Office of the United States Trade Representative


Fact Sheet on Ethanol in CAFTA

Central American Free Trade Agreement
Ethanol Provisions

· The Central American Free Trade Agreement (CAFTA) does not increase overall access to the U.S. ethanol market.

· Under the Caribbean Basin Initiative (CBI), countries in Central America and the Caribbean have had duty-free access to the United States since 1989 for ethanol from regional feedstocks. Access for ethanol derived from non-regional feedstocks has been limited by a CBI quota equal to 7% of total U.S. ethanol consumption.

· CAFTA simply establishes country-specific shares for El Salvador and Costa Rica within the existing CBI quota, without increasing the quota size. Other CAFTA countries retain existing CBI benefits on ethanol.

· Strict rules-of-origin prevent transshipment of ethanol from other countries.

· The country-specific shares for Costa Rica and El Salvador will have the effect of limiting the overall CBI quota available to other countries in the Caribbean and Central America.

· Costa Rica, El Salvador, and Jamaica are the only countries that have ever exported ethanol under the CBI quota, and at least 50% of the quota typically goes unused.

· Between 1995 and 2004, U.S. ethanol consumption grew an average of 11% per year.

Ethanol Production and Imports (2002)

U.S. Production: 2.3 billion gal.
U.S. Imports: 141 million gal.
CBI Quota: 120 million gal.
In-quota Imports: 48 million gal.
  --From El Salvador: 4.5 million gal.
  --From Costa Rica: 12 million gal.

CAFTA Shares:

El Salvador: 5.2 million gallons plus 1.3 million gallons per year, not to exceed 10% of quota.

Costa Rica: 31 million gallons.
CBI Quota (2004): 187 million gallons

Avg. Quota Growth: 11% per year (‘95-‘04)

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