A significant shift in trade policy is underway in Brazil, driven by the country’s cachaça makers who see a major opportunity in a new trade deal between the European Union and Mercosur, a South American trade bloc.
The deal, which cuts tariffs on hundreds of goods, including cachaça, has the potential to open up new markets for Brazil’s sugarcane-based liquor and increase exports. According to distiller Assja Schymura of Pindorama, “I think growth will be immense, if we can only get over these initial barriers.”
Trade Tensions and Cachaça Exports
The Trump administration’s tariffs have prompted Europe and South America to seek closer ties, and the EU-Mercosur agreement is a key result of this shift. The deal commits members to uphold democratic institutions and remain in the Paris climate agreement, and has given a new momentum to other talks between Europe and Latin America.
For Brazil’s cachaça makers, the agreement is a chance to break into the European market, where their products have won awards but struggled to gain traction due to import taxes and lack of familiarity. Producers like Pindorama see a chance to change that and increase exports of their signature spirit.
The EU-Mercosur agreement is not without its challenges, however. European lawmakers have sent the deal to the EU Court of Justice for review, citing concerns about the impact on agricultural regions. Despite these challenges, Mercosur’s new openness to trade is expected to continue, with talks underway with Canada, Japan, and the United Arab Emirates.
Implications of the Trade Deal
The shift in trade policy has significant implications for Brazil and the region. According to former Brazilian official Larissa Wachholz, the recent shocks from U.S. trade pressure to pandemic-era shortages have forced a rethink of Brazil’s trade policy, and “I don’t see that going back to hundred percent protectionism.”
The deal also has cultural significance, according to Rafael Daló, creative director of Pindorama. “People might have an image of Brazil that is restricted to carnival,” he says, but learning about cachaça means learning about the forest where it is made, and the unique smells and flavors it produces. “It’s another Brazilian story,” he adds.
The new trade deal is a significant development in the region, and its impact will be felt for years to come. As Brazil and other countries in the region continue to navigate the complexities of global trade, one thing is clear: the future of cachaça exports is looking brighter than ever, and that’s a story that will be watched closely by trade experts and spirit enthusiasts alike.
