Ethanol Import Tariff Again Under Focus, This Time on Two Fronts

October 6, 2008 07:00 PM

via a special arrangement with Informa Economics, Inc.

Commerce Secretary and U.S. Chamber of Commerce question need for tariff

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

The 54-cents-per-gallon ethanol import tariff will be discussed during a trip to Brazil this week by U.S. Commerce Secretary Carlos Gutierrez, who will meet with Brazilian government and industry officials for bilateral trade talks.

"We have had very candid discussions" with Brazil on the (ethanol import tariff) subject and "the administration has been very clear about our desire to revisit those tariffs," Gutierrez said.

During the 2008 Farm Bill, the import tariff was extended through 2010. "They are part of the farm bill, so to reduce them or eliminate them would require Congress to act," Gutierrez said. Acknowledging that it will be "tough to have that happen in the near future,” he said the tariff equates to a "tax on U.S. consumers" that is negatively impacting access to alternative sources of energy.

Meanwhile, the U.S. Chamber of Commerce, in a report, said the tariffs are designed to block ethanol imports at a time when the country needs to need to be securing new sources of energy. The Chamber's Blueprint for Securing America's Energy Future highlights the need for free-flowing trade when it comes renewable fuels and stresses the 54-cents-per-gallon tariff is an impediment. "This poses a significant obstacle to ethanol imports," the report said.

"As the biofuels market here in the United States grows and matures to meet (government requirements) we should seek also to 'commoditize' biofuels and help create an international market to increase their trade by harmonizing fuel standards," the report said. "Eventually, free trade of biofuels should be the goal, and we should be prepared to reconsider the tariff on imported ethanol as global demand and markets progress."

Comments: Forget about any near-term cut in the ethanol import tariff. However, even the most spend-happy lawmaker in next year's Congress will finally realize that the party is over and instead of increased spending, the agenda will be what to cut and how much. Included in the eventual "budget reconciliation" cuts in the years ahead will be farm program and some energy-related incentives. Count on it.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

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