USTR’s Chief Agricultural Negotiator Doug McKalip is working to break down barriers for U.S. ag exports around the globe and when it comes to ethanol, he says Brazil is at the top of his list.
“It has been a source of frustration that while Brazilian companies have successfully registered for the Renewable Fuel Standard program in the United States, not a single U.S. company has been successful at navigating and registering for their RenovaBio program in Brazil,” McKalip said during the National Ethanol Conference in San Diego today. “Even more troubling than the RenovaBio program has been Brazil's tariff on U.S. biofuel currently, which stands at 18%,” he added.
RenovaBio is a carbon market that gives Brazilian biofuel producers an additional source of income when they generate carbon credits.
McKalip said he met with his Brazilian counterparts last year and, by the end of 2023, their government released revised policies intended to help level the playing field and ensure that corn ethanol and other U.S.-based feedstocks can register in the future for RenovaBio.
“We're certainly not going to count that as a victory yet, but we're encouraged by the progress there,” he added.
On the tariff front, McKalip said he had the Brazilian secretary of agriculture, Neri Geller, and a few other government representatives in his office last week and had “a very, very frank discussion about this inequity.
“It's just not a situation that we can stand and it's just not a situation that we're going to allow to continue,” McKalip explained. He said Geller committed to developing a new proposal for USTR to review and that they would likely discuss the tariff situation when they meet again at the end of February in Abu Dhabi as part of the WTO ministerial.
In other parts of the world, McKalip said there are “excellent prospects on the horizon” including Guatemala and Nigeria. He recently met with Guatemalan government officials, and “it was very clear to me from our conversations that the Government of Guatemala is very much dedicated to meeting its goal and getting to E10 by early 2025.”
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Despite the need for tariff reduction and some technical issues, he said countries like Nigeria are very interested in working toward higher biofuel blends and he expects new trading opportunities to emerge across Africa for all U.S. food and ag products.
Regarding China, McKalip noted that U.S. trade has remained “quite strong” despite the Asian giant being in the “throes of some real economic woes.”
McKalip said that aside from its economy, one of the challenges with China has been government policies that have undermined certainty.
“I'm talking about the decree on important licensing, et cetera,” he added.
Both he and Agriculture Secretary Tom Vilsack met with China Minister of Agriculture and Rural Affairs Tang Renjian last month. He said they discussed the need for more certainty to make sure that “we're not having to troubleshoot issues where we have a boat on the water and we're not sure whether it's going to get into port.”
In addition, McKalip said USTR has worked to “diversify our customer base in that same region,” negotiating with 12 countries throughout the Indo-Pacific region.
Asked about the USMCA case against Mexico over biotech corn, McKalip said he expects the case to be resolved this year.
“USTR is going to continue to press until that case is resolved and we are able to ensure that science is the basis for trade and not politics and other types of factors.”
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