As the second largest economy in Latin America, Brazil plays a major role in shaping political and commercial relations between the region and the rest of the world. Historically characterized by an aggressive foreign policy approach (Brazil fought alongside the United States in World War II, 1939–45), Lula's Brazil is likely to exercise an even more aggressive role in Latin American politics. Identified with other left-wing presidents in the region, Lula has already made gestures to Cuba's Fidel Castro and Venezuela's Hugo Chávez. Because both Castro and Chávez are foes of the U.S. government, many U.S. experts have warned about a left-wing turn in Latin American politics. But unlike Castro and Chávez, Lula has shown signs that he is serious about building consensus and promoting understanding on all fronts. Lula has sent strong signals to the United States that his government wants to move forward on the negotiations for the Free Trade Agreement of the Americas scheduled for 2005. Brazil exports totaled more than US $70 billion in 2002, the second-largest exporter in Latin America. Brazil's diversified export portfolio has allowed it to enter markets as diverse as the United States, Japan, Germany, Italy, Netherlands, and the rest of Latin America (especially Argentina). Lula will seek to improve Brazilian access to world markets.
Lula is expected to lead a worldwide drive against hunger and poverty. Legitimized by his lifelong involvement in labor unions and his humble origins, Lula has already captured the attention of world leaders and international organizations. His first foreign policy initiative was announced a few weeks after taking office, during Lula's first trip to Europe. Lula called for the creation of an international fund to combat hunger. During his four-year term, the war against hunger will be Lula's main international concern.
Brazil's relationship with the United States has historically been strong, but the worldwide economic downturn in late 2001 cooled even the warmest of international relations. At the World Trade Organization (WTO), Brazil was engaged in a dispute with the United States over a Brazilian law affecting the pricing of U.S.-patented AIDS drugs sold in Brazil; under the threat that generic drugs would replace their patented ones, U.S. drug manufacturer Merck agreed to reduce prices for AIDS drugs in Brazil. The Brazilian government also objected strongly to new tariffs on steel imposed by the United States. But the main source of potential conflict with the United States will emerge from Lula's friendly relations with Cuba's Castro, Venezuela's Chávez, and the PT's links with many leftist and anti-U.S. groups in Latin America. Lula must maintain the delicate balance between his need to foster positive international relations and to remain true to his ideals forged in the labor movement.