Lawmakers urge Lighthizer to press Brazil on ethanol tariffs

August 20, 2020

BY Erin Krueger

A group of 20 members of Congress representing ethanol- and corn-producing regions sent a letter to U.S. Trade Representative Robert Lighthizer on Aug. 20 asking him to urge his counterparts in Brazil to terminate tariffs on U.S. ethanol.  

“Specifically, we request that you urge your Brazilian counterparts to terminate the ethanol tariff rate quota (TRQ) and prohibitive 20 percent tariff on out-of-quota imports, and instead reinstate the zero-duty exemption for U.S. ethanol from Brazil’s Common External Tariff that was in effect from 2012 to 2017,” they wrote.

The letter explains that Brazil and the U.S. maintained a reciprocal policy of applying low or zero duties on ethanol imports for nearly a decade. In September 2017, however, Brazil unilaterally decided to increase tariffs on U.S. ethanol through its restrictive TRQ system. Despite initial claims that the TRQ would only be in place for two years, Brazil extended the policy for a third year. In the letter, the members of Congress say they have reason to suspect that Brazil will once again extend the tariff at the end of August.

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“Ethanol is foundational to the trade relationship with Brazil and accounts for nearly half of all U.S. agricultural exports to the country,” they wrote. “Brazil was the largest U.S. ethanol export market last year, purchasing 332 million gallons of U.S.-produced ethanol worth $493 million. This economic activity is injected directly back into the communities we serve in the form of employee wages, feedstock payments to farmers, and continued investments in our ethanol facilities. Unfortunately, Brazilian purchases are down 32 percent from their peak in 2018 and appear likely to decline again in 2020 as the prohibitive 20 percent duty continues to hinder U.S. ethanol’s economic value in the country. For this strong partnership to continue, it is critical that U.S.-produced ethanol receive fair tariff treatment.”

“Brazil’s inequitable treatment of U.S. ethanol creates economic strain throughout the U.S. ethanol industry, especially during a year in which COVID-19 is devastating fuel demand in our country,” they continued. “The United States, however, continues to provide ethanol imports from Brazil virtually tariff-free access to the U.S. market. Last year, the U.S. imported 250 million gallons worth $596 million. Brazil must end this unfairness by eliminating its TRQ.”

The letter is signed by Reps. Darin LaHood, R-Ill.; Adrian Smith, R-Neb.; Roger Marshall, R-Kan.; Don Bacon, R-Neb.; Jim Hagedorn, R-Minn.; Mike Bost, R-Ill.; Cindy Axne, D-Iowa; Rodney Davis, R-Ill.; Vicky Hartzler, R-Mo.; Pete Stauber, R-Minn.; Jeff Fortenberry, R-Neb.; Ron Estes, R-Kan.; Collin Peterson, D-Minn.; Dusty Johnson, R-S.D.; Adam Kinzinger, R-Ill.; Cheri Bustos, D-Ill.; John Shimkus, R-Ill.; Dave Loebsack, D-Iowa; Tom Emmer, R-Minn.; and James Baird, R-Ind.

Growth Energy has spoken out to welcome the lawmakers’ push against Brazilian ethanol tariffs.

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“Brazil is a vital market for U.S. ethanol, but our exports to the nation plummeted by nearly a third last year under the nation’s unjustified and unfair approach,” said Emily Skor, CEO of Growth Energy. “For years, the U.S.-Brazil trade relationship has been a source of strength and growth for both nations, and we cannot afford to see that progress destroyed. With agricultural communities struggling to get back on their feet in the wake of COVID-19, it’s vital that U.S. negotiators use every tool at their disposal to ensure American exports are placed on a level playing field with Brazilian exports. We applaud leaders in Congress who are stepping up to ensure rural families have a seat at the table.”

A full copy of the letter can be downloaded from the Growth Energy website.

 

 

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