Ethanol is excluded from negotiations between Brazil and the US.

Amid negotiations to avoid the application of new tariffs on Brazilian products, Brazil has identified an openness from the United States to expand bilateral cooperation in the fight against transnational crime, said the Minister of Development, Industry, Trade and Services, Márcio Elias Rosa, on Tuesday (July 7).

Following a new round of technical meetings with representatives from the Office of the United States Trade Representative (USTR), the minister assessed that there had been progress on a topic considered strategic by the government. "We addressed a request that President Lula has made for integrated cooperation in combating transnational crime. There is recognition that it is possible to make progress on this point," he stated.

According to the minister, the expectation is to hold another technical meeting and a political meeting with the United States Trade Representative, Jamieson Greer, later this week, before the conclusion of the public consultation that precedes the decision on tariffs.

Despite progress on some issues, Márcio Elias Rosa emphasized that the government intends to keep negotiations restricted to tariff matters. "The president's main instruction is that we will not leave the table and we will also not allow other issues to be discussed," he said.

Ethanol excluded

The minister also reiterated his position that ethanol should remain outside the scope of trade negotiations between the two countries. According to Márcio Elias Rosa, discussing only the biofuel tariff ignores the relationship between the ethanol and sugar production chains, as well as the impacts on national industry.

"The government has been arguing that ethanol should not be included in this discussion. It's a shame that other people think differently so that American ethanol can easily enter the Brazilian market," he stated.

He further emphasized that the sector is strategic, especially for the Northeast, and noted that Brazilian sugar faces strong barriers to entering the American market. "Our sugar has a surcharge in the United States of almost 100%. You can't separate the two chains," he said.

Given the tight deadline for reaching an agreement, the minister stated that the government will concentrate its efforts on the points where there is a possibility of progress. "The deadline is short. We have to focus on what can yield positive results," he declared.

Sector supports

During the public hearing promoted by USTR, representatives from the Sugarcane and Bioenergy Industry Union, the National Corn Ethanol Union, and the Brazilian Confederation of Agriculture and Livestock reinforced the position defended by the Brazilian government.

The organizations argued that the drop in imports of American ethanol is not solely due to tariffs, but mainly to the expansion of domestic corn ethanol production, which has reduced the need for foreign purchases.

According to industry experts, Brazil and the United States, the world's two largest ethanol producers, should prioritize expanding the international biofuel market instead of escalating bilateral trade disputes.

What is Section 301?

The negotiations are taking place in parallel with the investigation opened by the USTR based on Section 301 of the United States Trade Act. This instrument allows the American government to investigate trade practices of other countries that are considered unfair or harmful to US companies. At the end of the process, Washington can apply measures such as surcharges on imported products or other trade restrictions.

In the Brazilian case, the investigation questions policies related to digital commerce, intellectual property, government procurement, and other issues. Before making a final decision, the American government conducts a public consultation with interested companies and entities.