Ethanol Blog: Lawmakers Press Biden Administration to Fight Brazil Ethanol Tariff, Open Ag, Biofuels Trade

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March 20, 2024

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by Todd Neeley (DTN Progressive Farmer) With Brazil set to reconsider an ongoing tariff on U.S. ethanol imports a group of Republican lawmakers asked the Biden administration to be active in an upcoming public-comment period on the 16% tariff that is expected to rise to 18% this year. In addition, lawmakers have asked the administration to take steps to open more biofuels and agriculture export markets.

The lawmakers sent two separate letters on Monday, one to U.S. Trade Representative Katherine Tai and U.S. Secretary of Agriculture Tom Vilsack, and a second letter to President Joe Biden and Tai.

In that letter, the 20 lawmakers led by Reps. Randy Feenstra, R-Iowa, and Darin LaHood, R-Illinois, asked Tai and Vilsack to "engage" during the public-comment period to assure the interests of U.S. farmers and biofuels producers are represented.

The Foreign Trade Chamber at the Brazil Ministry of the Economy, or CAMEX, reinstated the import tariff on American ethanol on Feb. 1, 2023, and is planning to raise the tariff "while ethanol shipped to the United States from Brazil receives duty-free treatment," the letter said.

"Moreover, Brazilian ethanol imports are incentivized under the U.S. Renewable Fuels Standard and the newly created 40B Sustainable Aviation Fuel tax credit, as well as California's, Oregon's and Washington's low-carbon fuel standard programs. This treatment is not reciprocated for American corn ethanol in Brazil.

"We urge you to engage during CAMEX's comment period to further highlight this issue and remind CAMEX that this tariff imbalance, coupled with ongoing non-tariff barriers such as Brazil's impenetrable RenovaBio biofuel program, puts American ethanol, farmers, and rural communities at a severe economic disadvantage."

The letters were signed by LaHood, Feenstra, Mike Bost, Marchy Kaptur, Don Bacon, Mike Flood, Mary E. Miller, Mark Alford, Derrick Van Orden, Jake LaTurner, Brad Finstad, James R. Baird, Mike Carey, Adrian Smith, Mariannette Miller-Meeks, Lisa C. McClain, Michelle Fischbach, Dusty Johnson, Ashley Hinson and Zach Nunn.

In the second letter, the lawmakers asked the administration to remove trade barriers and to open new export markets for farmers and biofuels producers.

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For example, India has set a national blending goal of 20% ethanol by 2025 but maintains a ban on imports of fuel-grade ethanol.

The United Kingdom, they said, also has applied a cap on crop-based biofuels that begins in 2027 and becomes increasingly restrictive through 2032.

"As these trade restrictive policies continue and new market access barriers emerge, USTR must defend American farmers and our nation's position as a leading producer of biofuels," the lawmakers said. READ MORE

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USTR IS WORKING ON BRAZIL’S U.S. ETHANOL IMPORT TARIFF (Brownfield Ag News)
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Brazil Rebuffs US Pressure to Abandon Tariffs on Ethanol Imports: Country will protect its producers, agriculture minister says; Brazilian authorities suggested US increase blend mandate (Bloomberg)
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Excerpt from Brownfield Ag News: The president of the National Corn Growers Association says the chief ag negotiator in the Office of the U.S. Trade Representative is trying to resolve a proposed tariff increase on U.S. ethanol imports to Brazil.

Harold Wolle met with Doug McKalip today in Washington D.C. and says McKalip didn’t specify the resolution details, but…

“He’s had numerous meetings with ministers from Brazil and he’s very hopeful of a resolution to the issue and it should be forthcoming.”

Wolle says McKalip and Trade Representative Katherine Tai met with Brazil at the end of February at a World Trade Organization’s Ministerial Conference.

“The Brazilian representatives did discuss the tariff situation with Ambassador Tai and she’s well aware of the issue and is working on a resolution.”

Earlier this week, lawmakers sent two letters to the Biden administration asking for expanded market access for biofuels and continued engagement with Brazil on its U.S. import tariffs.

Wolle says he has more optimism about the resolution of Brazil’s import tariffs on U.S. ethanol following the meeting with McKalip. READ MORE

Excerpt from Renewable Fuels Association/Growth Energy/U.S. Grains Council: This week, the Renewable Fuels Association, U.S. Grains Council and Growth Energy jointly submitted comments within the Brazilian Chamber of Foreign Trade (CAMEX) regarding the Brazilian tariff on imported U.S. ethanol.

Background:

In October 2023, ABICOM (the Brazil association of fuel importers) formally requested to drop the ethanol duties because data showed the tariff raised fuel costs for domestic consumers.

In anticipation of this open comment period, the Renewable Fuels Association, U.S. Grains Council and Growth Energy mobilized a diverse set of stakeholders—including government agencies—to seek a permanent removal of the Brazilian tariff on imported U.S. ethanol. As of January 1, 2024, the current duty stands at 18% on all incoming U.S. ethanol, while Brazilian ethanol imported into the U.S. enjoys free access within the U.S. market.

Joint Comments:

The three organizations’ joint comments, submitted in Portuguese, included the following:

“Considering this significant discrepancy in our historically productive commercial relationship between countries, we would like to stress that the U.S. industry will continue to advocate for restrictive measures to entry for Brazilian ethanol into the U.S., in the case that the Brazilian government does not rethink the current tariff policies…. Despite the promising opportunities emerging new ethanol export markets could bring to both countries, we stress that we are not willing to cooperate with Brazil in any possible partnerships, nor with technology transferring or within new uses for ethanol such as SAF, in case the market is not completely open for free trade for ethanol. We strongly consider the permanent reinstatement of the duty-free access for ethanol as a window of opportunity to strengthen the bilateral agenda and stimulate trade cooperation between Brazil and the United States.”

Our organizations will continue to monitor the situation and report back to our respective members as we learn more after the comment period. READ MORE