Brazil Leader Asks U.S. to Focus on Trade, Credit

By JOHN LYONS and DAVID LUHNOW
Wall Street Journal
MARCH 17, 2009
NEW YORK -- Brazilian President Luiz Inácio Lula da Silva, visiting the U.S. this week, urged world leaders to revive moribund global trade talks to cushion the world's poor against the economic crisis.
Mr. da Silva, who met with President Barack Obama on Saturday, said he left the meeting optimistic about trade talks, noting that Mr. Obama brought up the subject during their conversation. Meanwhile, top Brazilian officials shrugged off a darkening economic outlook: U.S. investment bank Morgan Stanley lowered its forecast for Brazil's economy Monday, saying it will contract by 4.5% in 2009.
"There will be no recession this year," Dilma Rousseff, Mr. da Silva's chief of staff, said at a conference on Brazil sponsored by The Wall Street Journal.
The left-leaning Mr. da Silva, a former union leader, has become an unlikely ally of more open trade, which he says can help stimulate growth in developing nations even as the U.S., Europe and Japan fall into recession. The World Trade Organization's Doha Round of negotiations collapsed last year and Mr. da Silva noted the talks still face huge obstacles, including resistance from U.S. unions and Indian manufacturers. "We came very close last time," Mr. da Silva said in a meeting with Wall Street Journal editors.
While the U.S. and Europe tussle over banking regulation and economic stimulus, Brazil and other emerging markets are focused on trade and how the crisis is affecting credit for developing economies. Export financing has dried up and even the best companies in countries such as Brazil are struggling to get loans.
Once synonymous with financial meltdowns, Brazil now is trying to help the world solve a crisis that began in the U.S. Brazilian officials privately joke that U.S. banks that once lectured Brazil on fiscal prudence now risk collapse. Mr. da Silva warned that the downturn threatened to hurt an emerging middle class in developing nations, a recipe for social unrest. "The big revolts don't come from the hungry," Mr. da Silva said. "They come from the middle class, which has learned to live well, and doesn't want to lose it."