The U.S. Grains Council, Growth Energy, and the Renewable Fuels Association expressed their disappointment with the news that the Brazilian government amended the recent August 31st rule that raised the quota on U.S. ethanol imports under the tariff rate quote (TRQ) from 600 million liters per year to nearly 750 million liters per year. The TRQ regulates the threshold of ethanol that can be imported into Brazil without triggering a 20 percent tariff.
This is a step backwards in Brazilian government claims that it is an advocate of free markets. Growth Energy, U.S. Grains Council, and Renewable Fuels Association released the following statement:
“The decision by Brazil to place seasonal restrictions on its tariff rate quota for U.S. ethanol is disappointing and puts up additional roadblocks to free trade, hurting consumers and our respective ethanol industries.
For more than 15 years, Brazilian ethanol industry leaders lobbied the U.S. government to drop the tax on imported ethanol, saying:
• ‘[We] believe that free trade is a two-way street and Brazil…will lead by example and eliminate barriers to renewable, clean fuels.’
• ‘[We’re] asking the Brazilian government to make the tariff elimination permanent if the U.S. Congress will do the same and drop the tax on imported ethanol.’
• ‘It’s time for these two countries to show leadership and work together to develop a truly global free market for ethanol, without trade barriers, as is the case for oil.’
• ‘Consumers win when industries compete. Brazilian ethanol producers are willing to compete for consumers. What about American producers?’
The U.S. took the high road and eliminated its ethanol tariff.
The action by Brazil this week to impose seasonal restrictions on the sale of ethanol does not create a case study in leading by example, but rather the opposite – it is up-ending real opportunities for free trade.”