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Effects of ethanol trade barriers on U.S. and Brazilian markets

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  1. Introduction
  2. History of ethanol in the U.S. and Brazil
  3. Legislation in the U.S. and Brazil
  4. U.S. Brazilian trade relations
  5. The U.S. corn and ethanol markets
  6. The Brazilian sugar and ethanol markets
  7. Competitiveness of the U.S. vs. Brazil
  8. Public opinion
  9. Trade liberalization
  10. Trade liberalization and tax credit removal
  11. WTO negotiations
  12. Conclusion
  13. References

Rising oil prices, a slowing U.S. economy, the war on terror, and increasing concern about global warming have all converged on the international stage and in the mind of the average U.S. consumer in recent years. Calls for energy independence, clean energy, and cheaper alternatives to oil have made ethanol an ever-increasingly attractive option. Ethanol is a biofuel created from ?a variety of feedstock's such as cereals, sugarcane, and cellulosic material? (Elobied 1). In the U.S., the fuel is produced almost exclusively from corn, whereas in Brazil it is produced almost exclusively from sugarcane. In this paper, I hope to investigate the effects of these trade barriers on ethanol production in the United States and in Brazil and what would happen if some or all of those barriers were lifted.

[...] and Brazilian ethanol markets, the research I did and studies I perused helped me to better understand just how much of an impact ethanol prices have not only on the pocketbooks of ordinary Americans, but how much those prices affect other commodities, and how greatly trade distortions inflate the price of U.S. ethanol. Elobeid sums up his own research best: Ethanol is an emerging market, currently driven primarily by regulations and mandates, with Brazil and the U.S. leading the way. [...]

[...] Brazilian exporters, on the other hand, are able to make a great deal of money by exploiting this arrangement because sugar sells in the U.S. for three times the worldwide market price (Schott 10). The U.S. Farm Security and Rural Investment Act, passed by Congress in 2002, also adversely affects Brazilian farmers. The law subsidizes the price of corn, cotton, and soybeans grown by U.S. farmers, allowing them to be sold at below-market prices (Schott 10). While U.S. consumers benefit from being able to buy cheap, high quality food, foreign food producers are not so fortunate. [...]

[...] and Brazilian Ethanol Markets.? Their work is really superb and I have relied on it to a great extent to try to understand what might happen if barriers to the free trade of ethanol between the United States and Brazil were to be lifted. I mean to give these two authors as much credit as they are due, as I could not have hoped to perform all the complex calculations and data inquiries that they did in their research. I merely hope to extrapolate further from their conclusions and try to further their own work. [...]

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