Brazil’s Foreign Trade Chamber – Camex – has delayed a decision on whether it will impose an ethanol tariff to combat surging US imports by 30 days.
According to a senior government official, Camex could not yet agree on applying the tariff and might instead consider enacting quotas on imported ethanol at its next meeting, Reuters reported on 26 July.
The proposed quota would allow for 500,000 tonnes/year of ethanol imports before a 20% import duty would kick in, the official said.
The Brazilian Ministry of Agriculture had recommended a 17% duty after Brazilian ethanol producers demanded protection for their domestic market, but other ministries opposed the plan as they wanted to maintain good relations with the USA, which they see as an important business partner.
Experts warned that imposing an import tariff could “destroy” the free trade in ethanol the USA and Brazil established in 2009, Reuters wrote.
Joel Velasco, Latin America expert at business strategy firm Albright Stonebridge Group, told Reuters: “Today’s delay is another opportunity for cooler heads to prevail and for Brazil to not turn its back on market-driven competition.”
Velasco added that even establishing a quota would undermine the credibility Brazil’s sugarcane industry had managed to build up globally.
In the first half of 2017, Brazilian ethanol imports skyrocketed to 1.3M m3, marking an increase of 330% year-on-year, Reuters wrote.