Zeroing US ethanol import tariff hurts Brazilian producer, says Fava Neves

Zeroing US ethanol import tariff hurts Brazilian producer, says Fava Neves

With the trade war between the United States and China, Brazil considers fully opening the ethanol market to the US

Sputnik Brasil – 08 ago 2019 – 08:58

Brazilian authorities consider zeroing on the ethanol import tariff to facilitate ongoing negotiations on the bilateral agreement with the United States. The elimination of ethanol tariffs is advocated by the Minister of Economy, Paulo Guedes.

In an interview with Sputnik Brazil, Marcos Fava Neves, professor of Strategy and Agribusiness, USP-Ribeirão Preto, said that the measure may even benefit the final consumer, but harms the Brazilian ethanol industry.

“For the Brazilian people it is beneficial because you have a cheaper product and will make the fuel cheaper. Now for the Brazilian ethanol-producing industry, be it corn or sugarcane, it’s a threat, ”he said.

Precisely for this reason, the Ministry of Agriculture opposes and defends the renewal of the current import quota. Minister Tereza Cristina said that any opening of the market will be done gradually so as not to affect the ethanol sector in Brazil.

Marcos Fava Neves also said that the Brazilian government could demand a counterpart from the United States government and allow the free entry of sugar produced in Brazil.

“We would have much to gain from access to the American sugar market. Who would win more would be the food and beverage industries in the United States, which would pay a sugar cheaper than they pay today with all tariffs, ”he said.

In August 2017, the Brazilian government imposed a 20% tariff on US ethanol shipments exceeding the annual quota of 600 million liters, after US imports deteriorated local prices.

For its part, the US ethanol sector has been suffering since US President Donald Trump started a trade war with China, the largest US buyer of ethanol.



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