South America Calling

Brazil Raises US Ethanol Quota, Leaves Tariff in Place

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Brazil announced it will allow more ethanol gallons into the country from the United States tariff-free. (DTN file photo)

Though the Brazilian government announced it would raise the quota for ethanol imports from the United States not subject to the country's 20% tariff, ethanol and grains interest groups said in press statements on Tuesday that Brazil should fully open the doors to ethanol.

Brazil is raising the tariff rate quota, or TRQ, from about 159 million to about 198 million gallons for the next year. The quota essentially regulates the amount of U.S. ethanol allowed into Brazil before the tariff kicks in.

Brazil was the top export market for U.S. ethanol in 2018 at 513 million gallons, up from 428 million in 2017.

"We appreciate the U.S. government's efforts to raise the TRQ, however we are disappointed that Brazil did not remove their tariff completely to allow a fully open market," said Emily Skor, chief executive officer of Growth Energy.

"Brazilian ethanol continues to have virtual 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."

Ryan LeGrand, president and the chief executive officer of the U.S. Grains Council, said he was disappointed the Brazilian government continued the tariff despite receiving information on how the quota was hurting Brazil's consumers.

"We are very disappointed Brazil did not fully consider the vast information we and the U.S. government provided them showing the detrimental and negative impact this TRQ has on Brazilian consumers by raising prices at the pump," LeGrand said.

"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."

Renewable Fuels Association President and Chief Executive Officer Geoff Cooper, said Brazil's decision is a "major setback" in the U.S. relationship with the Brazilian sugar and ethanol industries.

"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," Cooper said.

"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 un-level playing 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."

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