The Brazilian government will increase duty-free ethanol imports with the United States for 90 days from September 14, the foreign ministry said in a statement on Friday (September 11, 2020).
During that time, the United States and Brazil will discuss ways in which they can open up their respective ethanol, soy and corn markets, the statement said.
Brazil allowed a non-tariff quota for imports of 750 million liters per year of ethanol to expire at the end of August, resulting in U.S. producers having to pay a 20% tariff.
The tax-free import quota was used entirely by U.S. corn ethanol producers, who were happy to sell to Brazil to make up for low sales due to the coronavirus pandemic.
Trump, who faced pressure from the U.S. farm lobby, had urged renewal of the non-tariff quota. Some ethanol-producing states are key to Trump’s November 3 re-election bid.
But Brazil’s farm sector has lobbied President Jair Bolsonaro’s government to drop the ethanol import quota or get something in return.
International Media reported on Wednesday that the Brazilian government was likely to extend the tariff-free import regime – while pushing for greater access to the U.S. sugar market – in part to keep the U.S. election from exerting too much influence on any trade negotiations.
“Brazil and the United States have held consultations regarding their bilateral trade on ethanol,” the Brazilian foreign ministry said in the Friday statement.