VZCZCXRO0347
RR RUEHRG
DE RUEHBR #1482 3181913
ZNR UUUUU ZZH
R 131913Z NOV 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 2893
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 6856
RUEHSO/AMCONSUL SAO PAULO 3041
RUEHRG/AMCONSUL RECIFE 8683
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS BRASILIA 001482 
 
SIPDIS 
SENSITIVE 
 
STATE FOR WHA/BSC, WHA/EPSC 
 
E.O. 12958: N/A 
TAGS: ETRD ECON BR
SUBJECT:  Brazil: Cachaga and Tennessee Whiskey 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (SBU) Summary: William Foster, Assistant Administrator of the 
Treasury Department's Alcohol and Tobacco Tax and Trade Bureau 
(TTB), met with Agriculture, External Relations, and Receita Federal 
(Brazilian Customs) on October 29th to propose a Memorandum of 
Understanding, discuss new Brazilian alcohol regulations, and 
exchange updates on pending rules governing market access of cachaga 
(Brazilian rum) in the U.S. market and bourbon and Tennessee whiskey 
in the Brazilian market. End summary. 
¶2. (SBU) During Foster's technical meeting with Celio Porto, Under 
Secretary for International Affairs in the Brazilian Ministry of 
Agriculture (MAPA) and other MAPA officials on October 29, 2008, 
Foster presented a draft information sharing Memorandum of 
Understanding (MOU) for MAPA's review and consideration.  Foster 
highlighted TTB's MOUs with China and Italy and current negotiations 
with France, noting an MOU with Brazil would increase communication 
between the two governments and provide a forum for cooperation and 
mutual understanding.  Porto drew attention to the shared 
responsibilities within the Brazilian government pertaining to an 
MOU of this type, and stated that MAPA could not sign an MOU on 
behalf of other Ministries.  Foster offered the option of adjusting 
the text as deemed appropriate by MAPA.  MAPA agreed to review the 
proposal and provide feedback. 
¶3. (SBU) Foster raised USG concerns regarding Brazil's new 
regulations for wine and distilled spirits.  MAPA officials stated 
that there had been several public hearings on these new norms and 
many comments, both internal and external, were received.  MAPA has 
reviewed and started replying initially to  the comments related to 
mixed alcoholic beverages.  Due to the large number of comments, 
substantial changes had been made to the new regulations for mixed 
alcoholic beverages, and a new public hearing will be conducted 
soon.  Porto noted that many Brazilian alcohol regulations were 
out-dated, requiring that MAPA review these regulations and change 
certain norms. 
¶4. (SBU) When questioned about TTB's position on the recognition of 
cachaga as a Brazilian product, Mr. Foster explained that U.S. law 
makes distinctions based on class and type.  Because cachaga is a 
type of alcohol distilled from sugar cane, it currently falls under 
the class of rum.  Foster added that the proposed rule, which would 
establish cachaga as new type of rum, and would permit labeling as 
cachaga without reference to rum, had been written and was expected 
to be released soon for public comment.  Foster noted that if 
Brazil's rules continued to omit bourbon and Tennessee whiskey from 
the list of distinctive products, there would be opposition to the 
law from the U.S. industry during the public comment period, making 
implementation unlikely in that scenario. 
¶5. (SBU) The discussions on cachaga and bourbon and Tennessee 
whiskey continued during Foster's meeting with Mr. Philip 
Fox-Drummond Gough of the Market Access Division at the Brazilian 
Foreign Ministry (MRE). Gough confirmed that the GOB would establish 
bourbon and Tennessee whiskey as distinctive products of U.S. origin 
only, thereby protecting them in the Brazilian market. In return for 
this concession, Gough expressed his hope that TTB would speed up 
the passage of the rule identifying cachaga as uniquely Brazilian. 
Foster confirmed that the processing time to publish a final rule 
would be greatly reduced if bourbon and Tennessee whisky are granted 
distinctive product status, given that there would then be fewer 
objections raised during the public comment period on the cachaga 
rule. 
¶6. (SBU) Discussions with Dr. Marcelo Fisch of Receita Federal 
focused on tobacco and alcohol where both sides agreed that 
falsified undervaluing of imports for customs valuation purposes was 
a challenge USG and GOB shared. Both sides agreed that TTB would 
send to Receita Federal a draft of TTB's proposed 
information-sharing MOU and a letter explaining the MOU's benefits 
for Receita Federal's review. 
¶7. (SBU) Comment: The concession by the GOB to work to add bourbon 
and Tennessee whiskey to the Brazilian list of distinctive products 
has been a helpful outcome of the Economic Partnership Dialogue 
process.  This concession, confirmed during the meeting with the 
MRE, will help in finalizing the pending U.S. rule identifying 
cachaga as distinctive Brazilian rum in the U.S. A TTB 
information-sharing agreement with relevant GOB agencies would also 
be helpful in fostering further Brazilian-US regulatory cooperation. 
 End comment. 
SOBEL