UNICA threatens WTO intervention over tariff

By Kris Bevill | November 15, 2010
Posted Dec. 8, 2010

The Brazilian Sugarcane Industry Association, UNICA, said it will encourage the Brazilian government to initiate dispute settlement proceedings at the World Trade Organization if currently proposed legislation to continue the ethanol import tariff passes the U.S. Congress.

While final details are yet to become available, it is believed that the tax extension package currently being finalized in the U.S. Senate contains language that would continue the Volumetric Ethanol Excise Ethanol Credit at a rate of 36 cents per gallon and would also continue the ethanol import tariff at its current rate of 54 cents per gallon. Joel Velasco, UNICA's chief representative in North America, said this would essentially double the import tariff, making it impossible for Brazilian exports to enter the U.S. market. "The stated rationale for the ethanol import tariff has always been to offset the blenders' tax credit and prevent Americans from subsidizing foreign energy production," he said. "This move would transform it from an offset to a punitive trade barrier."

UNICA has disputed the import tariff for years and lobbied extensively this year for a complete removal of the tariff. UNICA President and CEO Marcos Jank said the continuation of the tariff at what is perceived to be a higher level would leave the association no choice but to seek WTO intervention. "We will have exhausted all options to resolve our differences through informal dialogue and the U.S. legislative process," he said. "It will then be time for the WTO to resolve this matter in accordance with applicable international rights and obligations."

Matt Hartwig, communications director for the Renewable Fuels Association, said UNICA is resorting to scare tactics in order to protect its interests. "This is nothing short of a final p.r. ploy by a desperate foreign industry [with] millions of dollars seeking to tarnish the image of American farmers and ethanol producers while greenwashing its own questionable environmental and labor record," he said.

A final bill has yet to be released and it is unclear when Congress might vote on the legislation. However, Senate Majority Leader Harry Reid has told Senate members that he would like to adjourn by Dec. 17.