Although the American tariffs against Brazilian products have been reduced, the Brazilian government is still worried about another question: the ongoing investigation opened by the Americans against Brazil, through Section 301.

“This is possibly the largest 301 ever. Often, a 301 action is in a particular sector, even when it concerns China. Brazil is the target of an extensive investigation. There are six topics in total, each one of them vast in itself”, says Fernando Pimentel, director of the Commercial Politics Department of the Ministry of Foreign Relations of Brazil (Itamaraty).

The investigation, opened in July, involves six areas in which Brazil has been accused of unlawful practices. These are: digital commerce and electronic payment services, including Pix; preferential tariffs; application of anti-corruption laws; intellectual property; ethanol market, and illegal deforestation.

Pimentel spoke about the situation during an event hosted by the Brazil-United States House of Commerce (Amcham) this Tuesday, the 25^th. He also said that Brazil has little control over the possible results of this investigation.

“The fact that we answered well and that we have much data and facts on our side doesn’t mean that the 301 will be solved in our favor. There is much discretion in negotiations”, he affirms.

“Beyond tariffs, it is important for us to deal well with the 301. It makes no sense for us to deal with the tariff issue only to face the 301 three months down the line. Possibly, due to the sheer scope of the investigation, we may have to deal with all of that again. We must avoid a very complicated situation”, he said.

The investigation was opened in July. In September, there was a public hearing at which government officials, as well as representatives from companies and entities, presented arguments for and against the tariffs. On this occasion, many American companies made arguments against the tariffs on Brazil.

“The presentation and response stage has been concluded. Next is a consultation phase. They have been offered and accepted by Brazil, but it is now up to the American government to schedule them. We are waiting for that to happen”, said Pimentel.

The investigation has no deadline, but expectations are that it will end in the coming months.

What is Section 301

Section 301 is a part of America´s Commerce Law of 1974. This law authorizes the president to take measures against countries that violate international trade rules or that take measures to restrict trade with the USA.

Investigations into countries that might have broken rules are initiated by the United States Trade Representative (USTR), which is part of the administration.

The rule states that the USTR must negotiate with countries to remove commercial barriers before imposing punishing measures.

If no deal is reached, the American government may refer the issue to international bodies, such as the World Trade Organization, or impose unilateral sanctions on the target country.