In light of information disseminated in the media over the past week, regarding the possibility of Brazil importing ethanol, the Brazilian Sugarcane Industry Association (UNICA) provides the following clarifications:

On October 30, 2009, UNICA sent a letter to the Brazilian Chamber of Foreign Trade (CAMEX) requesting the elimination of the 20% tariff charged by Brazil on ethanol imports. This request reflects a historical position of the organization, which has always advocated for free trade, against tariff or non-tariff barriers for renewable fuels that have sound energy and environmental efficiency, as is the case with Brazilian sugarcane ethanol.

It is also a coherent position, since UNICA works on several fronts, including through its offices in Washington and Brussels, to open markets and expand Brazilian ethanol exports, transforming it into a global energy commodity.

UNICA believes that free trade is a two way street and Brazil, as the largest producer of cane ethanol and largest exporter of ethanol, with 60% of the global market, should lead by example and eliminate barriers, which would then allow Brazil to pursue similar measures from countries that maintain their markets heavily protected.

It is important to note that eventual imports do not represent anything new as Brazil has imported ethanol from various countries on many occasions over the years. The table below shows the import volumes and main countries of origin of the imported product. UNICA has been monitoring the market and is not aware of any fuel ethanol imports during 2009, nor any shipments planned for the near future.

In UNICA’s analysis, the current Brazilian tariff has never been an inhibiting factor for imports. However, the existence of this tariff is often criticized abroad, in the course of discussions to open up ethanol markets, especially in the United States. The elimination of the 20% Brazilian tariff will therefore be an important ingredient in these discussions.

Lastly, it is essential to clarify that UNICA’s request to CAMEX last year has no connection with the possibility of eventual ethanol imports in the short term because of current domestic prices. If the tariff cut requested by UNICA is approved in February, eventual imports would only happen two months later, when the next ethanol harvest will already be under way in South-Central Brazil, which answers for more than 88% of the country’s overall sugarcane crop.