UPDATE 1-Brazil’s trade chief sees no U.S. tax treaty in short term

Feb 12 (Reuters) – Brazilian Trade Minister Armando Monteiro said on Thursday he does not see much chance of agreeing on a tax treaty with the United States in the short term.

In an interview during a visit to Washington, his first overseas trip as minister, Monteiro said double taxation, which was discussed during a meeting with U.S. Trade Representative Michael Froman, was a complicated issue.

A tax treaty would eliminate double taxation of income, something which currently acts as a disincentive for U.S. firms interested in setting up or investing in Brazil.

“I don’t see much possibility of progressing further with this question in the short term,” he said, after talks with U.S. officials which focused on trade facilitation and regulatory convergence between the two countries.

Monteiro did not hold out much hope of resolving the issue during a presidential visit, noting that there was no date set for President Dilma Rousseff to visit the United States.

But he said there could be progress on other issues, for example exports of Brazilian beef to the United States, in the lead-up to such a visit.

“The conditions are there and present to move towards an agreement,” Monteiro said.

He dismissed the prospect that a corruption scandal at flagship oil company Petrobras might put U.S. firms off investing in Latin America’s largest economy, saying there were plenty of opportunities, particularly in infrastructure.

Petrobras is ensnared in a huge graft and bribery scheme, with former executives accused of conspiring with construction and engineering firms to overcharge for projects and then kick money back to political parties, including Rousseff’s own Workers Party.

The government has vowed to rein in government spending and Monteiro said government export programs could be cut back, although they would not be scrapped.

Monteiro also said he would seek to renew Brazil’s auto quota agreement with Mexico, albeit with some changes.

“Our position is that Brazil must seek to renew the agreement while seeking adjustments in that agreement,” he said.

He would not rule out decreasing the quotas under that agreement, but said they were unlikely to be increased.

“In my opinion I don’t think there is a chance” of an increase, he said. (Reporting by Krista Hughes; Editing by Sandra Maler and Andrew Hay)