SAO PAULO (Dow Jones)--In hopes of lowering global trade barriers on ethanol, the Brazilian government has set its sights on re-classifying ethanol in the international trade arena as a fuel commodity rather than an agricultural commodity, confirmed a spokesman at the Foreign Ministry on Monday.
"There have been a series of consultations and discussions in the government about this, and it's in our internal plan," said the spokesman in a phone interview with Dow Jones Newswires. "But it's premature to talk about a schedule for when this might happen."
The country's Agricultural, Mines & Energy, Chief of Staff, and Trade ministries are also involved in this discussion, he added.
Brazil - the world's top ethanol exporter as well as its lowest-cost producer - would benefit immensely from lowered trade tariffs on the biofuel. However, the country's ethanol is subject to high import duties in several key trading partners, due in part to a formidable system of tariffs already imposed on agricultural products.
If ethanol were considered an energy commodity, then it could receive the same treatment as petroleum, said Celso Amorim, the country's Foreign Trade Minister last month.
"No one, if it's not for fiscal reasons, and this occurs in few cases, places a tariff on petroleum imports, because that would penalize the whole productive process of the country," he added.
The office of Brazil's Chief of Staff is also a supporter of re-classifying ethanol under the fuel category, according to a report in local business daily Gazeta Mercantil published Monday.
The U.S., the top buyer of Brazilian ethanol this year, imposes a lofty 54-cent-per-gallon duty on direct ethanol imports, as well as a 2.5% ad valorum tariff.
The E.U., expected to be Brazil's top purchaser of ethanol next year, imposes a tariff of 10.2 euros per every 100 liters for denatured alcohol, and a tariff of EUR19.2 per 100 liters for undenatured alcohol. Both types of alcohol can be used for biofuel production.
In the first half of this year, a new bureau of energy was created within the Foreign Ministry to direct Brazil's energy strategies in both the bilateral and multilateral arenas, added the Foreign Ministry spokesman.
Brazil is the world's leading sugar producer and exporter.It is also the world's No. 2 ethanol producer after the U.S.
Source: Grace Fan; Dow Jones Newswires; 55 11 3145 1489; brazil@dowjones.com