Carib, Central America complain about U.S.-Brazil ethanol trade

Caribbean trade bloc and Central American countries are to jointly lobby the U.S. Congress against lifting taxes on cheaper ethanol exports from Brazil, fearing it would quickly wipe out not-so-competitive and already struggling industries.

Leaders from the two blocs were scheduled to meet in El Salvador on Aug. 19 to discuss a number of functional cooperation issues, including a major lobbying effort by Brazil in the Senate to have duties amounting to 54 cents per gallon lifted, so as to make Brazilian ethanol exports more competitive.

But fearing that plants in Jamaica, Trinidad, Costa Rica and El Salvador will quickly close, the two blocs are to decide on joint action to encourage senators not to bow to lobbying from Brazil to cut the import taxes and leave their own sectors at the mercy of Brazil, one of the world’s largest and most efficient producers of ethanol.

New Caribbean Community Secretary General Irwin LaRocque, part of the regional delegation attending the week of meetings including a foreign ministers session on Thursday, said that the region did raise the matter with U.S. Secretary of State Hilary Clinton at a meeting in Jamaica earlier this year “at which she gave certain general assurances, but the issue is definitely on our agenda.”

Trade specialist David Hales said one of the plants in Jamaica recently closed its doors and “any lifting of the 54 cents duties would have a major negative effect on both of us, Central America and Caricom.”

He said the industry is a major economic player in the region with exports in Trinidad for example, moving from $12M in 2002 to $160M in the past two years.

Most of the plants in the two blocs actually but production materials from Brazil and have been complaining about increases in buying rates recently. Should Brazil get the green light, it may choose not to sell them any more base materials or could flood the market, leaving the two blocs in the lurch Hales said.

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