Lula government sees no room for an agreement with the US on tariffs and rejects negotiating Pix and ethanol

Despite the lack of perspective, Brazilian government technicians do not rule out a final contact with the US trade representative, Jamieson Greer, on the eve of the tariff. According to two authorities interviewed by Folha, the dialogue has been flowing, but the agreement has not.

During an event in São José dos Campos (SP), President Lula was asked about the concern about surcharges and replied that "there will be no tariffs".

As a result of the investigation based on Section 301 of the US Trade Law, the USTR (Office of the United States Trade Representative) concluded that Brazil adopts discriminatory and unreasonable practices in trade with the US and defended a 25% surcharge on Brazilian products - there is an extensive list of exceptions.

"The expectation of an agreement is almost none, or none at all, whether because of the deadline or what the United States points out, points on which there will be no concessions today or tomorrow by this government", minister Márcio Elias Rosa, from Mdic (Ministry of Development, Industry, Commerce and Services), tells Folha.

"Pix is an example, [another is] ethanol, without reviewing the tariffs applied to Brazilian sugar. These are points that separate us today. But they can and should expand the list of exceptions", he adds.

In the Brazilian government, the USTR's recommendation is seen as abusive and unfair.

Faced with this scenario, Lula's assistants reject any type of concession to the USA that goes against Brazil's interests.

"There are points on which there will be no concessions, because they are non-negotiable, others are wrong and all are unreasonable", he states.

Last week, the minister said that the proposal to eliminate the import tax on American ethanol is not on the tariff negotiation table and that the entry of American ethanol into Brazil would cause damage above all to the Northeast region, which is home to one of Brazil's productive hubs.

"President Lula clearly defends that the issue of ethanol should not be addressed in this negotiation, and what's more, it should not be addressed without us also addressing the issue of sugar, which is overtaxed in the United States," said Elias Rosa at the time.

As revealed by Folha, senator and pre-candidate for the Presidency of Brazil Flávio Bolsonaro (PL-RJ) sent a proposal to the USTR suggesting reaching a "zero to zero agreement" on ethanol and sugar, eliminating import taxes side by side.

The tariff was discussed again by Lula with ministers and assistants in a meeting last Friday (10). According to participants, the government hopes to define a period for implementing the new tariff, which will give space to insist on negotiation.

Initially, there was the prospect that the negotiation meeting before the taxation scheduled for Wednesday (15) would take place between technicians from the commercial areas of the two countries. However, the Brazilian government insists on contact at the ministerial level.

Since announcing the new taxation last month, the USTR has consulted with the private sector to comment on the results of the investigation before preparing the final report.

In a public hearing on the topic, Flávio Bolsonaro suggested that the debate on tariffs between countries be postponed until after the Brazilian elections.

The senator alleged that the application of tariffs was being used as political leverage by Lula. In reaction, the PT administration issued a note of repudiation of what it called Flávio's interference in the ongoing negotiations.

Within the Brazilian government, there is a perception that, if the USA accepts postponing the application of the tariff until after the elections, it will become clear that the American retaliation against Brazil has a political, not an economic, character.

As Folha showed, the Brazilian government must wait for the application of the new tariff phase to decide how it will react to the United States' decision and whether it will be the case to mobilize the Reciprocity Law.

In force since last year, the legislation establishes the criteria that can be used by Brazil to react with retaliatory measures against economic sanctions applied by another country.