Growth Energy, the Renewable Fuels Association (RFA), and the U.S. Grains Council (USGC) are calling upon the U.S. government to develop an immediate response to Brazil’s newly implemented tariffs on U.S. ethanol imports, a trade barrier that threatens over $750 million in U.S. exports and U.S. jobs.
On Aug. 23, Brazil’s Chamber of Foreign Trade (CAMEX) imposed an immediate two-year tariff-rate quota (TRQ) system for ethanol imports. Under the TRQ, a 20% tariff will be applied to purchases from the United States after a 600 million-liter (158.5 million gallon) quota is met. This year fuel ethanol exports to Brazil are at 1.17 billion liters (310 million gallons) through July, according to U.S. Census Bureau trade data.
The three organizations are urging the administration to immediately engage their Brazilian counterparts on the future of the two countries trade relationships with regard to biofuels.
“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,” the groups said.
According to the three organizations, Brazil’s tactics are the latest step in a troubling global trend toward protectionist tariffs and other actions against the U.S. biofuels industry.
“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,” said Bob Dinneen, president and chief executive officer of the RFA. “In fact, U.S. policies like the RFS 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. Unfortunately, Brazil’s recent protectionist actions are turning back the clock to an era of isolationism and inefficient global trade. In the end, Brazil’s new trade policy not only harms U.S. ethanol producers, but also penalizes Brazilian consumers who will be forced to pay more for their fuel as a result of CAMEX’s actions.”
The groups are hoping to move forward with a better trade relationship not to shift backward.
“We are encouraging our leadership to take action that will get us working together again,” said Tom Sleight, president and CEO of the USGC. “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.”