Trade Deal Opens EU to More Ethanol Imports from South America

by Erin Voegele (Ethanol Producer Magazine) A new trade agreement reached June between Mercosur, a South American trade bloc consisting of Argentina, Brazil, Paraguay and Uruguay, and the European Union is expected to impact ethanol producers in both regions.

The agreement includes quotas for imports of sugar, ethanol fuel and ethanol used for industrial purposes. According to information released by the EU, the trade agreement establishes a 450,000 metric ton per year quota for duty free ethanol to enter the EU. An additional 200,000 metric tons per year of ethanol for all uses, including fuel, will be subject to an in-quota duty of one-third of the current rate.

ePURE, the European association for renewable ethanol, has spoken out to criticize the deal, calling the agreement a blow to Europe’s farmers and ethanol industry and stating the deal makes concessions to Mercosur countries that essentially sacrifice the EU agriculture sector and domestic production of ethanol in exchange for gains elsewhere.

“The agreement essentially trades away Europe’s ethanol industry unless the EU can act quickly and grow the European ethanol market to accommodate a flood of imports,” the group said in a statement. “That means aligning trade policy with environmental and renewable energy policy by, for example, ensuring that the EU’s long-term decarbonization strategy includes a stronger push for sustainable biofuels such as ethanol. It also means that during the implementation phase of the agreement Member States and the European Parliament fight to give EU farmers the tools to absorb the negative imports of imports originating in Mercosur.”

“The Commission has spent several years trying to shrink the market for a fuel that helps decarbonize its transport sector and reduces engine pollutants in today’s vehicle fleet, and with this deal it is offering what’s left of that market to Brazilian producers and sugarcane farmers,” Desplechin continued. READ MORE