US Government Links Restoration of Brazil Sugar Quota to Trade Proposals

The United States government has stated that it will only return a sugar export quota of nearly 60,000 tons to Brazil if the country presents satisfactory commercial proposals. US Under Secretary of Agriculture Stephen Vaden made the statement during an American Sugar Alliance symposium on Monday. If no agreement is reached, the US threatens to redistribute the volume to other countries.

For the upcoming cycle, the Trump administration reduced Brazil's allocation from 155,900 tons to 100,000 tons, representing a decrease of 35.9 percent. This quota allows sugar to enter the US at a reduced tariff; products outside this limit face a barrier of approximately 340 US dollars per ton. The new tariff quotas will take effect in October and last for one year.

An urgent report from Ana Lucia Viana, the agricultural attaché at the Brazilian embassy in Washington, noted that the exact match between the reduced Brazilian quota and the unallocated amount suggests the measure is being used as a commercial negotiation tool. While the US has not specified what constitutes a satisfactory proposal, Washington has pressured Brazil for years to reduce its 18 percent tariff on American ethanol. The Lula government previously indicated it would discuss reducing that barrier if the US opened its market further for sugar, though no agreement was reached.

Brazil currently holds the third largest allocation, following the Dominican Republic and the Philippines. Last year, Brazil exported 292,400 tons of raw sugar to the US. According to the reports, the quota is filled by producers in the Northeast, while volumes exceeding the quota are primarily supplied by the Southeast.