Brazil Temporarily Removes Ethanol Tariffs

In an effort to put pressure on the U.S. amidst international trade negotiations, the Brazilian government announced a temporary suspension of tariffs on ethanol imports.

The move, which would eliminate the nation's 20 percent tariff on imported ethanol through the end of 2011, comes in chorus with an announced settlement between the U.S. and Brazil over their ongoing cotton dispute. The U.S. currently has an ethanol tariff of 54 cents per gallon and a 2.5 percent ad valorem tax.

Over recent years, the Brazilian ethanol industry, in particular, the Brazilian Sugarcane Industry Association (UNICA), has been extremely vocal against the U.S. tariffs on the imported biofuel.

Joel Valasco, UNICA's Chief Representative for North America, challenges the US to make similar concessions.

"The question now is whether the U.S., as the world's number-one ethanol producer, will follow suit. Consumers win when industries compete. Brazilian ethanol producers are willing to compete for consumers. What about American producers?"

The Renewable Fuels Association (RFA), the national trade association for the U.S. ethanol industry, quickly released a statement discouraging reciprocation from Washington.

"America should continue a constant and consistent trade and tax policy that provides for the growth of the domestic industry while not penalizing imports should the market demand them... The tariff serves to protect American taxpayers from further subsidizing foreign ethanol industries already benefiting from generous government support in their own countries."

Brazil's announcement is certainly on the minds of Congress and the Obama Administration as the U.S. ethanol tariff, along with the 45 cents per gallon ethanol tax credit, expire at the end of the year. Efforts are underway to extend the tax credit and tariff, including the Renewable Fuels Reinvestment Act, a bill introduced by Rep. Earl Pomeroy (D-N.D.) to extend the domestic ethanol provisions through 2015.

source: wisconsinagconnection