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

Jacqui Fatka, Policy editor

October 23, 2019

2 Min Read
Brazil reneges on increasing US ethanol quota

 

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.”

Related:Brazil raises ethanol tariff rate quota

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.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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