Ethanol Blog

United States efforts to convince Brazil to eliminate its tariff rate quota on ethanol imports, may have hit a snag as a result of questions raised by members of the House Foreign Affairs Committee about the actions of the American ambassador in Brazil.

A July 31 story in the New York Times said the committee was "extremely alarmed" by reports the ambassador Todd Chapman "signaled to Brazilian officials they could help get President Trump re-elected by changing their trade policies," the Times reported.

In a July 31 letter to Chapman, Rep. Eliot Engel, D-New York, chairman of the House Foreign Affairs Committee; and Rep. Albio Sires, D-New Jersey, chairman House Subcommittee on the Western Hemisphere, Civilian Security, and Trade; said, "These statements are completely inappropriate for a U.S. ambassador to make, and if true, would be a potential violation of the Hatch Act of 1939... Elections in the United States are for the American people and the American people only to decide...

"Finally, it is important to note that the purpose of this correspondence is not to take a position on ethanol tariffs –- an issue which is worthy of a meaningful conversation in both of our countries. This is about something much bigger. Given the events of 2016, it is all the more important for U.S. ambassadors serving our country abroad to not insert themselves into U.S. elections or encourage foreign government officials from any branch of government to do so."

Earlier this week, Iowa Republican Sens. Charles Grassley and Joni Ernst, fired back in a letter to Chapman.

"To be frank, the only thing partisan about ethanol that we see are the arguments underlying Chairmen Engel and Sires' letter," the senators said.

"Essentially, they are saying President Trump and officials like yourself should not fight for America's ethanol industry because it's an election year –- and a president who delivers on his promises is bad for them. (As the media recently captured, Chairman Engel may be quite candid that partisan motives govern his actions: 'if I didn't have a primary, I wouldn't care.' But that's his problem. Good policy that improves American lives doesn't become inappropriate just because it might make it harder for one party to win elections.

"In short, the Trump administration is absolutely right in trying to remove barriers to U.S. ethanol. The fact that President Trump is persistent and aggressive in trying to deliver on his promises to make life better for the American people isn't playing politics; trying to stop it is."

Time is running out on Brazil's current ethanol tariff on some U.S. ethanol imports and there is a pending threat to set a new tariff on all of those imports.

Trump said during a news conference on Aug. 10, his administration is considering a reciprocal tariff against Brazil.

In response to a reporter's question Trump said, "As far as Brazil is concerned, if they do tariffs, we have to have an equalization of tariffs. You may be seeing something on that very soon."

Brazil's current tariff rate quota is set to expire at the end of August. Brazilian ethanol industry and government officials have suggested slapping a 20% tariff on all U.S. ethanol imports starting in September.

U.S. ethanol exports to Brazil have fallen as a result of the tariff rate quota and over-quota tariff. Those exports dropped by about 33% from 2018 to 2019. The Renewable Fuels Association said those shipments continue to fall in 2020, and U.S. producers have lost about 350 million gallons of demand for ethanol since late 2017, valued at about $400 million.

Read Engel's and Sires' letter here: https://foreignaffairs.house.gov/…

Read the senators' letter here: https://www.grassley.senate.gov/…

Read the New York Times story here: https://www.nytimes.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

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