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The Bolsonaro government gave in and renewed the import of ethanol from the United States without taxes. A victory for US President Donald Trump in an election year.
Fifteen days after the United States reduced the amount of steel it buys from Brazil at lower rates, the Brazilian government decided to facilitate the entry of US ethanol. Over the next three months, North American producers will be able to sell up to 187.5 million liters of ethanol without paying taxes in Brazil.
That facility already existed, but the rule had ended in August. The fee has now been renewed. The decision contradicts the request of the Brazilian producers of the sector, who have ethanol stocks well above average because there was a reduction in fuel consumption due to the social isolation required during the pandemic.
“The quota is a great sacrifice for the Brazilian producer at a time when stocks are much higher than last year. And it only makes sense if the commitment assumed by Minister Ernesto Araújo, to negotiate a good deal for Brazilian sugar there in the United States, is really materialized within a period of three months ”, highlights Evandro Gussi, president of ÚNICA.
The Ministry of Foreign Relations believes that, in the next three months, it will be able to convince the United States government to reduce the very high rate charged to allow the entry of Brazilian sugar. But this is a negotiation that Brazil has been trying to do for decades and it never worked.
Oliver Stuenkel, Professor of International Relations at FGV, says the Brazilian government’s decision benefits President Donald Trump in the re-election race; and it also shows that Brazil has chosen to support the United States at the expense of domestic producers.
“This decision is a political calculation, it is an attempt by Bolsonaro to show the US president that Brazil is a strong ally, because this initiative brings very concrete benefits to Trump. The Bolsonaro government made this decision to strengthen its association, thus accepting a situation that is not very advantageous for the Brazilian agribusiness ”, he highlights.
Cristiano Palavro, a market analyst, recalls that, as ethanol stocks are high, the price for the consumer should not change, but the measure hurts Brazilian producers.
“There is no risk of ethanol shortage here in the domestic market. So the impact on the market occurs with this reduced import duty because it gives you access to US ethanol in a more competitive way here in our market. Especially, for example, for the Northeast states, ”he says.
