Costa Rica exempts Brasil from sugar surcharges and ethanol tariffs

Costa Rica has committed to exempting a quota of 4,437 tonnes of Brazilian sugar from surcharges until August 19, 2023, as well as to zeroing the import tariff levied on ethanol shipments during the first year of the Caribbean country’s project to blend the biofuel with gasoline, said a joint note from the Ministries of Foreign Affairs, Economy and Agriculture.

According to the statement, the countries reached an agreement on September 30.

In August 2020, Costa Rica imposed an additional 34.27% surcharge on sugar from Brazil, following a safeguards investigation initiated in 2019.

At the time, the Brazilian government had claimed that the additional fee was “unjustified,” and, in November 2020, since no compromise had been met, it suspended imports of certain agricultural products from Costa Rica.

In the letter, the Brazilian government states that the benefits over sugar imports will be valid until August 19, 2023. Also, ethanol imports will be exempt from tariffs for the remainder of the period in which Costa Rica will increase the share of ethanol in the gasoline blend. “The understanding is the result of the two countries’ efforts to build a negotiated solution aimed at strengthening and expanding bilateral trade ties,” the statement said.

In 2021, Brazilian sugar exports to Costa Rica were priced at around US$ 2.6 million.

Stance against trade distortions 

The agreement between Brazil and Costa Rica for the sale of sugar and ethanol should not change the balance of the national sugar-energy market, given the low volume of shipments. Still, it reinforces the Brazilian position on market distortions, says the executive director of the sugarcane and bioenergy industry Unica, Eduardo Leão. “This is an important sign that Brazil is attentive and ready to take a stand on policies that distort international trade,” he said.

Since 2020, Costa Rica has applied an additional surcharge of 34.27% on imported sugar, following a safeguards investigation that began in 2019. “At the time, we were approached by Itamaraty, and we stated that, while it was a tiny market (with Brazil exporting 5 to 7 thousand tonnes per year), it was important to send a signal that Brazil was paying attention to measures that distort international trade,” explained Unica’s executive director.

In recent years, the country has also opposed subsidies and safeguards adopted in the sugar markets of Thailand, China, and India.

Although the surcharge imposed by Costa Rica was explicitly linked to sugar, Brazil’s proposed agreement drawn up in 2020 also included ethanol. “It was a brilliant strategy to include ethanol in the negotiation, as we are very interested in expanding the market,” said Leão.

According to him, it is now necessary to observe whether there will be an expansion, in fact, of the biofuel presence in Costa Rica. “A first step was taken, with the opening of the ethanol market at least in the first year of blending implementation, and the second step will be the implementation of blending in the country,” he concluded.

Source: Money Times

To read the full original article, please go to: https://www.moneytimes.com.br/costa-rica-isenta-brasil-de-sobretaxa-de-acucar-e-zera-imposto-sobre-etanol/

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