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Brazil likely to create ethanol import quota, tax imports above it

SAO PAULO (Reuters) — The Brazilian government is likely to adopt a quota system for ethanol imports, allowing 600 MM liters into the country per year free of tax and imposing a 20% tariff on volumes in excess of that quota, cane industry group Unica said on Monday.

Eduardo Leão, Unica's executive director, told Reuters on the sidelines of a seminar in Sao Paulo that the new policy has been discussed within the government and should be approved in an extraordinary meeting of Brazil's foreign trade chamber Camex on August 23.

The Brazilian government is under pressure from sugar and ethanol producers, particularly from the politically influential Northeast region, to tax imports of the biofuel, which currently are free from any tariffs.

The proposal is aimed at curbing ethanol imports, almost all from the United States, which jumped more than 300% in the first half compared to similar period a year earlier, gaining market share from producers in the Northeast.

Leão said that according to the proposal being discussed, imports will remain free of taxes up to the 600 MM liters per year, unless they go above 150 MM liters in only one quarter, when the 20% tariff would also be imposed.

US groups representing ethanol producers, such as the Renewables Fuels Association, are against the imposition of taxes, saying they would go against Brazil's own longstanding view that tariffs would harm the development of a global ethanol industry.

Reporting by José Roberto Gomes; Writing by Marcelo Teixeira; Editing by Chizu Nomiyama

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