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Brazil places 20 percent tariff on U.S. ethanol

Brazil places 20 percent tariff on U.S. ethanol

American industry groups call the move ‘unjust’

By Diego Flammini
Staff Writer

American ethanol exports to Brazil will once again be subject to tariffs.

The expiration of a tariff-rate quota (TRQ) on Monday means future U.S. ethanol exports to Brazil will face levies of 20 percent.

The TRQ, which allowed almost 200 million gallons of U.S. ethanol to enter Brazil without tariffs, expired on Aug. 31 but received a 90-day renewal on Sept. 11.

This window was to give the two countries more time to negotiate a permanent agreement while Brazilian ethanol continued to enter the U.S. tariff-free.

Since May, the U.S. has exported fewer than 4 million gallons of ethanol to Brazil while the South American country has exported almost 100 million gallons of ethanol to the U.S.

Brazil is part of the Mercosur trading bloc with Argentina, Paraguay and Uruguay. Trade between those countries is free, while goods coming from outside of the bloc are subject to tariffs.

This trading structure creates an unfair scenario, U.S. industry groups said.

“Brazilian ethanol receives unfettered access into the U.S. market, while U.S. producers are denied reciprocal market access due to a restrictive import tariff designed solely to make U.S. product less competitive,” the U.S. Grains Council, Growth Energy, the Renewable Fuels Association and the National Corn Growers Association, said in a Dec. 16 statement.

American farm and ethanol groups want this issue to be one President-elect Biden handles sooner than later.

The Illinois Corn Growers Association (ICGA) and Illinois Renewable Fuels Association “will urge the incoming (Biden) Administration to respond to Brazil’s action and ensure that U.S. ethanol is allowed the same access to the Brazilian market that Brazilian ethanol has in the U.S.,” said Randy DeSutter, president of the ICGA.

Brazilian officials do not seem too concerned about any U.S. retaliations.

Evandro Gussi, president of Unica, Brazil’s sugar and ethanol lobby group, sees no reason for the U.S. to take action, like limiting sugar imports, in response to the ethanol tariffs, he said during a news conference, Reuters reported.

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