Brazil's Unlevel Playing Field

In this summer's World Cup tournament, Brazil's team struck fear into the hearts of competitors because, on the playing field, it is dominant.

Brazil similarly strikes fear into the hearts of competitors when it comes to agriculture. But its dominance in this area is the direct result of the unlevel playing field the country has been able to carve out for itself in the World Trade Organization.

Even though Brazil's growth has come from highly advanced and large-scale farms, its status as a lesser-developed country gives it real advantages in the international trade arena. And Brazil has used the WTO to seek to harm its competitors.

The country recently brought and won a trade case against the United States, claiming harm from America's support of cotton farmers at $.52 per pound, even though the basic support price for Brazilian cotton farmers is $.79, according to a compilation of foreign agricultural subsidies by Texas Tech.

Now the Brazilian sugar-based ethanol industry has U.S. corn-based ethanol producers in its sites in hopes of displacing the U.S. industry. That's a risky proposition for the United States, according to Tom Buis of Growth Energy, which represents numerous U.S. ethanol producers.

"Removing the tariff [on ethanol imports] will do nothing to reduce our dependence on foreign oil; all it will do is replace domestically produced ethanol and eliminate U.S. jobs," he said. "It would essentially replace our nation's addiction to foreign oil with a dependence on foreign ethanol—and that is not in the best interests of our nation."

Indeed, a recent report released by the University of Missouri's Community Policy Analysis Center contends that Brazil's emergence here could cost nearly 161,000 Americans their jobs while sucking $36.7 billion out of the economy in the first three years.

"At a time when our economy is struggling, we cannot afford to…stymie the growth we have seen in our ethanol industry," said Congressman Earl Pomeroy (D-N.D.), who is backing a measure in Congress to keep Brazilian ethanol from flooding the U.S. market.

Brazil, in an effort to blunt Pomeroy and other U.S. lawmakers, has resorted to exaggerated claims about lower prices for Brazilian ethanol. However, the Renewable Fuels Association compared Brazil E10 to American E10 (the blend of 90 percent gasoline and 10 percent ethanol that is sold at the pumps) and found that American E10 is currently cheaper.

But this debate is not just about price. There's still that nasty issue of forced labor to consider.

While the Brazilian government touts its burgeoning ethanol industry as a way to help its citizens escape poverty, those very citizens are suffering deplorable conditions to grow and harvest the sugarcane necessary to make the ethanol.

A 2009 article on CNN.com noted that the United Nations International Labour Organization estimated that there are still between 25,000 and 40,000 Brazilian workers who are subjected to slave-like conditions and earn no real wages. And according to the article, Anti-Slavery International, an advocacy group based in London, believes nearly seven in 10 Brazilian slaves work on cattle ranches and sugarcane plantations.

Earlier this year, Wal-Mart temporarily suspended a supply contract with Brazilian sugar producer Cosan SA Industria & Comercio after the Brazilian sugar supplier was added to a government slavery blacklist. Blaming labor abuses on a contractor that oversees harvest, Cosan SA Industria & Comercio was later removed from the blacklist.

"This debate is about more than U.S. ethanol producers versus Brazilian companies," said Erik Osmon, the general manager of Bushmills Ethanol, a Minnesota-based ethanol cooperative. "Allowing subsidized Brazilian ethanol to flood the U.S. market is tantamount to condoning its deplorable labor practices."

On the other hand, a recent survey of American ethanol production showed that 75 percent of U.S. employees working at ethanol biorefineries made at least $50,000 per year and 99 percent received health care benefits.

The story gets worse for Brazil, which continues to be plagued by deforestation in the Amazon. Amazingly, Brazilian sympathizers have even tried to blame American ethanol producers for Brazil's bad acts through a half-backed concept known as Indirect Land Use Change.

According to National Farmers Union President Roger Johnson, who recently visited Brazil to study the interaction between agriculture and deforestation, "American farmers and ranchers know the importance of being good stewards of the land. With family farmers fighting to hold onto their land, we've got to make sure we're not being undercut by irresponsible practices like deforestation."

Well said, Mr. Johnson. And as Americans, we shouldn't reward countries that use low labor and environmental standards in an attempt to gain a leg up on the competition.

Bookmark and Share



Enter your email address below to receive our newsletter:



Copyright © 2009 All Rights Reserved