The name is absent

had policy making been informed and rational from a national viewpoint, the use of rebates
would have remained small and/or their use would have quickly ceased.

It is still somewhat unclear why Brazil initiated the use of coffee export tax rebates.
Perhaps they were only intended as a mechanism to allow price discrimination, though Bates
(personal communication) has suggested that the rebates were implemented to share the benefits
of the ICA global quota with the large international coffee roasters in at least tacit exchange for
their political support within the United States during the negotiation of the ICA (see also Bates
1997). Others, including Jorio Dauster, one of Brazil's chief negotiators in the ICA in a later
period, believe that the rebates were initiated only to achieve price discrimination (personal
communication). It may be that the roasters perceived a benefit and supported the ICA at least
partly on this basis, without Brazil having intended the benefit.

Whatever the origin of the export tax rebate policy, the continuous and expanded use of
the rebates over a long period, despite reducing net IBC revenue and worsening Brazil’s net
terms of trade, points to the insidious nature of rent seeking. Any transfer was strikingly at odds
with the Brazilian government’s often stated objective that it wanted to use the IBC to offset the
roasters’ perceived market power and thus achieve better prices and higher revenues from coffee.
It appears likely that relatively small gains to a few officials encouraged the continuation and
expansion of a policy that eventually imposed enormous costs on Brazil.²⁷ Other conditions,
including a widespread faith in government intervention as a means to improve Brazilian
economic welfare, the powerful and largely autonomous IBC, and, during much of the period, a
military government whose policies reduced public disclosure of information, increased the

²⁷ For example, newly appointed IBC presidents—whose average term in office throughout the period of the ICA
was 18 months--frequently canceled existing long-term contracts and then signed new contracts with foreign
roasters (see Bacha, 1992, for examples), a behavior that could signal rent seeking activity. The IBC had 14
presidents between 1963 and 1987.

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