Production and use of fuel ethanol in Brazil - BAFF

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The extension of the grinding period in Brazil, for its part, could only be achieved thanks to the great investments that have been made exclusively by the private sector for decades with a view to developing sugar-cane varieties that support such extension. In Brazil, this is also a legitimate action that is taken exclusively by private parties in pursuit of competitiveness. A2.11. Has Brazil ever been accused of unfair trade practices in the case of ethanol? On February 25, 1985 the US International Trade Court accepted a petition filed by the US ethanol industry for the commencement of investigations into the possible occurrence of dumping and illegitimate use of subsidies to ethanol exports from Brazil to the United States in 1984, therefore on a date near that on which such credit benefits were granted. The investigations were conducted by the US Department of Commerce and audited by two independent private firms. The conclusion of the investigations was that the residual effect of the credit benefits on the value of the 1984 ethanol production was equivalent to just 2.60 percent. Most of that net subsidy, equivalent to 1.65 percent, which was then attributed to a financing program with subsidized interest under PROÁLCOOL, was not considered to be a subsidy to exports, but financing for the ethanol industry, the product of which was consumed mostly in the domestic market. The US Department of Commerce concluded that “there were no critical circumstances” that could lead to the alleged conclusions. Based on such result, the International Trade Commission, on March 19, 1986, by a score of 4 to 1, rejected the allegations made by the American industry of a damage or threat supposedly caused by the grant of subsidies to ethanol exports from Brazil to the USA. Most of the credit incentives had been discontinued in 1983, and the PROÁLCOOL financing facilities were interrupted in 1985 and have not been offered ever since. Taxes on Automobile Sales Taxes 1.000cc -1.000 at 2.000cc +2.000cc Gas/Eth/Flex Gas Eth/Flex Gas Eth/Flex CPI 7.0 13.0 11.0 25.0 18.0 ICMS 12.0 12.0 12.0 12.0 12.0 PIS/COFINS 11.6 11.6 11.6 11.6 11.6 Source: Anfavea A. Fuel ethanol: Activities in Brazil and the world context 29
30 A3. Institutional and tax-related aspects of ethanol production and use A3.1. Is the establishment of a sugar or ethanol plant in Brazil conditional upon specific authorization by any governmental agency? Is there any State interference with or intervention in the production of sugar or ethanol? No. Article 170, sole paragraph, of the Federal Constitution assures everybody the freedom to engage in any business activity, irrespective of any authorization from governmental agencies, except for those cases in which the law specifically provides otherwise. There is no law in Brazil requiring such an authorization. However, as in any business activity, the industry is required to obtain the necessary permits, such as environmental ones, and to enroll or register with the relevant governmental agencies, such as the Internal Revenue Department and State Treasuries, among others. Likewise, there is no State interference with or intervention in the sugar or the ethanol industry. Such an interference would be unconstitutional, as the Federal Constitution, under articles 1 st and 170, considers free enterprise and free competition to be fundamental principles. Article 174 of the Constitution provides that the State’s business activity planning action is only indicative of the path that the private sector should follow. A3.2. Are there any restrictions on foreign capital investments in Brazil’s sugar and ethanol industry? No, there aren’t. The Constitution of 1988 put an end to the distinction between national and foreign capital investments (with only a few exceptions). Therefore, if an industrial business is organized in accordance with the Brazilian law, then it shall be assured an isonomic treatment, regardless of the origin of its capital. Note that, concerning the production of sugar-cane, which is the raw material used by the industry, the law provides for certain limitations on the share of foreign capital in the acquisition or lease of rural property. A. Fuel ethanol: Activities in Brazil and the world context
Page 1 and 2: Production and use of fuel ethanol
Page 4: President Eduardo Pereira de Carval
Page 8 and 9: Contents A. Fuel ethanol: Activitie
Page 10 and 11: A5. Current expansion of sugar-cane
Page 12: C1.3 What are the unions in the sug
Page 15 and 16: 14 formulators of C gasoline: they
Page 17 and 18: 16 up to 10 percent ethanol to be a
Page 19 and 20: 18 A1.9. What are Flex-Fuel vehicle
Page 21 and 22: 20 A2.3. What were the main foundat
Page 23 and 24: 22 for molasses and ethanol, whatev
Page 25 and 26: 24 A2.8. When, how and why did the
Page 27 and 28: 26 The term of transactions, financ
Page 29: 28 decision. In most commercially a
Page 33 and 34: 32 A3.4. What is the taxation line
Page 35 and 36: 34 A4. Institutional and economic a
Page 37 and 38: 36 A4.5. How is sugar-cane paid for
Page 39 and 40: 38 A5. Current expansion of sugar-c
Page 41 and 42: 40 For the domestic market, the set
Page 43 and 44: 42 almost all of the expansion (94
Page 45 and 46: 44 B2.2. How can the process of gra
Page 47 and 48: 46 B2.5. Is there any regulation to
Page 49 and 50: 48 The use of surface or undergroun
Page 51 and 52: 50 B3.2. What are the impacts of su
Page 53 and 54: 52 B4. Ethanol use: effect on vehic
Page 55 and 56: 54 Because there is a tendency to e
Page 57 and 58: 56 C. Sugar-cane and ethanol produc
Page 59 and 60: 58 Collective bargaining instrument
Page 61 and 62: 60 As to income distribution (engag
Page 63 and 64: 62 C2.4. How are employment levels
Page 65 and 66: 64 C3. Social responsibility practi
Page 67 and 68: 66 D. Technologies: evolution and p
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