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The United States will recognize cachaca, the distilled sugar cane liquor used to make caipirinha cocktails, as a distinctive product of Brazil, according to an agreement both governments signed Monday.
In exchange, Brazil pledges to recognize bourbon and Tennessee whiskey as distinctive products of the U.S., Brazil's Industry Ministry said. Under the letters of intent signed by U.S. Trade Representative Ron Kirk and Brazil's Trade Minister Fernando Pimentel, both countries recognize the exclusive origin and qualities of the three distilled spirits, the ministry said.
The accord is one of at least eight agreements ranging from aviation and education to the environment that will be signed on the first day of Brazilian President Dilma Rousseff's two-day visit to the U.S. She met Monday with President Obama and on Tuesday with Brazilian students at Harvard and the Massachusetts Institute of Technology in Boston.
"Cachaca has a Brazilian face," Robson Andrade, head of the National Industry Confederation, told reporters after a meeting of business leaders with Rousseff on Sunday night in Washington. "This recognition of a genuinely Brazilian product shows the value that the American government attaches today to Brazil."
In Brazil, 40,000 distillers make 4,000 different brands of cachaca with total sales of 2 billion reais ($1.1 billion) a year, according to the Brazilian Cachaca Institute's website. The country, which is also the world's largest sugar exporter, sold $17.28 million worth of cachaca to 60 countries last year. The main importers are Germany, Portugal, the U.S. and France.
Brazilian exporters hope the agreement will boost sales of its popular liquor, said Andrade. Since 2000 Brazil has had to label cachaca as Brazilian rum, according to the Trade Ministry.
Brazil's trade balance with the U.S. swung from a $6.4 billion surplus in 2007 to an $8.2 billion deficit last year as the real rallied and economic growth in Brazil spurred demand for imports.
The U.S. Congress allowed an import tariff on Brazilian ethanol to expire last year and renewed the U.S. Generalized System of Preferences that exempts many Brazilian goods from duties.