US Senator Chuck Grassley (IA) sent a letter (pdf) this week to United States Trade Representative Susan Schwab to reassure her that the ethanol import tariff is explicitly permitted under World Trade Organization rules.“Besides the fact that the ethanol tariff is perfectly in line with WTO obligations, it is also in line with our domestic energy policy which focuses on using homegrown ethanol to help rural communities across the country rather than sending more dollars to the Middle East or Brazil,” Grassley said.The letter was in response to questions raised by Senator Dianne Feinstein to Schwab about whether the import tariff violates the rules of the World Trade Organization.
“Brazil has yet to even take advantage of exporting ethanol duty-free to the United States through the Caribbean Basin Initiative. Until Brazil takes full advantage of its ability to export ethanol duty-free, I don’t see why we should give Brazilian ethanol more generous treatment.”
Brazil has the opportunity to ship ethanol to the United States duty-free through the Caribbean Basin Initiative. Up to 7 percent of the United States ethanol market can enter duty-free, however this cap has not once been filled since it first became available in 1990.
But most importantly, the tarrif remains in place to offset the blenders credit for ethanol. Just why would we want to subsidize Brazil's ethanol industry?
Source: Senator Charles Grassley
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