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Brazil reneges on increasing US ethanol quota

Brazil reneges on increasing US ethanol quota

Brazil takes action to impose seasonal restrictions on the sale of ethanol posing additional roadblocks in open trade.

 

Ethanol industry groups expressed their disappointment with the news that the Brazilian government amended the recent August 31 rule that 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.

In a joint statement from Growth Energy, the U.S. Grains Council, and the Renewable Fuels Assn., the groups said the action represents “a step backwards in Brazilian government claims that it is an advocate of free markets.”

“The decision by Brazil to place seasonal restrictions on its tariff rate quota for U.S. ethanol is disappointing and puts up additional roadblocks to free trade, hurting consumers and our respective ethanol industries,” the groups stated.

In the statement, the ethanol supporters noted that for more than 15 years, Brazilian ethanol industry leaders lobbied the U.S. government to drop the tax on imported ethanol, saying that it believes in a two-way street and that Brazil would lead by example and eliminate barriers to renewable, clean fuels. US ethanol groups also reported that Brazil leaders previously stated, “It’s time for these two countries to show leadership and work together to develop a truly global free market for ethanol, without trade barriers, as is the case for oil.”

The domestic ethanol industry said the U.S. took the high road and eliminated its ethanol tariff.

“The action by Brazil this week to impose seasonal restrictions on the sale of ethanol does not create a case study in leading by example, but rather the opposite - it is up-ending real opportunities for free trade,” the groups stated.

Brazilian ethanol continues to have virtual tariff-free access to the U.S., the groups said following the agreement announced earlier this fall.

RFA president and chief executive officer Geoff Cooper had already called into question the unlevel playing field offered to Brazil and said the nation’s protectionist trade barrier against US ethanol represents a setback in the relationship with the Brazil sugar and ethanol industry.

“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 field created by Brazilian trade barriers. In light of Brazil’s action, it may be time for U.S. policymakers to reconsider our open-door trade policy regarding sugarcane ethanol,” Cooper said in a Sept. 3 statement.

TAGS: Policy
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