Brazil's first circle of international relations is with its Latin American neighbors. Being the largest nation in the region makes this process somewhat delicate. Most border issues were settled in the late nineteenth and early twentieth centuries, but some questions concerning the borders with Bolivia, Colombia, Paraguay, and Venezuela remain. In 1995 Brazilian farmers and forest gatherers penetrated Bolivia's Pando Department, in an action reminiscent of the invasion of Acre by Brazilian rubber tappers in the 1890s. Brazil regularly extends export credits and university scholarships to its Latin American neighbors. A certain quota of Latin Americans are admitted to the Rio Branco Institute and the armed forces staff schools.
An active participant in regional security activities, Brazil hosted the conference that established the Inter-American Treaty of Reciprocal Assistance (Rio Treaty) in 1947. In addition, Brazil was a founding member of the OAS in 1948 and has participated in several OAS peacekeeping endeavors. Most notable was Brazil's participation in the Inter-American Peace Force (Fuerzas Interamericanas de Paz--FIP) in the Dominican Republic in 1965. In the 1980s, Brazil was an active participant in the Contadora Support Group (see Glossary), which sought a permanent peace in Central America. In June 1995, eighty-seven Brazilians were attached to peacekeeping operations in the Americas--thirty-seven in El Salvador, thirty-two in Nicaragua, ten on the Ecuador/Peru border, six in Honduras, and two in Guatemala.
The Treaty of Asunción--signed in 1991 by Brazil, Argentina, Uruguay, and Paraguay--was the culmination of a rapprochement between Brazil and Argentina after 160 years of regional rivalry (see Trade Patterns and Regional Economic Integration, ch. 3). It also incorporated Uruguay and Paraguay into Mercosul, and Bolivia and Chile joined Mercosul in 1996.
During the period from the 1970s to 1995, the relative importance of the European Economic Community (EEC; now the European Union--EU) as a trading partner with Brazil was reduced, but increased in the mid-1990s. By 1995 German investments in Brazil were second only to the United States, but Britain, Italy, and France also have important investments, mostly in industrial manufacturing, heavy equipment and automobiles, and consumer goods. In mid-1995 negotiations advanced toward establishing a free-trade association between the EU and Mercosul. In December 1995, the EU signed an important free-trade protocol with Mercosul, the first ever between two regional trading blocs. Since then Brazil has adroitly used the EU card to force a slowdown of the United States pressure to "fast track" the Free Trade Area of the Americas (FTAA) expansion of the North American Free Trade Agreement (NAFTA).
Relations with the EU are economically important, but even more so from a North-South political perspective. Brazil and its Mercosul partners want to strengthen their trading bloc to include not only Chile but also Bolivia, Colombia, Ecuador, Peru, and Venezuela before 2005, to be able to negotiate as a bloc with NAFTA, as opposed to bilateral negotiations as favored by the administration of President William Jefferson Clinton. The United States view is that 2005 is the date for the FTAA to be "fully operational," whereas Brazil and its Mercosul partners view the year 2005 as a "starting point" for the FTAA process.
Data as of April 1997