In response to a recent joint Brazil - US trade statement on the expired bilateral ethanol agreement, the Renewable Fuels Association (RFA), US Grains Council, Growth Energy, and the National Corn Growers Association (NCGA) believe the 90-day extension of Brazil's tariff-rate quota (TRQ) serves neither Brazil’s consumers nor the Brazilian government’s own decarbonization goals, especially while Brazil’s ethanol producers continue to be afforded "virtually tariff-free" access to the US market.
After expiring on August 31, 2020, Brazil applied a 20 percent tariff on all US ethanol. On September 11, 2020, a joint agreement was reached whereby Brazil’s tariff-rate quota (TRQ) has been extended for a further 90 days starting on September 14, 2020, as the two countries decided to conduct “results-oriented” discussions on an arrangement to improve market access for ethanol and sugar in both countries.
In a joint statement, Geoff Cooper, President, and CEO of the Renewable Fuels Association (RFA), Ryan LeGrand, President and CEO, US Grains Council (USGC); Emily Skor, CEO, Growth Energy; and Jon Doggett, CEO of the National Corn Growers Association (NCGA) point out that the extension falls during Brazil’s annual inter-harvest period when US ethanol exports to Brazil are traditionally low, causing greater uncertainty for US exporters looking to make selling decisions now for the traditionally higher Brazilian demand in the winter months.
While the Brazilian ethanol market has not been fully reopened to imports, we appreciate the continued support and efforts of the US government as we use this 90-day period to aggressively pursue an open and mutually beneficial ethanol trading relationship with Brazil, the statement said.
The signatories state that the US ethanol industry has actively sought, through repeated dialogue with local industry and government, to illustrate the “negative impacts of tariffs” on Brazilian consumers and the Brazilian government’s own decarbonization goals.
However, it seems Brazil’s government has left its own consumers to pay the price through higher fuel costs once again. While we would have preferred Brazil abandon its ethanol import tariffs entirely and resume its free trade posture on ethanol, which it held for several years before the TRQ, we view its decision to temporarily extend the TRQ on ethanol at the current level as an opportunity to continue discussions toward that end.
The joint statement also emphasized that the American ethanol industry remains focused on “expanding the global use of low-carbon ethanol, reducing barriers to trade and elevating its prominence in energy discussions”.
We remain eager to collaborate and cooperate with other nations that share in the vision of a free and open global ethanol market, the signatories concluded.
