SAO PAULO, Brazil -- While visiting families who've staked out cramped rooms as homes in an abandoned office building, grassroots organizer Luiz "Gege" Gonzaga da Silva explains why he's campaigning for Brazil to exit free-trade talks with the United States.

"If the whole country is pushed down, the one on the bottom gets pushed down further," said the housing activist.

In a conference room overlooking Manhattan-like canyons of skyscrapers, Sao Paulo Federation of Industries manager Romao Luiz Parolin braces for tough U.S. rivals under free-trade, touting new services to help Brazilian companies.

"They're an elephant compared to us," Parolin said of the U.S. economy, 10 times the size of Brazil's and with almost 20 times the trade.

When trade ministers from 34 countries gather next week in Miami to debate details for free trade across the Americas, talks will revolve around the region's two largest countries -- the United States and Brazil.

But Brazilians from the slums to the boardrooms share similar concerns: How can their nation, an emerging middleweight, find ways to compete and negotiate with the world's economic superpower on a level playing field?

Brazil has substantial clout. It ranks as the world's fifth-largest nation in land and people, among the top 10 economies worldwide, and it ranks as a powerhouse in soy, citrus, steel, small jets and other products.

But that weight still pales against U.S. might.

Farming powerhouse

The challenge for Brasilia is persuading Washington to craft a "balanced" Free Trade Area of the Americas pact, or FTAA, that reflects more than the U.S. agenda. The pact would slash import duties, loosen investment rules and cut other trade barriers among all countries in the Americas, except Cuba, by 2005.

Brazil has been forceful in setting its own priorities, playing tit-for-tat when Washington rejects its requests.

U.S.-Brazil tensions over FTAA now run so high that many analysts expect only a watered-down pact. Meetings between their top trade officials produced no new breakthroughs in Washington this weekend.

"We're not going to run away from the negotiating table," Brazil's President Luiz Inancio Lula da Silva told reporters in late October. "The question isn't `yes' or `no' to FTAA, but to define which FTAA interests us."

Brazil's key interest is agriculture. As a farming powerhouse, it sees the pact as a way to sell more crops to the United States, the world's largest consumer market. Those sales are limited today by hefty U.S. government farm supports, including $180 billion over 10 years in the latest farm bill. Brazil wants those subsidies cut.

But Washington claims subsidies must be discussed in worldwide trade talks, not in FTAA negotiations, since Europe and Japan also heavily subsidize their crops. Global trade talks broke down in Mexico over the issue.

Brazilians worry they'll be sold those subsidized crops, as Mexico has been under North American Free Trade Agreement, NAFTA. Those U.S. grain sales have been blamed for undercutting Mexican farmers and forcing them off their land.

"I watch TV, and I see what happened in Mexico," said slum dweller Rosemeire Ferreira Leite, 36, who shares a single room with her husband and three children, a sheet of clear plastic serving as a window pane. "I see how Mexican farmers are protesting, how food prices were up. I don't want that for Brazil."

Call for `clearer rules'

Separately, Brazil wants assurances that if it boosts sales of products, like steel, to the United States, it won't be unjustly penalized. Brazilians say the U.S. system that now handles complaints against foreign companies for "dumping" goods at unfair prices tends to favor U.S. producers,

"The United States adopts many arbitrary ways to define things in dumping cases," such as dismissing information supplied by Brazilian companies as irrelevant, said Sandra Rios, an economist at the Brazil's National Industry Council. "We want to have clearer rules."

But Washington rejects that request too, leaving it for world trade talks and outside FTAA.

On imports, Brazil also wants to protect some of its more sheltered industries from a potential flood of goods, services and investment from larger, more efficient and better financed U.S. companies.

Unlike other Latin American nations with small domestic markets, Brazil developed a significant manufacturing base -- from consumer electronics to cars to software -- by offering incentives for companies to produce for the local market, now 182 million residents. Many of those firms are not ready to compete unshielded, nor can they swiftly adapt to start selling abroad.

"We still have a culture to supply the internal market, not to export," said Brazil-born Jair Almeida, president of Miami-based PHN Group, which specializes in trade with Brazil.

`Don't dominate us'

Yet negotiating with a superpower remains tough.

Playing divide-and-conquer, Washington has started to forge separate free-trade accords with some Latin nations. That means that rivals from other countries might get duty-free access to the United States, while Brazil still pays taxes.

"If we don't participate in this process, we will lose preferences to other countries," said economist Rios.

The Bush administration's "with-us or against-us" style also extends to trade talks, with U.S. officials at tense moments calling Brazil a "won't do" nation and suggesting it trade with Antarctica.

"Woo us, don't dominate us," said Brazilian lawyer Paulo Miranda with Akerman Senterfitt law firm in Miami.

Plus, Brazil lacks other pressing issues with Washington -- like Mexico has on immigration or Colombia on drugs -- that could command U.S. attention and wring out more concessions.

To counter and boost its clout, Brazil is looking beyond the Americas too, seeking a free-trade accord with Europe and deals with other nations.

Within the FTAA, it's also teaming up with neighbors including Argentina to push its agenda.

Plus, it's suggested tit-for-tat that certain U.S. requests be taken out of FTAA talks and moved to global talks, including action to open its government bids to more U.S. firms.

Still, with the odds so uneven, some labor and grassroots groups say Brazil should pull out.

In the fall of 2002, about 150,000 volunteers collected 10 million "votes" against FTAA. This year, they submitted petitions with 2 million signatures to Brazil's Congress seeking a referendum on whether to proceed with the FTAA.

Strong vs. weak

The campaign organizers gathered recently in an austere Catholic community center in Sao Paulo to plan new strategies against FTAA, including rallies to coincide with talks in Miami next week. The opponents see little hope for balance in free trade.

"The free market by itself has never closed gaps. Instead it increases the strength of force of the strong and reduces the strength of the weak, " said Jesuit priest Bernardo Lestienne, 57, a Frenchman living 15 years in Brazil who runs a cultural center in Brasilia. "There's no equality in this relationship with the United States."

Instead, Lestienne suggested a different model for linking markets in the Americas along European lines, with richer countries giving massive funds directly to poorer ones to help bring fellow members up to more equal levels.

All the talk means little for now, however, to many in the slums of a nation with the worst income distribution in the Americas.

"Free trade in 2005?" said Daniela Ferreira da Silva, a 22-year-old mother of three who never finished junior high and cleans homes when she can find jobs. "I need work now."

Copyright 2003, Sun-Sentinel Co.

###