U.S. Ethanol Industry Asks Trump to Intervene in Brazil Dispute

  • Trade groups cite exports, jobs at risk over import tariff
  • Trump has previously stated his support for ethanol producers

An ethanol plant in Nevada, Iowa, on Jan. 30, 2016.

Photographer: Luke Sharrett/Bloomberg

U.S. ethanol producers will ask the Trump administration to intervene in a trade dispute with Brazil as tensions between the industry and foreign competitors continue to escalate.

The Renewable Fuels Association, Growth Energy and the U.S. Grains Council -- all Washington-based lobbying organizations -- said in a statement Thursday that the government should “take immediate action and consider all avenues to encourage Brazil” to revoke or at least ease the 20 percent tariff on ethanol imports from the U.S. it announced last month.

The groups are drafting a letter that they plan to send to the U.S. Agriculture Department and the U.S. Trade Representative, requesting the agencies consider the tools that they have under World Trade Organization rules, Growth Energy Chief Executive Emily Skor said in an interview. More than $750 million in U.S. exports and jobs are at stake, the groups said.

The move comes two weeks after the U.S. Commerce Department proposed duties on biodiesel imported from Indonesia and Argentina, claiming producers in those countries benefit from state subsidies. Earlier this year, China slapped tariffs on U.S. ethanol and a byproduct that’s used as animal feed.

The U.S. government’s response will be a test for Trump, who has repeatedly pronounced his support for the domestic ethanol sector, most recently during a campaign-style rally in June. Last week, Senator Chuck Grassley, an Iowa Republican, said the president had assured him that he’s “pro-ethanol.” 

Midwest Corn

“My members are looking at how this president campaigned," Skor said. “Based off of that, there is a hope, and I would add, an expectation, that this government will do everything” it can to help.

Ethanol is made primarily from corn in the U.S. while soybeans are the main feedstock for biodiesel. Production of biofuels and the crops in the U.S. are concentrated in the Midwest, a region that helped swing the November general election to Trump. Yet many farmers have been dismayed by Trump’s threats to exit the North American Free Trade Agreement, which would undermine U.S. farm exports.

Trump’s support must go beyond setting the annual domestic consumption targets for ethanol under the so-called Renewable Fuel Standard, said Skor, whose group represents U.S. ethanol producers Poet LLC and Green Plains Inc. The administration should know that “there’s a global aspect as well” to the industry’s demands, she said.

The Brazilian ethanol duty applies to imports from the U.S. in excess of an annual cap of 600 million liters (158 million gallons). Brazil’s own ethanol industry uses sugarcane, of which it’s the largest grower.

Argentina is trying to strike an accord to suspend the preliminary duties set by the U.S. on biodiesel, Horacio Reyser, the Foreign Ministry’s international secretary, said by phone from Brussels. Any deal would have to be approved by U.S. producers.

Separately, the European Union confirmed Thursday it’s slashing anti-dumping duties on imports of Argentine biodiesel, in line with a ruling from the WTO.

— With assistance by Jennifer A Dlouhy, and Jonathan Gilbert

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