Ethanol Blog

Two weeks after the Brazilian government elected to slap a tariff on ethanol imports from the United States, biofuels and agriculture interest groups are growing anxious.

On Aug. 23, 2017, Brazil's Chamber of Foreign Trade imposed a two-year tariff-rate quota system for ethanol imports. A 20% tariff will be applied to purchases from the U.S. after a 600-million-liter (158.5 million gallon) quota is met. In 2017 thus far, ethanol exports to Brazil are at 1.17 billion liters (310 million gallons) through July, according to U.S. Census Bureau trade data.

Officials with the Renewable Fuels Association, Growth Energy and the U.S. Grains Council said in statements on Thursday there needs to be an "immediate response" to the new tariffs because they threaten more than $750 million in U.S. exports and American jobs.

"The three organizations, which work jointly and with the U.S. Department of Agriculture (USDA) to develop overseas markets for U.S. ethanol, are imploring the administration to immediately engage their Brazilian counterparts on the future of our relationships with regard to biofuels," the groups said in a news release on Thursday.

"It is vital that the administration take immediate action and consider all avenues to encourage Brazil to either revoke the TRQ or substantially increase the tariff-free quota level to better reflect the current ethanol market and trade realities.

"Brazil's tactics are the latest step in a troubling global trend towards protectionist tariffs and other actions against the American biofuels industry. As the largest ethanol export market for American producers, the impact of this economic attack is both damaging and thoroughly counterproductive. American jobs, farms, and businesses are at risk; this cannot go unanswered."

Growth Energy Chief Executive Officer Emily Skor said the U.S. government "should not take this lying down" and that Brazil's actions "undermine the zero-ethanol tariff arrangement between our two countries that has been in place for several years and that damage the potential cooperation between our two countries to expand global ethanol demand and trade."

Renewable Fuels Association President and Chief Executive Officer Bob Dinneen said Brazil's actions are "turning back the clock to an era of isolationism and inefficient" global trade.

"About a decade ago, the U.S. and Brazil put aside a long-standing dispute over trade policy and began a process of mutual trade barrier disarmament," he said in a statement.

"In fact, U.S. policies like the RFS (Renewable Fuel Standard) actually created additional opportunities that further incentivized the importation of Brazilian sugarcane ethanol. Both countries have benefited greatly from the free and fair trade that resulted from the elimination of arcane barriers, and the U.S. and Brazilian ethanol industries worked arm-in-arm to build a robust global market for renewable fuels."

U.S. Grains Council President and Chief Executive Officer Tom Sleight said the U.S. government should find a way to re-open a biofuels partnership between both countries.

"I look forward to the day we are back to working together on global markets rather than putting in place protectionist measures that will ultimately hurt the global industry and our collective ability to reap the benefits of biofuels," he said.

In a statement to DTN, Sen. Charles Grassley, R-Iowa, said the U.S. government should consider the next steps in response.

"Brazil's sudden tariff increase on ethanol imports from the United States is concerning, and I'm looking closely at this issue," he said.

"U.S. trading partners have an obligation to follow the terms of existing agreements and the administration should consider available enforcement measures. International trade should be fair and not put U.S. industry or American workers at a disadvantage."

The U.S. Trade Representative did not respond to DTN's request for comment.

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

Follow me on Twitter @toddneeleyDTN

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