Brazil acts to protect ethanol producers as U.S. imports jump
Reuters
Published May 15, 2017 12:03PM ET
Brazil acts to protect ethanol producers as U.S. imports jump
By Luciano Costa
SAO PAULO (Reuters) - Brazil is toughening requirements for ethanol importers to protect domestic producers from a surge of U.S. corn ethanol, a minister said on Monday, adding that he opposed the idea of new tariffs that could trigger a costly retaliation.
Buyers of foreign ethanol will need to follow the same capacity and inventory demands as local producers, according to a government ruling published in the official gazette.
Energy Minister Fernando Coelho said the measure aims at giving "fair treatment" to importers and producers in the face of a "violent" increase in shipments from the United States.
Brazil is the main market for U.S. exports of corn ethanol, which have swelled in recent months to fill a gap left by falling domestic output, as Brazilian cane producers divert more of their crop to making sugar because of high prices.
Ethanol imports from the United States increased fivefold to a record 720 million liters in the first quarter, worth some $363 million, according to Brazil's trade ministry.
Coelho said Brazil needs to protect its ethanol industry from U.S. corn ethanol with measures other than import tariffs, which could trigger a U.S. response. "I think tariffs could cost us even more in retaliation," he said.
Reuters reported on April 27 that Agriculture Minister Blairo Maggi had asked Brazilian trade authority Camex to impose tariffs on U.S. ethanol imports. The cane industry in northeast Brazil, the main point of entry for ethanol imports, is leading calls for a 20 percent tariff.
The Camex executive committee held off deciding the matter at a meeting this month to consider the broader implications of a tariff. The committee is expected to make a decision at a meeting in early June.
"A U.S. retaliation is possible and that is being taken into account in discussion of a tariff," Trade and Industry Minister Marcos Pereira told Reuters last week.
Coelho said that his ministry would not adopt any other measures to protect the local industry but added that producers were presenting demands to Camex and the Agriculture Ministry.
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Written By: Reuters
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