Doubling import tax on ethanol will escalate Brazil-U.S. trade conflict, Says Brazilian Sugarcane Industry Association

In light of ongoing negotiations in the U.S. Congress, regarding the future of subsidies in support of domestic ethanol production and the US$0.54 per gallon tariff imposed on imported ethanol, the Brazilian Sugarcane Industry Association (UNICA) is issuing the following statement. All remarks should be attributed to UNICA President & CEO, Marcos Jank:

“For 30 years, the United States has been subsidizing corn ethanol and imposing trade barriers on imported ethanol. Over the last three years, UNICA has sought to engage with various stakeholders in the United States in an effort to reform U.S. ethanol policy in a way that reduces trade distortions and would avoid trade conflict. However, after being rebuffed twice – first in the Bush Administration’s 2008 Farm Bill and now apparently during the Obama lame duck negotiations – it is clear that the United States is not committed to open and fair trade in clean energy, particularly ethanol.

The stated rationale for the ethanol import tariff has always been to offset the blenders tax credit and prevent Americans from subsidizing foreign energy production. Unfortunately, lame duck legislation negotiated by the President and Congressional leaders is set to double the import tax on clean, affordable alternatives like sugarcane ethanol from nine to 18 cents and transform the tariff from an offset to a punitive trade barrier.

Consequently, UNICA will urge the Brazilian government to initiate dispute settlement proceedings at the World Trade Organization (WTO) as soon as this legislation passes Congress and is signed by President Obama. We will have exhausted all options to resolve our differences through informal dialogue and the U.S. legislative process. It will then be time for the WTO to resolve this matter in accordance with applicable international rights and obligations.”