Brazil plans to offer tariff-free wheat quota to the US

Brazil is considering offering a 750,000 ton per annum tariff free wheat quota to the United States in exchange for other trade concessions from the North American country, according to Reuters. Brazil is hoping to see the US make progress towards lifting its ban on fresh Brazilian beef as well as seeking access for its exports of limes that are facing phytosanitary certification issues.

The proposed tariff free wheat quota is equivalent to 10% of Brazil’s total wheat imports. Two decades ago Brazil committed to importing 750,000 tons of wheat a year free of tariffs during a WTO meeting but the commitment was never followed through. Brazil imports most of its wheat tariff free from Argentina as well as some from Uruguay and Paraguay through the Mercosur trade agreement. Imports from the rest of the world pay 10% in duties. The following DataLiner graph shows the country’s top wheat import origins:

Brazilian delegates, including President Bolsonaro, are in the US this week to discuss bilateral trade, among other issues. According to Reuters, if the quota was introduced, US wheat sales could increase between US$75m and US$120m a year.

The new head of Brazil’s powerful sugarcane industry group, Unica, is hoping the Brazilian government will seek a tariff-free sugar quota agreement from the United States during Bolsonaro’s US visit this week, similar to the duty-free ethanol quota Brazil offers the U.S.

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