WASHINGTON, DC, US — Brazil has extended a 20% tariff rate quota on all US ethanol imports for the next 90 days. The United States and Brazil have begun discussions to improve market access for ethanol and sugar in both countries.

“The two countries will also discuss ways to ensure there is fair market access along with any increase in the consumption of ethanol, as well as to coordinate and ensure that the ethanol industries in both countries will be treated fairly and benefit from future regulatory changes on biofuel products in Brazil and the United States,” said the Office of the US Trade Representative. “The discussions should aim to achieve reciprocal and proportional outcomes that generate trade and open markets to the benefit of both countries.”

From 2012 to 2017, the Brazilian government had a zero-duty exemption for US ethanol imports to the country, according to the US House of Agriculture Committee. Brazil is a major purchaser of US ethanol, importing 332 million gallons of US ethanol worth $493 million in 2019.

Collin Peterson, chairman of the US House of Agriculture Committee, is not encouraged by the extended TRQ’s and air concerns of tariff wars.

“American corn and ethanol producers are struggling to access domestic markets because of the coronavirus and the Environmental Protection Agency's reckless implementation of the Renewable Fuel Standard,” Peterson said. “Brazil’s move to increase tariffs on American ethanol is more bad news for our producers. The Trump administration should continue working with Brazilian officials to restore the duty-free access that was in place from 2012 to 2017.

“Tariff wars have consequences, and our biofuels producers are seeing that first-hand.”

In a joint statement the US Grains Council (USGC), Growth Energy, the Renewable Fuels Association and the National Corn Growers Association (NCGA) said they do not believe Brazil will benefit from the extended TRQ.

 “The US Grains Council, Growth Energy, the Renewable Fuels Association and the National Corn Growers Association believe the 90-day extension of the TRQ serves neither Brazil’s consumers nor the Brazilian government’s own decarbonization goals, especially while Brazil’s ethanol producers continue to be afforded virtually tariff-free access to the US market,” the joint statement said. “The extension falls during Brazil’s annual inter-harvest period when US ethanol exports to Brazil are traditionally low, causing greater uncertainty for US exporters looking to make selling decisions now for the traditionally higher Brazilian demand in the winter months.

“While the Brazilian ethanol market has not been fully reopened to imports, we appreciate the continued support and efforts of the US government as we use this 90-day period to aggressively pursue an open and mutually beneficial ethanol trading relationship with Brazil.”

The associations will continue to focus on creating an equal playing field for ethanol trade.

“The US ethanol industry actively sought, through repeated dialogue with local industry and government, to illustrate the negative impacts of tariffs on Brazilian consumers and the Brazilian government’s own decarbonization goals,” the associations said. “However, it seems Brazil’s government has left its own consumers to pay the price through higher fuel costs once again. While we would have preferred Brazil abandon its ethanol import tariffs entirely and resume its free trade posture on ethanol, which it held for several years before the TRQ, we view its decision to temporarily extend the TRQ on ethanol at the current level as an opportunity to continue discussions toward that end.

 “The US ethanol industry remains focused on expanding the global use of low-carbon ethanol, reducing barriers to trade and elevating its prominence in energy discussions. We remain eager to collaborate and cooperate with other nations that share in the vision of a free and open global ethanol market.”