4 ms·

Long, strange trip: How U.S. ethanol reaches China tariff-free

33 points by howard941 8y ago

entity345 8y ago
"Although China slapped retaliatory tariffs up to 70 percent on U.S. ethanol shipments, the fuel can still legally enter China tariff-free if it arrives blended with at least 40 percent Asian-produced fuel" Right, so the American producers can still sell tariff-free to China provided that they sell 40% less volume with increased costs. Nice loophole...
- hatersgonnahate 8y ago
  Unless the profit margin is huge
- maxander 8y ago
  Where does it say they sell 40% less volume? Under this scheme, the amount of US ethanol that can get in tariff-free is limited to two-thirds of the total Asian ethanol production. Does the US export that much anyway?
  - entity345 8y ago
    Well it says that it must be mixed with 40% of Asian ethanol. Let's say you're an American company and you have a contract to supply 1 million litres to a Chinese customer. If you want to avoid tariffs you now have to use only 600,000 litres of American ethanol where you would have used 1 million before. It may not end up that much a drop in the end, but it clearly encourages to use less American ethanol.
    - ngcc_hk 8y ago
      Read between the line or shipping, “less formal or declared American ethanol”
  - wil421 8y ago
    I’m on mobile so I can’t investigate further. Here’s a helpful link. 1.4 billion gallons in 2017 with most making it to Brazil and Canada. https://www.eia.gov/todayinenergy/detail.php?id=35972 https://www.eia.gov/todayinenergy/detail.php?id=35972
archgoon 8y ago
This appears to be "What Colour are your bits?": Ethanol Edition. The original "What Colour are your bits?" essay. https://ansuz.sooke.bc.ca/entry/23 https://ansuz.sooke.bc.ca/entry/23
- pjc50 8y ago
  Nah, it's a standard trade "origin" dispute. These things happen a lot, and companies do ridiculous things to get round them, like removing seats from vans: https://www.bbc.co.uk/news/business-45875405 https://www.bbc.co.uk/news/business-45875405 The Chinese position is that US corn ethanol is a subsidised product; this is the reverse of the complaints about "dumping" solar panels.
- whatshisface 8y ago
  The fact that bitcoin involves proof-of work is a testament that the origin of bit sequences can actually be a coherent notion in computer science. >"But when it comes to child pornography, I think maybe Colour should make a difference - if we're going to ban it at all, it should matter where it came from. Whether any children were actually involved, who did or didn't give consent" It's a digression, but I have to say: what is it with how people with unique ideas about copyright keep coming up with, uhh, "unique" ideas about CP?
  - gdhbcc 8y ago
    Because on a fundamental level bits are bits are bits, regardless of who made them or through what purpose.
    - whatshisface 8y ago
      Ownership isn't a physical property of atoms either, but we don't have any trouble handling that.
jws 8y ago
Malaysia has no track record of significant domestic ethanol production, so it is unclear where the ethanol blended with the U.S. product originates. I wonder if they sell the tanker of blended ethanol to the Chinese buyer, offload 60% of it, then buy back the remaining 40% of the load which is now clearly Chinese ethanol and head out to top off again.
magicalhippo 8y ago
Reminds me of what they did to import Spanish cured hams (ala Serrano ham) to Norway. Norway has very high import duty on cured ham to protect traditional Norwegian cured ham production, which we have a fair bit of. Now, duties you have to pay when importing foreign goods into a country. However, at least in Norway, there is an exception for processing goods abroad. In that case you only pay duties on the actual work done abroad. So, some clever folks started to transport the slaughtered, whole, pigs to Norway from Spain and import them into Norway. They were just plain (dead) pigs, and so the duty was rather low. Arriving at the destination just across the border, the truck was then told to turn around and go back to Spain. The pigs would then get cured in Spain, and then transported back to Norway. Since the pigs used for the cured ham had already been imported into Norway the hams had thus been processed abroad, invoking the exception. Thus they only had to pay for the work done curing the ham, which was quite a lot cheaper given labor costs in Spain, as well as avoiding the higher duties. I was told there were quite a few surprised truck drivers, being told to go right back with the same load after just having arrived in Norway. Not sure if customs cracked down on this or if they're still doing it. Not exactly good for the environment...

33 points by howard941 8y ago

"Although China slapped retaliatory tariffs up to 70 percent on U.S. ethanol shipments, the fuel can still legally enter China tariff-free if it arrives blended with at least 40 percent Asian-produced fuel" Right, so the American producers can still sell tariff-free to China provided that they sell 40% less volume with increased costs. Nice loophole...

hatersgonnahate 8y ago
Unless the profit margin is huge
maxander 8y ago
Where does it say they sell 40% less volume? Under this scheme, the amount of US ethanol that can get in tariff-free is limited to two-thirds of the total Asian ethanol production. Does the US export that much anyway?
- entity345 8y ago
  Well it says that it must be mixed with 40% of Asian ethanol. Let's say you're an American company and you have a contract to supply 1 million litres to a Chinese customer. If you want to avoid tariffs you now have to use only 600,000 litres of American ethanol where you would have used 1 million before. It may not end up that much a drop in the end, but it clearly encourages to use less American ethanol.
  - ngcc_hk 8y ago
    Read between the line or shipping, “less formal or declared American ethanol”
- wil421 8y ago
  I’m on mobile so I can’t investigate further. Here’s a helpful link. 1.4 billion gallons in 2017 with most making it to Brazil and Canada. https://www.eia.gov/todayinenergy/detail.php?id=35972 https://www.eia.gov/todayinenergy/detail.php?id=35972

archgoon 8y ago

This appears to be "What Colour are your bits?": Ethanol Edition. The original "What Colour are your bits?" essay. https://ansuz.sooke.bc.ca/entry/23 https://ansuz.sooke.bc.ca/entry/23

pjc50 8y ago
Nah, it's a standard trade "origin" dispute. These things happen a lot, and companies do ridiculous things to get round them, like removing seats from vans: https://www.bbc.co.uk/news/business-45875405 https://www.bbc.co.uk/news/business-45875405 The Chinese position is that US corn ethanol is a subsidised product; this is the reverse of the complaints about "dumping" solar panels.
whatshisface 8y ago
The fact that bitcoin involves proof-of work is a testament that the origin of bit sequences can actually be a coherent notion in computer science. >"But when it comes to child pornography, I think maybe Colour should make a difference - if we're going to ban it at all, it should matter where it came from. Whether any children were actually involved, who did or didn't give consent" It's a digression, but I have to say: what is it with how people with unique ideas about copyright keep coming up with, uhh, "unique" ideas about CP?
- gdhbcc 8y ago
  Because on a fundamental level bits are bits are bits, regardless of who made them or through what purpose.
  - whatshisface 8y ago
    Ownership isn't a physical property of atoms either, but we don't have any trouble handling that.

jws 8y ago

Malaysia has no track record of significant domestic ethanol production, so it is unclear where the ethanol blended with the U.S. product originates. I wonder if they sell the tanker of blended ethanol to the Chinese buyer, offload 60% of it, then buy back the remaining 40% of the load which is now clearly Chinese ethanol and head out to top off again.

magicalhippo 8y ago

Reminds me of what they did to import Spanish cured hams (ala Serrano ham) to Norway. Norway has very high import duty on cured ham to protect traditional Norwegian cured ham production, which we have a fair bit of. Now, duties you have to pay when importing foreign goods into a country. However, at least in Norway, there is an exception for processing goods abroad. In that case you only pay duties on the actual work done abroad. So, some clever folks started to transport the slaughtered, whole, pigs to Norway from Spain and import them into Norway. They were just plain (dead) pigs, and so the duty was rather low. Arriving at the destination just across the border, the truck was then told to turn around and go back to Spain. The pigs would then get cured in Spain, and then transported back to Norway. Since the pigs used for the cured ham had already been imported into Norway the hams had thus been processed abroad, invoking the exception. Thus they only had to pay for the work done curing the ham, which was quite a lot cheaper given labor costs in Spain, as well as avoiding the higher duties. I was told there were quite a few surprised truck drivers, being told to go right back with the same load after just having arrived in Norway. Not sure if customs cracked down on this or if they're still doing it. Not exactly good for the environment...