 barriers to American imports a losing proposition for Brazil as a whole.
Given these facts, what did CAMEX, the Brazilian foreign trade chamber that reviews trade policy, do? It approved a 20 percent import tariff on ethanol, against the combined wisdom of economists in general and the government’s economics team in particular.
The next step was to open negotiations and get a general tariff and/or quota through Congress, to be operationalized later. Negotiations proceeded. In the end, the parties agree on a 20 percent tariff on American ethanol exports that exceed 600 million liters. The agricultural lobby remains strong, especially in a pre-election year. Ethanol producers won. Brazil lost.
This is protectionism at its worst: In a modern world where climate change is a threat and most countries subsidize renewables, the Brazilian government buckled to provide an indirect subsidy to fossil fuels, at a cost to the population. The saying goes that Brazil is the country of the future that never comes. This tariff on American ethanol is an example of why.
Zeidan is a business and finance professor at New York University in Shanghai and Fundação Dom Cabral.
Tags: Ethanol, Petrobras