New Tariff Unfairly Inhibits U.S. Ethanol Ability To Compete In Brazil

USGC opposes Brazil ethanol tariff

The U.S. Grains Council (USGC), jointly with Growth Energy and the Renewable Fuels Association, called Thursday for the U.S. government to respond to a new, restrictive Brazilian tariff in order to enable the U.S. ethanol industry to fairly compete in the Brazilian marketplace. 

The new policy, recommended by the Brazilian Chamber of Foreign Trade, went into effect on Sept. 1, 2017 and will last for two years. The policy would apply a 20 percent tariff to all imports of ethanol after a 600 million liter (158.5 million gallon) tariff rate quota (TRQ). 

Brazil has consistently ranked as the first or second market for U.S. fuel ethanol exports for more than a decade and is expected to be one of the fastest growing ethanol markets over the next 15 years. U.S. exports to Brazil have increased significantly the last two years. Brazil has purchased 1.17 billion liters (310 million gallons) this calendar year through July 2017, according to Census Bureau trade data. 

The new tariffs create an artificial barrier to U.S. ethanol exports and put this substantial market at risk. Brazil’s current annual ethanol consumption is just under 30 billion liters, making the import TRQ very restrictive. In addition, these actions inhibit the U.S. ethanol industry from competing for Brazilian business and retaining access to the market.

“We are encouraging our leadership to take action that will get us working together again,” said USGC President and CEO Tom Sleight. “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.”