Notice2025-13498
Initiation of Section 301 Investigation: Brazil's Acts, Policies, and Practices Related to Digital Trade and Electronic Payment Services; Unfair, Preferential Tariffs; Anti-Corruption Enforcement; Intellectual Property Protection; Ethanol Market Access; and Illegal Deforestation; Hearing; and Request for Public Comments
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Published
July 18, 2025
Issuing agencies
Trade Representative, Office of United States
Abstract
In accordance with the specific direction of the President, on July 15, 2025 the U.S. Trade Representative initiated an investigation into Brazil's acts, policies, and practices related to digital trade and electronic payment services; unfair, preferential tariffs; anti- corruption enforcement; intellectual property protection; ethanol market access; and illegal deforestation. The Section 301 Committee is holding a public hearing and seeking public comments in connection with this investigation.
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<title>Federal Register, Volume 90 Issue 136 (Friday, July 18, 2025)</title>
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[Federal Register Volume 90, Number 136 (Friday, July 18, 2025)]
[Notices]
[Pages 34069-34072]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13498]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket No. USTR-2025-0043]
Initiation of Section 301 Investigation: Brazil's Acts, Policies,
and Practices Related to Digital Trade and Electronic Payment Services;
Unfair, Preferential Tariffs; Anti-Corruption Enforcement; Intellectual
Property Protection; Ethanol Market Access; and Illegal Deforestation;
Hearing; and Request for Public Comments
AGENCY: Office of the United States Trade Representative (USTR).
ACTION: Notice of initiation of investigation and a hearing, and a
request for comments.
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SUMMARY: In accordance with the specific direction of the President, on
July 15, 2025 the U.S. Trade Representative initiated an investigation
into Brazil's acts, policies, and practices related to digital trade
and electronic payment services; unfair, preferential tariffs; anti-
corruption enforcement; intellectual property protection; ethanol
market access; and illegal deforestation. The Section 301 Committee is
holding a public hearing and seeking public comments in connection with
this investigation.
DATES:
July 15, 2025: The U.S. Trade Representative initiated the
investigation.
July 17, 2025: USTR will open the docket for submission of written
comments.
August 18, 2025, at 11:59 p.m. EDT: To be assured of consideration,
submit written comments, requests to appear at the hearing, along with
a summary of the testimony, by this date.
September 3, 2025, at 10.00 a.m.: USTR will hold a public hearing
in the main hearing room of the U.S. International Trade Commission,
500 E Street SW, Washington, DC 20436, beginning at 10 a.m. If
necessary, the hearing may continue on the next business day.
Seven calendar days after the last day of the public hearing: Due
date for submission of post-hearing rebuttal comments.
ADDRESSES: Submit documents in response to this notice, including
written comments, hearing appearance requests, summaries of testimony,
and post-hearing rebuttal comments through the online USTR portal:
<a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>.
FOR FURTHER INFORMATION CONTACT: For general questions about this
notice contact Philip Butler and Megan Grimball, Chairs of the Section
301 Committee; or Megan Paster, Assistant General Counsel at
202.395.5725.
SUPPLEMENTARY INFORMATION:
I. Brazil's Acts, Policies, and Practices
The Section 301 investigation will initially focus on the issue
areas discussed below.
A. Digital Trade and Electronic Payment Services
Evidence indicates that Brazil engages in a variety of acts,
policies, and practices that may undermine the competitiveness of U.S.
companies engaged in digital trade and electronic payment services. For
example, the Brazilian Supreme Court recently voted to make social
media companies liable for illegal postings by their users, even absent
a court order to remove that content, but includes within the scope of
such ``illegal'' postings a broad range of speech, including political
speech. This regime could trigger the preemptive takedown of content
and restrictions on a wide array of speech, as well as significantly
increase the risk of economic harm to U.S. social media companies.
Additionally, Brazilian courts have issued secret orders instructing
U.S. social media companies to censor thousands of posts and de-
platform dozens of political critics, including U.S. persons, for
lawful speech on U.S. soil. When U.S. and U.S.-headquartered companies
have refused to comply with these orders, Brazilian courts have imposed
substantial fines on U.S. and U.S.-headquartered companies, ordered the
suspension of U.S. and U.S.-headquartered platforms in Brazil, and
threatened U.S. and U.S.-headquartered company executives with arrest
or criminal prosecution.
More generally, evidence indicates that these acts, policies, and
practices may undermine the competitiveness of U.S. companies engaged
in digital trade and electronic payment services, for example, by
raising risks or costs for U.S. businesses, restricting the ability of
U.S. companies to provide services or engage in normal business
practices, decreasing the revenue and returns on investments of those
U.S. companies, assigning increased regulatory burdens and compliance
costs on those U.S. companies, or creating advantages for domestic
Brazilian competitors.
For example, Brazil imposes overly broad restrictions on the
transfer of personal data outside Brazil, including to the United
States, that may not adequately account for routine business purposes.
These restrictions may prevent a business from securely processing data
or providing services from U.S. servers. Additionally, Brazil also
appears to engage in a number of unfair practices with respect to
electronic payment services, including but not limited to advantaging
its government-developed electronic payment services.
B. Brazil's Unfair, Preferential Tariffs
Brazil has lowered tariffs on an unfair, preferential basis by
entering into partial-scope preferential trade arrangements with
certain large trading partners, while disadvantaging the United States
by applying higher tariffs to U.S. imports. Under these arrangements,
Brazil accords lower, preferential tariff treatment only to certain
large trading partners in specific sectors, including sectors in which
these trading partners are globally competitive. At the same time,
Brazil maintains high most-favored nation (MFN) tariffs that apply to
U.S. exports. In 2024, Brazil had a 12.2 percent simple average MFN
applied rate, compared to the United States' 3.3 percent simple average
MFN rate.
In particular, Brazil accords to India and Mexico preferential
tariff treatment that it does not accord to the United States. This
preferential treatment covers thousands of tariff lines for Mexico and
hundreds of tariff lines for India at tariff rates that are between 10
and 100 percent lower than Brazil's MFN rate. This preferential
treatment applies to hundreds of products across multiple sectors, such
as agricultural products, motor vehicles and parts, minerals,
chemicals, and machinery. In 2023, Brazil imported approximately $5.5
billion in imports at these preferential tariff rates--$4.6 billion
from Mexico and $1.0 billion from India. Products covered by
preferential tariffs included nearly $1.7 billion in motor vehicles and
motor vehicle parts from Mexico. Nearly all of Brazil's imports of
motor vehicles and parts from Mexico were subject to no tariffs, while
Brazil's imports of these products from the United States were subject
to MFN rates, almost all of which are between 14 and 35 percent.
Brazil accords this preferential treatment pursuant to bilateral
agreements with large trading partners covering only discrete sectors.
In 2024, Brazil's gross domestic product (GDP) exceeded $2.1 trillion,
and it imported over $274 billion of goods and exported over $339
billion. In 2024, Mexico exported $617.8 billion of goods, and India
exported over $447 billion. Furthermore, Brazil, Mexico, and India are
already advanced and globally competitive in many of the sectors
[[Page 34070]]
covered by preferential tariff treatment. For example, Mexico is one of
the largest global vehicle producers, and India is one of the world's
leading chemical producers. Nonetheless, Mexican vehicles and Indian
chemicals receive preferential tariff treatment from Brazil while U.S.
vehicles and chemicals are subject to Brazil's MFN rate.
When Brazil applies lower tariffs on goods of other large and
competitive economies, while continuing to subject U.S. goods to its
high, MFN rates, U.S. exports are denied a level playing field in
Brazil's market. This can suppress U.S. exports and economic output,
with negative consequences for employment and domestic production.
C. Anti-Corruption Enforcement
Evidence suggests that Brazil's efforts to fight corruption have
weakened considerably in some areas. For example, reports indicate that
prosecutors have engaged in opaque agreements to provide leniency to
companies engaged in corruption and indicate conflicts of interest in
judicial decisions. In a highly publicized case involving the bribery
of public officials for public projects and money laundering, rulings
by a Supreme Court justice to throw out the convictions have drawn
widespread criticism. Evidence indicates that Brazil's lack of
enforcement of anti-corruption measures and lack of transparency may
disadvantage U.S. companies engaged in trade and investment in Brazil
and raises concerns in relation to norms relating to fighting bribery
and corruption, such as under Protocol to the Agreement on Trade and
Economic Cooperation Between the Government of the United States of
America and the Government of the Federative Republic of Brazil
Relating to Trade Rules and Transparency, Annex III or the Convention
on Combating Bribery of Foreign Public Officials in International
Business Transactions, done at Paris, December 19, 1997.
D. Intellectual Property Protection
Brazil engages in a variety of acts, policies, and practices that
apparently deny adequate and effective protection and enforcement of
intellectual property rights. For example, Brazil has failed to
effectively address widespread importation, distribution, sale, and use
of counterfeit goods, modified gaming consoles, illicit streaming
devices, and other circumvention devices. Counterfeiting remains
widespread because enforcement raids are not followed by deterrent-
level remedies or penalties and long-term disruption of these illicit
business practices. The Rua 25 de Mar[ccedil]o area has for decades
remained one of the largest markets for counterfeit goods despite raids
targeting this area.
As another example, the overall average pendency of patent
applications remains high, particularly for biopharmaceutical patent
applications. The impact of the current average patent application
pendency of almost 7 years (and 9.5 years for pharmaceutical patents
granted between 2020 and 2024) is to cut into the patent term. In
addition, the failure to effectively address piracy of copyrighted
content remains a significant barrier to the adoption of legitimate
content distribution channels. Brazil's failure to address such issues
harms American workers whose livelihoods are tied to America's
innovation- and creativity-driven sectors.
E. Ethanol Market Access
The United States suffers from higher tariffs on ethanol by Brazil
and from imbalanced trade resulting from Brazil's decision to abandon
the reciprocal, virtually duty-free treatment that promoted the
development of both of our industries and to flourishing and mutually
beneficial trade. Brazil and the United States are the two largest
ethanol producers in the world. In 2024, the United States produced an
estimated 16.1 billion gallons of ethanol, while Brazil produced nearly
8.8 billion gallons--figures that together make up 80 percent of the
world's total ethanol production. The United States competes with
Brazil in global sales of agricultural commodities that serve as
feedstocks for biofuels such as ethanol and biodiesel, including corn
and soybeans. In Brazil, the main feedstock for ethanol production is
sugarcane, followed by corn. Brazil's corn ethanol production has been
rapidly increasing since 2017.
Between 2010 and 2017, Brazil and the United States each took
action to establish virtually duty-free bilateral trade of ethanol. In
2010, Brazil suspended its 20 percent tariff on imported ethanol, a
move that was supported by Brazil's ethanol industry. In 2011, the
United States allowed the ``blender'' tax credit to U.S. ethanol
producers and the $0.54/gallon surcharge on ethanol imports to expire.
These actions permitted bilateral ethanol trade to flourish.
However, beginning in September 2017, Brazil abandoned this
mutually beneficial approach, in a way that disadvantaged the United
States in particular, which supplies the majority of Brazil's imports
of ethanol. Since then, U.S. ethanol producers have, at times, faced
steep and unfair Brazilian import tariffs on their products.
Brazil first imposed a tariff-rate quota (TRQ) of 600 million
liters annually in 2017, with an out-of-quota rate of 20 percent on
imports of ethanol. In September 2019, the TRQ was expanded to 750
million liters annually, but the TRQ expired in December 2020, causing
all ethanol imports to face a 20 percent rate, which later changed to
18 percent in November 2021. The expiry of the TRQ and significantly
higher Brazilian tariff rates have had a negative impact on the
previously robust bilateral ethanol trade. Brazil temporarily
eliminated its ethanol tariff from March 23, 2022, to January 31, 2023,
but then reinstated the tariff at 16 percent. Effective January 1,
2024, Brazil set its tariff rate on ethanol at 18 percent, where it
remains.
These tariff rates have had demonstrable impacts on U.S. ethanol
exports to Brazil. U.S. ethanol exports to Brazil peaked at $761
million in 2018, but fell to $140,000 in 2023, and were $53 million in
2024, suggesting that U.S. ethanol producers are at a significant
disadvantage under the current tariff system.
F. Illegal Deforestation
Evidence indicates that Brazil's lack of effective enforcement of
its environmental laws and regulations has contributed to illegal
deforestation in Brazil, and Brazilian ranchers and farmers have made
use of such illegally deforested land by using it for agricultural
production for livestock and a wide range of crops, including corn and
soybeans. Conversion of illegally deforested land for agricultural
production provides an unfair competitive advantage to agricultural
exports by lowering costs and expanding availability of land inputs.
Brazil is a major competitor of the United States in global sales
of agricultural products, including beef, corn, and soybeans. When
China engages in economic coercion and restricts or prohibits U.S.
agricultural exports, Brazilian producers readily backfill those
products. Although the United States has an overall trade surplus with
Brazil in goods and services, the U.S. trade deficit with Brazil for
agricultural products has risen steeply in recent years, from
approximately US$3 billion in 2020 to US$7 billion in 2024.
Agricultural production, particularly for soy plantations and
cattle ranches, has been one of the main drivers of deforestation in
Brazil, and deforestation reached a 15-year high in 2021. Brazil's
enforcement efforts have
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not stopped illegal deforestation, and previously deforested land has
not been restored, despite some efforts by Brazil recently to
strengthen its environmental laws as well as enforcement of those laws.
While deforestation rates have declined in recent years, deforestation
rates in 2024 were nevertheless estimated to be about 3,403 hectares
per day. Evidence indicates that up to 91 percent of such deforestation
could be illegal. Agricultural products produced on previously
illegally deforested land may also continue to compete with U.S.
products.
Reports also suggest that illegal logging is occurring at
significant levels in Brazil. In fact, reports estimate that more than
one third of all Amazonian timber is estimated to be of illegal origin,
either because it is illegally harvested from protected lands or it is
harvested without the appropriate permits and approvals. There is
documented evidence of the extensive use of forced labor within the
context of illegal deforestation. Evidence also suggests that Brazilian
producers use legitimate timber production sites as fronts, along with
fraudulent transport documents, to launder illegal timber illegally
harvested elsewhere. Corruption in the system also undermines Brazil's
enforcement of laws designed to prevent illegal deforestation, as
evidence indicates that timber harvested illegally is disguised as
legal through fraudulent paperwork schemes and bribery of Brazilian
officials. Evidence further indicates that Brazil has ineffectively
enforced environmental laws and regulations meant to prevent illegally
harvested timber from entering the market. Sanctioned production sites
have continued to sell timber to U.S. buyers, and Brazilian timber
exporters that have been fined have been able to continue trading
products on the global market. Illegal timber enters the U.S. market in
violation of laws such as the Lacey Act, and can be sold at lower
prices, thereby creating an unfair advantage over U.S. products that
are harvested legally.
II. Initiation of Section 301 Investigation
Section 302(b)(1)(A) of the Trade Act of 1974, as amended (Trade
Act), authorizes the U.S. Trade Representative to initiate an
investigation to determine whether an act, policy, or practice of a
foreign country is actionable under Section 301 of the Trade Act.
Actionable matters under Section 301 include acts, policies, and
practices of a foreign country that are unreasonable or discriminatory
and burden or restrict U.S. commerce. An act, policy, or practice is
unreasonable if, while not necessarily in violation of, or inconsistent
with, the international legal rights of the United States, it is
otherwise unfair and inequitable.
On July 15, 2025, in accordance with the specific direction of the
President, the U.S. Trade Representative initiated a Section 301
investigation to examine whether Brazil's acts, policies, and practices
related to digital trade and electronic payment services; unfair,
preferential tariffs; anti-corruption enforcement; intellectual
property protection; ethanol market access; and illegal deforestation
are unreasonable or discriminatory and burden or restrict U.S.
commerce. Pursuant to Section 302(b)(1)(B) of the Trade Act, USTR has
consulted with appropriate advisory committees and the inter-agency
Section 301 Committee. Pursuant to Section 303(a) of the Trade Act,
USTR is requesting consultations with the Government of Brazil.
Pursuant to Section 304 of the Trade Act, USTR must determine
whether the acts, policies, or practices under investigation are
actionable under Section 301. If that determination is affirmative, the
U.S. Trade Representative must determine whether action is appropriate,
and if so, what action to take.
III. Request for Public Comments
You may submit written comments on any issue covered by the
investigation. In particular, USTR invites comments regarding:
Digital Trade and Electronic Payment Services
<bullet> The acts, policies, or practices of Brazil that may
undermine the competitiveness of U.S. companies engaged in digital
trade or electronic payment services.
<bullet> The extent to which Brazil's acts, policies, or practices
discriminate against or unfairly disadvantage U.S. companies engaged in
digital trade or electronic payment services.
Unfair, Preferential Tariffs
<bullet> The acts, policies, or practices of Brazil which accord
lower, preferential tariff treatment only to certain large trading
partners in specific sectors, including sectors in which these trading
partners are globally competitive.
<bullet> The extent to which Brazil's acts, policies, or practices
discriminate against or unfairly disadvantage U.S. exports and economic
output.
Anti-Corruption Enforcement
<bullet> The extent to which Brazil's enforcement of anti-
corruption is not sufficient.
<bullet> The extent to which Brazil's lack of enforcement of anti-
corruption measures disadvantage U.S. companies engaged in trade and
investment in Brazil.
Intellectual Property Protection
<bullet> The acts, policies, and practices of Brazil that deny
adequate and effective protection and enforcement of intellectual
property rights.
<bullet> The extent to which Brazil's acts, policies, or practices
discriminate against or unfairly disadvantage American workers whose
livelihoods are tied to American's innovation- and creativity-driven
sectors.
<bullet> Other acts, policies, and practices of Brazil relating to
the protection or enforcement of intellectual property rights that may
discriminate against or unfairly disadvantage U.S. businesses.
Ethanol Market Access
<bullet> The extent to which Brazil's tariff rates or any related
regulations on ethanol discriminate against or unfairly disadvantage
U.S. ethanol producers.
<bullet> Other acts, policies, or practices of Brazil that may
discriminate against or unfairly disadvantage U.S. producers of
ethanol, biofuels, or related products.
Illegal Deforestation
<bullet> The extent to which Brazil has laws and regulations to
effectively address illegal deforestation, use of illegally deforested
land for agricultural production, and illegal logging taking place in
its territory.
<bullet> The extent to which Brazil is effectively enforcing laws
and regulations to address illegal deforestation, use of illegally
deforested land for agricultural production, and illegal logging taking
place in its territory.
<bullet> The extent to which agricultural products are being
produced on illegally deforested land and are being exported, directly
or through downstream agricultural products, to the United States or
other markets.
<bullet> The extent to which Brazilian products, including lumber
and wooden furniture, are being made with timber harvested illegally
and are being exported to the United States or other markets.
<bullet> Other acts, policies, or practices of Brazil related to
illegal deforestation that may discriminate against or unfairly
disadvantage U.S. businesses.
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General
<bullet> Whether there are any other acts, policies, and practices
of Brazil related to the production of goods and services referenced in
this notice that discriminate against or unfairly disadvantage U.S.
businesses.
<bullet> Whether Brazil's acts, policies, and practices identified
in this initiation notice are unreasonable or discriminatory.
<bullet> Whether Brazil's acts, policies, and practices identified
in this initiation notice burden or restrict U.S. commerce, and if so,
the nature and level of the burden or restriction. This would include
economic assessments of the burden or restriction on U.S. commerce.
<bullet> Whether Brazil's acts, policies, and practices identified
in this initiation notice are actionable under Section 301(b) of the
Trade Act, and what action, if any, should be taken, including tariff
and non-tariff actions.
To be assured of consideration, USTR must receive written comments
by 11:59 p.m. EDT on August 18, 2025. Additional instructions on how to
submit written comments are provided below in Part V.
IV. Hearing Participation
The Section 301 Committee will convene a public hearing on
September 3, 2025, and if needed, the hearing will continue on
September 4, 2025. To testify at the hearing, you must submit a request
to appear using the electronic portal at <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>,
following the instructions in Part V below. Requests to appear must
include a summary of testimony, and may be accompanied by a prehearing
submission. Remarks at the hearing are limited to five minutes to allow
for possible questions from the Section 301 Committee. All submissions
must be in English. To be assured of consideration, USTR must receive
your request to appear and summary of the testimony by August 18, 2025.
Post-hearing rebuttal comments, which should be limited to
rebutting or supplementing testimony presented at the hearing, may be
submitted within seven calendar days after the last day of the public
hearing. Rebuttal comments must be submitted using the electronic
portal at <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>, following the instructions in
Part V below.
V. Submissions Instructions
Interested persons must submit written comments, requests to appear
at the hearing, summaries of testimony, and post-hearing rebuttal
comments using the appropriate docket on the portal at <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>. To make a submission, use the docket on the
portal entitled `Request for Comments on the Section 301 Investigation
of Acts, Policies, and Practices of Brazil Related to Digital Trade and
Electronic Payment Services; Unfair, Preferential Tariffs; Anti-
Corruption Enforcement; Intellectual Property Protection; Ethanol
Market Access; and Illegal Deforestation,' docket number USTR-2025-
0043. Interested persons wishing to provide testimony at the hearing
must submit a notification of intent and summary of testimony using the
docket entitled `Request to Appear at the Hearing on the Section 301
Investigation of Acts, Policies, and Practices of Brazil Related to
Digital Trade and Electronic Payment Services; Unfair, Preferential
Tariffs; Anti-Corruption Enforcement; Intellectual Property Protection;
Ethanol Market Access; and Illegal Deforestation,' docket number USTR-
2025-0044.
You do not need to establish an account to submit comments or a
notification of intent to testify. The first screen allows you to enter
identification and contact information. Third party organizations such
as law firms, trade associations, or customs brokers should identify
the full legal name of the organization they represent and identify the
primary point of contact for the submission. Information fields are
optional. However, USTR may not consider your comment or request if
insufficient information is provided. Fields with a gray Business
Confidential Information (BCI) notation are for BCI information that
will not be made publicly available. Fields with a green (Public)
notation will be viewable by the public. After entering the
identification and contact information, you can complete the remainder
of the comment, or any portion of it, by clicking `Next.' You may
upload documents at the end of the form and indicate whether USTR
should treat the documents as business confidential or public
information. Any page containing BCI must be clearly marked `BUSINESS
CONFIDENTIAL' on the top of that page and the submission should clearly
indicate, via brackets, highlighting, or other means, the specific
information that is BCI. If you request business confidential
treatment, you must certify in writing that the information would not
customarily be released to the public. Parties uploading attachments
containing BCI also must submit a public version of their comments. If
these procedures are not sufficient to protect BCI or otherwise protect
business interests, please contact the USTR Section 301 support line at
202.395.5725 to discuss whether alternative arrangements are possible.
USTR will post attachments uploaded to the docket for public
inspection, except for properly designated BCI. You can view
submissions on USTR's electronic portal at <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>.
Jennifer Thornton,
General Counsel, Office of the United States Trade Representative.
[FR Doc. 2025-13498 Filed 7-17-25; 8:45 am]
BILLING CODE 3390-F4-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.