Cocoa Organization (ICCO); International Coffee
Organization; INTELSAT; Group of 77.


PEOPLE
With an estimated population of 150 million, Brazil is the most
populous country in Latin America and ranks sixth in the world.
Most of the people live in the south-central area, which includes the
industrial cities of Sao Paulo, Rio de Janeiro, and Belo Horizonte.
Urban growth has been rapid; by 1984 the urban sector included
more than two-thirds of the total population.  Increased urbanization
has aided economic development but, at the same time, has created
serious social and political problems in the major cities.

Four major groups make up the Brazilian population: indigenous
Indians of Tupi and Guarani language stock; the Portuguese, who
began colonizing in the 16th century; Africans brought to Brazil as
slaves; and various European and Asian immigrant groups that have
settled in Brazil since the mid-19th century. The Portuguese often
intermarried with the Indians; marriage with slaves was common.
Although the basic ethnic stock of Brazil was once Portuguese,
subsequent waves of immigration have contributed to a rich ethnic
and cultural heritage.


From 1875 until 1960, about 5 million Europeans emigrated to Brazil,
settling mainly in the four southern states of Sao Paulo, Parana,
Santa Catarina, and Rio Grande do Sul.  In order of numbers, after
the Portuguese, the immigrants have come from Italy, Germany,
Spain, Japan, Poland, and the Middle East.  The largest Japanese
community outside Japan is in Sao Paulo.  Despite class distinctions,
national identity is strong, and racial friction is a relatively new
phenomenon.

Indigenous full-blooded Indians, located mainly in the northern and
western border regions and in the upper Amazon Basin, constitute
less than 1% of the population.  Their numbers are rapidly declining
as contact with the outside world and commercial expansion into the
interior increase.  Brazilian government programs to establish
reservations and to provide other forms of assistance have been in
effect for years but are increasingly controversial.
Brazil is the only Portuguese-speaking nation in the Americas. About
90% of the population belongs to the Roman Catholic Church,
although many Brazilians adhere to Protestantism and spiritualism.

As its geography, population size, and ethnic diversity would imply,
Brazil's cultural profile and achievements are extensive, vibrant, and
constantly changing.  Popular culture predominates, with a thriving
popular music industry, relatively active cinema, and a highly
developed television empire, producing an enormous number of
soap operas (telenovelas) that have found a world market.  The
visual arts, especially painting, are lively, while literature and the
theatre, although important, play a less prominent role in this
fast-moving, media-oriented society.

Traditionally, Brazilian culture has developed around regional
subjects, with the country's northeast normally identified with national
themes, both nativist and Afro-Brazilian, while the urban centers of
Sao Paulo and Rio de Janeiro have demonstrated a tendency toward
a more international, and European-oriented expression.  With the
post-1964 push to a more integrated national culture, these
tendencies have diminished somewhat but remain central to
understanding the uniqueness of this vast nation.

HISTORY
Recent archeological discoveries suggest that Brazil may have been
inhabited as long ago as 40,000 years.  Additional research must be
undertaken before these hypotheses, which may push the history of
Western Hemisphere human occupation back by as many as 20,000
years, are universally accepted.  In addition, there is continuing
speculation that Brazil may have been visited by the 15th century
Portuguese  explorers who sailed widely in the South Atlantic, trading
with Africa and settling the Azores and Madeira Islands.

Brazil was formally claimed in 1500 by the Portuguese navigator
Pedro Cabral.  It was ruled from Lisbon as a colony until 1808 when
the Portuguese royal family, having fled from Napoleon's army,
established the seat of government first in Salvador and later in Rio
de Janeiro.  Brazil became a kingdom under Dom Joao VI, who
returned to Portugal in 1821, leaving his son, Dom Pedro I, as
regent. Dom Pedro I successfully declared Brazil's independence on
September 7, 1822, and became emperor. Dom Pedro II, ruled from
1831 to 1889, when a federal republic was established.

From 1889 to 1930, the government was a constitutional democracy
with a limited franchise. The presidency alternated between the
dominant states of Sao Paulo and Minas Gerais.  This period ended
with a military coup by Getulio Vargas, who remained as dictator until
1945.  From 1945 to 1961, Eurico Dutra, Vargas, Juscelino
Kubitschek, and Janio Quadros were the elected presidents.  When
Quadros resigned in 1961, he was succeeded by Vice President
Joao Goulart.


Goulart's years in office were marked by high inflation, economic
stagnation, and the increasing influence of radical political
philosophies.  The armed forces, alarmed by these developments,
staged a coup on March 31, 1964.  The coup leaders chose as
president Army Marshal Humberto Castello Branco, who was elected
by the National Congress on April 11, 1964.  Castello Branco was
followed by retired Army Marshal Arthur da Costa e Silva (1967-69),
Gen. Emilio Garrastazu Medici (1969-74), and retired Gen. Ernesto
Geisel (1974-79).  Geisel began the political liberalization process,
known as abertura  or "opening," which was carried further by his
successor, Gen. Joao Baptista de Oliveira Figueiredo (1979-85).
Figueiredo not only permitted the return of politicians exiled or
banned during the 1960s and early 1970s but also allowed them to
run for state and federal offices in 1982, including the first direct
elections for governor since 1966.

However, the electoral college, consisting of all members of
Congress and six delegates chosen from each state, continued to
choose the president. In January 1985, the electoral college picked
Tancredo Neves from the opposition Brazilian Democratic Movement
Party (PMDB). However, Tancredo Neves became ill in March and
died a month later. His vice president, the former Senator Jose
Sarney, who had been acting president since inauguration day,
became president upon Neves' death.

Brazil completed its transition to a popularly elected government in
1989, when Fernando Collor de Mello won 53% of the vote in the first
direct presidential elections in 29 years.

GOVERNMENT
Brazil is a federative republic with broad powers granted to the
federal government.  A Constituent Assembly drafted a new
constitution in late 1988.  At the national level, the constitution
establishes a presidential system with three "independent and
harmonious powers"--executive, legislative, and judicial.  It forbids
delegation of powers and provides for a series of checks and
balances.

The president is assisted by a vice president (elected with the
president), a presidentially appointed cabinet, and specialized
administrative and advisory bodies.

The bicameral National Congress consists of 81 Senators (three for
each state and the federal district) elected to 8-year terms, and 495
Deputies elected at large in each state to 4-year terms.  The
elections are based on proportional representation weighted in favor
of less populous states.  The next congressional elections are
scheduled for October 1990.

The apex of the judicial system is the Supreme Federal Tribunal.  Its
11 Justices, including the Chief Justice, are appointed by the
president to serve until age 70.
Brazil is divided administratively into 26 states and a federal district,
Brasilia.  The framework of state and local governments closely
parallels that of the federal government.  Governors, elected for
4-year terms, have more limited powers than do their counterparts
in the United States.  This is due to the highly centralized nature of
the Brazilian system. The limited taxing authority granted to states
and municipalities--the only territorial subdivisions of the
states--further weakens their power.
The federal district, which moved from Rio de Janeiro to Brasilia in
April 1960, is governed by a governor and vice governor, both of
whom will be chosen in direct elections in 1990.


Principal Government Officials
President--Fernando COLLOR de Mello
Vice President--Itamar FRANCO
Foreign Affairs--Jose Francisco REZEK
Ambassador to the United States--Marcilio M. Moreira

Ambassador to the United Nations--Paulo Nogueira
Brazil maintains an embassy in the United States at 3006
Massachusetts Avenue NW., Washington, DC 20008   (tel.
202-745-2700).
Brazil maintains consulates general in New Orleans, New York,
Chicago, and Los Angeles, and consulates in Miami, Houston,
Dallas, San Francisco, and Atlanta.


POLITICAL CONDITIONS
Following the 1964 military coup, the 13 existing political parties were
abolished, and two political organizations, the pro-government
National Renewal Alliance (ARENA) and the opposition Brazilian
Democratic Movement (MDB), were formed. In 1979, under a
government-sponsored bill approved by the congress, this two-party
system was abolished, and a multiparty system was allowed to
reemerge. In 1989, more than 20 political parties participated in the
campaign. The major parties are:

PMDB--Brazilian Democratic Movement Party (Partido do Movimento
Democratico Brasileiro). The country's largest party suffered
defections in the 1989 campaign. Known as the MDB from 1966 to
1979, under military-dominated governments, the PMDB includes
politicians ranging from conservative to left of center.  Most state
governors and almost all PMDB cabinet members belong to the
conservative wing of the party. PMDB popular support is strongest
in urban areas.

PFL--Liberal Front Party (Partido da Frente Liberal). The country's
second largest party;  defeated in the 1989 presidential campaign,
it is now aligned with President Fernando Collor de Mello. The PFL
espouses views similar to those of the PDS, but looks to different
political leaders and maintains fewer ties to the military establishment.
The PFL is strongest in medium-sized towns and the more
conservative cities, especially in the northeast. It was founded in
1985 by Democratic Social Party (PDS) dissidents.

PSDB--Brazilian Social Democracy Party (Partido da Social
Democracia Brasileira). Led by Senator Mario Covas, the PSDB was
founded in 1988 and includes prominent politicians who quit the
PMDB, PFL, and PDT over political differences with national or state
leaders of those parties.  The PSDB advocates adoption of a
parliamentary system of government in Brazil.

PDS--Democratic Social Party (Partido Democratico Social). Founded
in 1982, the PDS is the modern version of the ARENA party, which
represented GOB interests during 21 years of military-dominated
governments (1964-85). It advocates using foreign capital for
economic development. Its popular support is greatest in certain
rural strongholds and among upper/middle class in urban areas.
PDT--Democratic Workers Party (Partido Democratico Trabalhista).
The PDT is a populist party led by Leonel Brizola. It is strongest in
Rio de Janeiro and Rio Grande do Sul, where Brizola was governor.
Much of its support comes from slum dwellers and the rural poor.
Founded in 1980 by former members of the Brazilian Labor Party
(PTB).

PTB--Brazilian Labor Party (Partido Trabalhista Brasileiro).

The PTB, founded in 1945, is a populist party without a major
national leader.  It strongly supports organized labor  but advocates
center-right positions on many economic issues.  PTB was the party
of Getulio Vargas, one of Brazil's most popular presidents. For
several decades, beginning in 1945, the PTB exercised political
control over Brazil's labor sector. PTB support currently is strongest
among urban working class, professionals, and small shopkeepers,
particularly in Sao Paulo and Parana states.

PT--Workers' Party (Partido dos Trabalhadores). Formed in 1978, the
PT is Brazil's "European-style" leftist party, with a clearly defined
ideology and program, strict party discipline, a hierarchical structure,
and internal party democracy.  It is strongest among intellectuals,
organized labor, and the economically disadvantaged. It draws
considerable support from the liberation-theology wing of the
Catholic Church and from the labor confederation, the sole Workers
Central (CUT). In 1988, it won mayoralities of important industrial
cities, including that of Luiza Erundina in Sao Paulo and Olivio Dutra
in Porto Alegre.  In 1989, PT presidential candidate Luiz Inacio Lula
da Silva lost to Collor in the second-round run-off election.

PL--Liberal Party (Partido Liberal). The PL is a center-right party that
is popular among small businessmen and has growing strength in
Sao Paulo and Rio de Janeiro.  Presidential candidate Guilherme Afif
Domingos has given the party greater name recognition.

PRN--National Reconstruction Party (Partido da Reconstrucao
Nacional). The PRN was created by Collor in 1989  and served as
the vehicle for his 1989 presidential campaign.  Collor and his
advisers generally advocate free-market solutions to Brazil's
economic problems. His electoral support was greatest in rural areas
and in small towns across the country.


PCB--Brazilian Communist Party (Partido Comunista Brasileiro).
Founded in 1922, the PCB is ideologically communist but has
cooperated with mayors and governors of more moderate parties. It
supported the Sarney administration.  It maintains ties with West
European communist parties and identifies with Soviet President
Gorbachev's reforms.

PC do B--Communist Party of Brazil (Partido Communista do Brasil).
The PC do B generally advocates more "revolutionary" positions than
the PCB but has supported noncommunist candidates. Its electoral
support is based within the universities. Former PCB members
founded the party in 1961. In the presidential elections, the PC do B
was one of three parties in the Brazilian Popular Front (PF) coalition
formed to support the PT candidacy of Lula.

PSB--Brazilian Socialist Party (Partido Socialista Brasileiro). Founded
in 1946, the PSB, a leftist party enjoying little popular support, was
the third partner in Lula's PF.

Brazil also boasts several dozen small parties, some of which (e.g.,
National Mobilization Party--PMN, Christian Democratic Party--PDC)
are significant in specific regions or states.


ECONOMY
Brazil is a country rich in resources in resources and natural
advantages. To date, however, its economic performance has lagged
behind its potential. Economically, it is a country of contrasts ranging
from sophisticated economic centers around Sao Paolo to relatively
undeveloped trading outposts on the Amazon.  Industrial
development has been concentrated in the southeastern states of
Rio de Janeiro, Sao Paulo, Parana, and Rio Grande do Sul but is
now expanding to include the northeast and center west.

In 1988, Brazil's gross domestic product (GDP) totaled $352 billion,
with an estimated per capita GDP of $2,434. During the 1950s, GDP
rose at an annual rate of more than 6%. It slowed from 1963 to 1965
but averaged above 11% annually during the 1968-73 "economic
miracle." Growth slowed between 1974-80 and from 1981 to 1983
was either negative or nominal.  In 1984, the economy began to
improve again, and during 1985-86, GDP grew more than 8% per
year. After slowing in 1987, growth dropped in 1988 to a negative
-0.3% but climbed again in 1989 to 3%-4%.


Agriculture, Industry, and Natural Resources
About one-half of Brazil is covered by forests.  The largest rainforest
in the world is located in the Amazon Basin and is so impressive in
character and extent that the entire Amazon region is identified with
it.  Recent migrations into the Amazon region and controversial
large-scale burning of forest areas placed the international spotlight
on Brazil.  The government has since reduced incentives for such
activity and has begun to implement an ambitious environmental
plan.

Eastern Brazil has tropical and semideciduous forests and soil of
limited agricultural value; the nutrients in the small amount of humus
usually are exhausted after only a few years of farming.  The
softwood forests of the southern highlands still provide a substantial
portion of the construction timber used in Brazil.  However, fears that
these forests are being cut down so fast that they are in danger of
extinction within the next few decades have led the industry to move
north.  Major timber supplies for domestic and export markets now
come from the tropical hardwoods of the Amazon.  The thorn forests
of the northeastern interior contain dry, cactus-infested,
drought-resistant vegetation, its sparseness due as much to
overgrazing and overcultivation as to the unreliability of rainfall.

In Central Brazil, the states of Mato Grosso, Mato Grosso do Sul,
Goias, and parts of Minas Gerais and Sao Paulo contain substantial
areas of grassland, with only scattered trees.  Unlike the plains of
North America, the Brazilian grasslands are less fertile, and large
areas of these grasslands are best suited to pastures.

The agricultural sector employs 35% of Brazil's population and
accounts for about 12% of its GDP and almost 40% of the country's
exports. Except for wheat, Brazil is largely self-sufficient in food. It is
the world's leading exporter of coffee and orange juice concentrate;
the second largest exporter of cocoa and soybeans; and a major
exporter of sugar, meat, and cotton. During the past decade, in an
effort to expand its agricultural exports, Brazil began opening new
regions to cultivation. The most important of these are devoted to
soybean production in Mato Grosso do Sul, Rio Grande do Sul, Sao
Paulo, Parana and, more recently, Minas Gerais and Goias. Brazil
also has expanded cultivation of sugarcane, the raw material used
to produce the ethyl alcohol fuel that powers more than half of the
nation's cars.
Brazil's power, transportation, and communications systems
generally have kept pace with development, but, in recent years,
facilities in some areas have not met demand due to lack of
investment and maintenance funds.  The country has a large and
increasingly sophisticated industrial base, producing basic industrial
products such as steel, chemicals, and petrochemicals and finished
consumer goods and aircraft. A computer industry is also emerging.
Within the past decade, industry has been the greatest contributor
to economic growth.  Today, it accounts for nearly 35% of GDP and
60% of exports.

Brazil is one of the world's leading producers of hydroelectric power,
with a potential of 106,500 megawatts.  Existing hydroelectric plants
provide 90% of the nation's electricity.  Two large hydroelectric
projects, the 12,600-megawatt Itaipu Dam on the Parana River -- the
world's largest dam -- and the Tucurui Dam in Para in northeast
Brazil are in operation.

Proven mineral resources are extensive, and additional exploration
is expanding the resource base. Large iron and manganese reserves
provide important sources of industrial raw materials and export
earnings.  Deposits of nickel, tin, chromite, bauxite, beryllium,
copper, lead, tungsten, zinc, and gold, as well as lesser known
minerals, are exploited. Oil exploration is less urgent now, because
of Brazil's reduced dependence on oil and to lower world prices.
High-quality coal, especially of the coking grade required in the steel
industry, is in short supply. The government is beginning to
implement coal extraction and gasification projects to tap Brazil's
ample deposits of low-grade coal in the south.

Brazil's first commercial nuclear reactor, Angra I, located near Rio de
Janeiro, began operating in early 1982.  Site preparations began the
same year for Angra II and III. With a combined capacity of 1,245
megawatts, these are the first of eight nuclear plants envisioned
under the 1975 nuclear accord between the Federal Republic of
Germany and Brazil.  However, continued troubles with Angra I and
scarce funds have slowed construction of nuclear plants, limiting
expansion for the foreseeable future to the two reactors already
under construction. Brazil also is engaged in research to master the
nuclear fuel cycle.


The Brazilian government has undertaken an ambitious program to
reduce dependence on imported oil. Imports previously accounted
for more than 70% of the country's oil needs but now account for
only 50%. In addition to developing hydroelectric, nuclear, and coal
resources, Brazil has become a world leader in the development of
alcohol fuel derived from sugarcane.  Brazilian automotive gasoline
is a mixture containing up to 22% ethyl alcohol. Its auto
manufacturers began large-scale production of 100%
alcohol-powered cars in 1979, and today more than 1.5 million are
on the road.  Alcohol production has not kept pace, however,
leading to alcohol shortages in 1989-90.   The Collor government cut
alcohol subsidies, and car makers have regarded to increase
production of gasoline-powered automobiles.

Economic Strategy
Following the 1964 coup, the Brazilian government focused on two
major economic goals, high growth rates and control of inflation.
In the 1970s, escalating oil prices, governmental indebtedness, and
high interest rates brought the Brazilian economy to a virtual
standstill, forcing reduced government expenditures and subsidies
and income tax increases.  Nevertheless, budget deficits have
persisted. The combined public sector deficit in 1989 was at least 7%
of GDP.

Taking office in 1985, the Sarney administration brought inflation to
a halt by freezing all prices and ending indexation of wages and
other facets of the economy. Real wage increases led to a consumer
spending boom which created shortages and tight profit margins.
This plan collapsed in November 1986, and inflation rose to record
heights--1,700%--in 1989. In addition, high levels of imports so
reduced foreign exchange reserves that interest payments on foreign
loans were suspended in February 1987. Foreign indebtedness rose
to $112 billion (about $18 billion is held by US commercial banks),
the largest of any developing country. Debt service claimed most of
Brazil's balance of payments, and periodically the federal government
has suspended some forms of debt service, including a de facto
moratorium on payments to commercial banks in September 1989.

In the spring of 1990, President Collor introduced measures to
stabilize and liberalize the economy. The initial phase of the program,
which focused on drastically reducing liquidity and cutting inflation,
appeared to be achieving its objectives. Inflation slowed nearly to
zero within the first month, rising gradually to about 10% monthly by
August.  Although fiscal and monetary performance to date have
been convincing, it is still too early to guage whether Brasilia will be
successful over the long-term in eliminating government red ink.
Collor has put into place the administrative machinery to implement
an ambitious privatization program and has opened Brazil's markets
to foreign goods.

Foreign direct investment represents a relatively small but important
part of Brazil's capital base. The share of foreign direct investment
and reinvestment registered with the central investments totaled $8.7
billion, largely in manufacturing and finance. The constitution restricts
the entry of new foreign investors in the financial services area,
although US and other foreign institutions established before the
prohibition continue to have a prominent role. The constitution also
contains provisions that restrict investment in petroleum and minerals
exploration, health care, chemicals, biotechnology, and new
materials.  The congress has not yet completed legislation on foreign
investment.


Trade and Investment
Brazil's industrial development strategy through the 1980's was
based on a policy that combined import substitution, foreign
investment, and government participation in and regulation of the
economy.  This policy contributed to significant growth and, in the
late 1980's, to large trade surpluses.  The country recorded a $19
billion surplus in 1988 and $16 billion in 1989--a remarkable
turnaround from the deficits experienced at the beginning of the
decade.

FOREIGN RELATIONS
Traditionally, Brazil has been a leader in the inter-American
community and has played an important role in collective security
efforts as well as in economic cooperation in the Western
Hemisphere.  Brazil aligned with the allies in both World Wars and,
during World War II, its expeditionary force in Italy played a key role
in the allied victory at Monte Castello.  It is a party to the
Inter-American Treaty of Reciprocal Assistance (Rio treaty) and the
Organization of American States (OAS).  In recent years, Brazil has
given high priority to expanding relations with its South American
neighbors and is a founding member of the Amazon Pact and the
Latin American Integration Association (ALADI), the successor to the
Latin American Free Trade Association (LAFTA).

Brazil is a charter member of the United Nations and participates in
many of its specialized agencies.  It has contributed troops to UN
peacekeeping efforts in the Middle East, the former Belgian Congo,
and Cyprus.


As Brazil's domestic economy has grown and diversified, the country
has become increasingly involved in international politics and
economics. The United States, Western Europe, and Japan are
primary markets for Brazilian exports and sources of foreign lending
and investment.  Brazil's dependence on imported petroleum has
resulted in more intensive political and economic ties with Middle
Eastern countries.  In the 1970s, Brazil expanded its relations with
black African countries.  In 1986, it introduced a proposal at the UN
General Assembly to establish a Zone of Peace and Cooperation in
the South Atlantic.  As an indication of Brazil's broader international
role, trade with other developing countries increased from 9% of the
total in the 1970s to nearly 30% in 1983.

The Brazilian Government has diplomatic relations with the USSR,
China, all of the Eastern and Central European countries, and Cuba
but not with Vietnam, Cambodia, or North Korea.

US-BRAZILIAN RELATIONS
The United States was the first country to recognize Brazil's
independence in 1822. Brazil's 19th-century leader, Emperor Dom
Pedro II, admired Abraham Lincoln and visited the United States
during the 1876 centennial. President Eisenhower was given a hero's
welcome when he visited Brazil in 1960. Presidents Roosevelt and
Truman made earlier visits; President Carter visited in 1978 and
President Reagan in 1982. President Sarney visited the United States
in 1986.

In the 1950s and 1960s, Brazil received about $2.4 billion in US
economic assistance--$1.4 billion under the auspices of the US
Agency for International Development (AID) and the remainder under
PL 480 (Food for Peace) and Peace Corps programs.  After 1972,
US programs stressed training Brazilian in technology and physical
and social sciences (in the United States), especially at the graduate
level.  Some 14,000 persons were trained by AID during this period,
22,000 from all US Government sources.  In view of Brazil's
impressive economic development and its increased ability to obtain
loans and technical assistance from private and multilateral sources,
US assistance programs were phased out in the 1970s, major AID
activities in Brazil ended in 1979, and the Peace Corps program was
ended in 1980.  Currently, AID maintains a small advanced
developing country program that emphasizes cooperation in science
and technology and family planning and responds to endemic
disease, emergencies, and natural disasters.


The United States is Brazil's most important commercial partner and
largest investor.  The US share of Brazilian trade averages 22%, and
two-way trade amounted to $14.3 billion in 1988. The growing
diversification of U.S.-Brazil trade has led to trade disputes.  Brazilian
trade practices, including prohibition of some imports and difficult
import licensing procedures, market reserve requirements on
computer products, and the lack of intellectual property protection
(especially patents in certain areas)--led to frictions with the United
States and other major trading partners. These culminated in 1988
and 1989, when the United States named Brazil in a number of
formal trade action and took retaliatory steps against some Brazilian
imports under US trade law. The US objective was to stimulate
negotiations as well as action by the Government of Brazil to reduce
the trade barriers in question. For its part, Brazil was critical of the
United States for singling it out and of high US tariffs on products of
interest to Brazil such as steel and orange juice. Efforts by both sides
during the middle and latter part of 1989 began to reduce the
tensions arising from these issues.

The agreements between Brazil and the United States include a
treaty of peace and friendship; an extradition treaty; a joint
participation agreement on communication satellites; and scientific
cooperation, civil aviation, and maritime agreements. Brazil and the
United States exchange professors under Fulbright and other
academic programs and carry out university cooperation projects.


Principal US Officials
Ambassador--Richard H. Melton
Deputy Chief of Mission--Robert E. Service
Economic Counselor--M. Gordon Jones
Commercial Counselor--Kevin C. Brennan
Political Counselor--John F. Keane
Public Affairs Counselor (USIS)--Robert Jordan
Defense Attache--BG Joseph Stringham, US Army
The US Embassy in Brazil is located at Lote 3, Avenida das Nacoes,
Brasilia, DF (tel. [phone], telex 061-1091).  US Consulates
General are in Rio de Janeiro and Sao Paulo.  Consulates are at
Porto Alegre and Recife.   Branch offices of the US Information
Service (USIS) and of the US and Foreign Commercial Service are
located in all of these cities and Belo Horizonte.  Consular agents are
in Manaus, Sao Luis, Belem, and Salvador da Bahia.


Travel Notes
Entry requirements:  Visas are required of US citizens. No
inoculations are required for entry.  Within Brazil, travelers may be
required to present a yellow fever certificate when transiting between
certain cities.


Climate and clothing:  In most parts of the country, days range from
warm to hot, except during the rainy period from November through
February.  The extreme south of Brazil does get cold during the
winter (June-August).  Wear spring or summer clothes.

Health:  Sanitation facilities in many places are being expanded.
Carefully prepared and thoroughly cooked foods are safe for
consumption.  Tapwater is not recommended.  Yellow fever, rabies,
gamma globulin, typhoid, and polio immunizations are
recommended.

Telecommunications:  Telegraph and long distance telephone
services are good.  Brasilia is two time zones ahead of eastern
standard time; however, time differences vary, due to daylight
savings time, in both Brazil and the United States.


Transportation:  Direct air service is available.  Rio is the normal point
of entry, but Sao Paulo, Manaus, Recife, and Belem also have
international flights.  Domestic flights are expensive.  Trains are
limited.  Inter-city buses run frequently and are inexpensive but often
crowded.  Metered taxis with red license plates have relatively low
rates after 11 pm and on weekends.  Tipping is the same as in the
US.  The highway system in southeastern Brazil and as far north as
Salvador is adequate, but road maintenance is sometimes
incomplete.

Security:  Street crime is common in Brazil's larger cities and tourists
should take precautions such as not wearing jewelry, flashing
money, or otherwise calling attention to expensive personal
belongings.  For more information, check the Department of State's
Tips for Travelers.

Available from the Superintendent of Documents, US Government
Printing Office, Washington, DC  20402:
American University.  Area Handbook for Brazil. 1983.

US Department of Commerce.  Overseas Business Reports. Foreign
Economic Trends.

       Foreign Labor Trends.

US Department of State.  Key Officers of Foreign Service Posts
(Guide for Business Representatives).  Revised triannually.


Published by the United States Department of State --  Bureau of
Public Affairs  -- Office of  Public Communication --  Editorial Division
--  Washington, DC -- October 1990,  Editor:  Juanita Adams
Department of State Publication 7756 Background Notes Series  --
This material is in the public domain and may  be reprinted without
permission; citation of this source is appreciated.

For sale by the Superintendent of Documents, US Government
Printing Office, Washington, DC  20402.