Brazil sees progress in U.S. tariff talks but keeps ethanol off agenda

Brazil said the United States has shown willingness to expand bilateral cooperation against transnational crime as the two countries negotiate to avoid new tariffs on Brazilian products, Minister of Development, Industry, Trade and Services Márcio Elias Rosa said on Tuesday (7).

After a new round of technical talks with representatives from the Office of the United States Trade Representative, or USTR, the minister said discussions had moved forward on an issue considered strategic by the Brazilian government.

“We addressed a request President Lula has made for integrated cooperation to combat transnational crime. There is recognition that progress can be made on this point,” he said.

According to the minister, Brazil expects to hold another technical meeting this week, as well as a political-level meeting with U.S. Trade Representative Jamieson Greer, before the public comment period that precedes the tariff decision comes to an end.

Despite progress on some issues, Elias Rosa said the Brazilian government intends to keep the negotiations focused on tariffs.

“The president’s main guidance is that we will not leave the table, but we also will not allow other issues to be brought into the discussion,” he said.

Ethanol left out

The minister also reiterated that Brazil wants ethanol to remain outside the trade negotiations between the two countries.

According to Elias Rosa, discussing only the tariff on the biofuel ignores the links between the ethanol and sugar production chains, as well as the potential impact on Brazilian industry.

“The government has argued that ethanol should not be addressed in this discussion. It is unfortunate that others think differently so that U.S. ethanol can enter the Brazilian market more easily,” he said.

He also stressed that the sector is strategic, particularly for Brazil’s Northeast, and noted that Brazilian sugar faces steep barriers to enter the U.S. market.

“Our sugar faces a tariff surcharge of nearly 100% in the United States. The two chains cannot be separated,” he said.

With little time left to reach an understanding, the minister said the government will focus on areas where progress is possible.

“The deadline is tight. We have to focus on what can produce a positive result,” he said.

Industry support

During a public hearing held by the USTR, representatives from Brazil’s Sugarcane and Bioenergy Industry Union, the National Union of Corn Ethanol and the Brazilian Confederation of Agriculture and Livestock backed the Brazilian government’s position.

The groups argued that the decline in imports of U.S. ethanol is not explained solely by tariffs, but mainly by the expansion of domestic corn ethanol production, which has reduced Brazil’s need for foreign purchases.

In the industry’s view, Brazil and the United States, the world’s two largest ethanol producers, should prioritize expanding the international biofuels market rather than escalating bilateral trade disputes.

What is Section 301?

The negotiations are taking place alongside an investigation opened by the USTR under Section 301 of the U.S. Trade Act.

The mechanism allows the U.S. government to investigate trade practices by other countries that it considers unfair or harmful to U.S. companies. At the end of the process, Washington may adopt measures such as tariff surcharges on imported products or other trade restrictions.

In Brazil’s case, the investigation questions policies related to digital trade, intellectual property, government procurement and other issues. Before a final decision is made, the U.S. government is holding a public comment process with companies and interested organizations.

Source: Agência Brasil

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