U.S. Rep. Darin LaHood (R-IL) last week sent a letter to U.S. Trade Representative Robert Lighthizer urging for a prioritized reduction and elimination of Brazilian tariffs that target U.S. ethanol.
Rep. LaHood, a member of the House Ways and Means Committee and co-chair of the U.S.-Brazil Caucus, led the Aug. 20 letter with Rep. Adrian Smith (R-NE).
The letter, signed by 18 additional bipartisan members of the House, asked for a “level playing field for U.S. ethanol [to] be a high priority during bilateral trade negotiations.” The lawmakers specifically asked Lighthizer to urge his Brazilian counterparts to terminate Brazil’s prohibitive ethanol tariff rate quota (TRQ).
U.S. ethanol production faces a 20 percent tariff on imports beyond the specified quota, according to Rep. LaHood’s office. In place of the trade barriers, the lawmakers are asking Lighthizer to urge Brazilian counterparts to reinstate the zero-duty exemption for U.S. ethanol from Brazil’s Common External Tariff. The exemption was in effect from 2012 to 2017, the letter stated.
Initial claims stated that the TRQ, originally set in September 2017, would only be in place for two years, however, the Brazilian government extended the policy by another year, the lawmakers said in their correspondence, further stating that they are expecting the TRQ to be again extended by the end of the month.
The ethanol trade accounts for almost half of all U.S. agricultural exports to Brazil, Rep LaHood and his colleagues stated in their letter. Brazil was the largest U.S. ethanol export market last year, purchasing 332 million gallons of U.S.-produced ethanol worth $493 million, the letter said. Still, Brazilian purchases are down 32 percent from the record high in 2018 due to the tariff.
“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,” the lawmakers wrote. “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.”