News last update:6 Aug 2012

US ethanol duties anger Brazilian firms

Brazilian ethanol producers want President Luiz Inacio Lula da Silva to press President Bush to remove a steep U.S. import tariff on the increasingly important fuel when he visits Brazil next month.

While Brazilian producers are able to avoid the 54-cent-a-gallon direct-import tariff by shipping ethanol to the United States via the Caribbean, there are other costs involved, including an unfavourable exchange rate, that make it hard for them to compete.

Under the Caribbean Basin Initiative trade agreement, Brazilian hydrous ethanol can be shipped to the Caribbean and processed into anhydrous ethanol for re-export. Even though direct shipments to the United States were higher than those via the Caribbean, Brazilian producers say that the U.S. tariff is still unjustified.

"The ethanol market could be much bigger, if he Bush considered free or less restricted imports," said Plinio Nastari, president of analytical firm Datagro. Last year, Brazil exported 475.5 million litres (125.6 million gallons) of ethanol to the United States, according to the International Ethanol Trade Association in Sao Paulo.

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