The Renewable Fuels Assn. (RFA) called on President Donald Trump to move forward on seeking reciprocity and fairness in ethanol trade policy with Brazil. In a letter to the President, RFA highlighted Trump's August pledge to consider reciprocity with respect to Brazilian ethanol imports and reminded him of a commitment from the U.S. Trade Representative in September to “ensure that the ethanol industries in both countries will be treated fairly.”
On Aug. 31, Brazil let its tariff-free quota on U.S. ethanol imports expire, resulting in the imposition of a 20% tariff on all U.S. ethanol imports. On Sept. 14, however, Brazil temporarily reinstituted a pro rata tariff-free quota on ethanol imports for 90 days.
A joint statement from USTR and Brazilian trade officials on Sept. 11 said negotiations would continue during the 90-day period with the goals to “ensure that the ethanol industries in both countries will be treated fairly” and to “achieve reciprocal and proportional outcomes that generate trade and open markets to the benefit of both countries.”
“Unfortunately, it does not appear that any further progress is being made toward elimination of Brazil’s protectionist ethanol trade policies and restoration of the previous free and fair ethanol trade relationship we enjoyed with Brazil,” RFA president and chief executive officer Geoff Cooper wrote. “Instead, it appears likely that Brazil will allow its temporary tariff-free quota to expire again on Dec. 14, at which time a 20% (or higher) tariff could be applied to all ethanol imports from the United States.”
RFA said it has become clear that Brazil no longer shares the U.S. industry’s desire for free and open biofuel markets. Thus, the association is urging the Trump Administration to move forward with reciprocal tariffs on ethanol imports from Brazil.
“The impacts of the unlevel playing field for ethanol trade have become painfully apparent in recent months,” Cooper wrote. “U.S. imports of Brazilian ethanol have surged, with new shipments appearing at U.S. ports in nine of the past 12 weeks. Year-to-date imports of Brazilian ethanol exceed the same period in 2019 by 15% and are at a seven-year high.” The surge in ethanol imports from Brazil shows no signs of slowing down in the remaining months of 2020, Cooper said. Meanwhile, no U.S. fuel ethanol has been shipped to Brazil since May.
RFA added in its letter that, since late 2017, Brazil’s trade barriers have already resulted in the loss of demand for an estimated nearly 350 million gal. of U.S. ethanol valued at nearly $400 million.
RFA concluded by thanking the President for his efforts to pursue a level playing field and reciprocal treatment with respect to ethanol trade, noting that the association stands ready to work with Trump and his Administration to secure fair and equal trade with Brazil.
“While we would strongly prefer to return to the open two-way ethanol trade relationship that we enjoyed with Brazil between 2012 and 2017, it has become clear that the Brazilian ethanol industry (and some of the nation’s political leaders) no longer share our desire for free and open markets,” the RFA letter stated. “As such, it is only fair that the Brazilian ethanol industry face similar trade barriers when seeking access to the U.S. market. We strongly believe that the answer to this trade dispute requires the imposition of reciprocal duties on ethanol imports from Brazil.”