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Brazil raises ethanol tariff rate quota

Brazil raises ethanol tariff rate quota
Industry criticizes protectionist activities as Brazil enjoys U.S. market virtually tariff free.

Brazil announced that it has raised the quota on U.S. ethanol imports under the tariff rate quote (TRQ) from 600 million liters per year to nearly 750 million liters per year. The TRQ regulates the threshold of ethanol that can be imported into Brazil without triggering a 20% tariff. Industry groups expressed disappointment in the decision to not offer additional market access to U.S. ethanol.

Ryan LeGrand, president and chief executive officer of the U.S. Grains Council, noted that Brazil did not fully consider the vast information provided by the council and the U.S. government showing the detrimental and negative impact this TRQ has on Brazilian consumers by raising prices at the pump.

“We will actively encourage review of this policy, which inhibits trade between our countries and hinders the development of a robust global ethanol marketplace. Free and reciprocal fair trade between the world’s two largest ethanol producers should be a model for other countries to follow. Instead, Brazil is showing other countries a path to construct barriers to trade, which will hurt all consumers in the short, medium and long terms," LeGrand said in a statement.

Growth Energy CEO Emily Skor said her group appreciated the U.S. government's efforts to raise the TRQ but is disappointed that Brazil did not completely remove its tariff to allow a fully open market. “Brazilian ethanol continues to have virtually tariff-free access to the U.S. and puts U.S. ethanol producers at a disadvantage at a time when they need it most. We will continue working with U.S. government officials, the Brazilian government and our allies to truly open the ethanol market and build a strong trade relationship for decades to come,” Skor said.

Renewable Fuels Assn. president and CEO Geoff Cooper said, “Brazil’s decision to maintain its protectionist trade barrier against U.S. ethanol is extremely disappointing and represents a major setback in our relationship with the Brazilian sugar and ethanol industry. The token increase in the quota does nothing to provide relief to Brazilian consumers, who face higher fuel prices because of Brazil’s discriminatory policy. Not only is the U.S. market wide open to ethanol imports from Brazil, but our Renewable Fuel Standard actually incentivizes imports by characterizing sugarcane ethanol as an advanced biofuel. But there is nothing ‘advanced’ at all about the unfair and unlevel playing created by Brazilian trade barriers. In light of Brazil’s action, it may be time for U.S. policy-makers to reconsider our open-door trade policy regarding sugarcane ethanol.”

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