UPDATED - Sources: Bush Admin. Has Authority to Cut Ethanol Import Tariff Temporarily

Published on: 12:53PM Jun 18, 2008

via a special arrangement with Informa Economics, Inc.

If decision is announced, how would Brazil react?

Like what you see? This is only a light sample of the type of exclusive, “insider’s briefing” on Washington farm policy, agricultural trade and farm politics you can get every day! How? Subscribe to Inside Washington Today by Jim Wiesemeyer!

Or, join Pro Farmer and gain access to Inside Washington Today and other exclusive features of the Pro Farmer Members Only segment here on AgWeb.com. For more information, click on the Pro Farmer page in the left column.

The Bush administration is seriously considering taking an administrative move, an action that would not need congressional approval, to cut the current 54-cent ethanol import duty, perhaps to zero, temporarily, and the administration probably could claim some kind of emergency and do it quickly, according to trade policy and government contacts.

Brazil's reaction Several sources told me that if the import duty announcement were made by the Bush administration, they do not think Brazil would significantly increase its exports of ethanol to the United States. Reasons: gas prices would increase in Brazil, and Brazil already has a robust ethanol export market, and would more likely want to ship ethanol to neighboring states like Argentina. and via countries like Japan of which it has long-term contracts.

Sen. Chuck Grassley (R-Iowa) said the amount of money for those tariffs is locked in until 2010, and he does not believe the president can – or would – do that. Grassley said ethanol is coming in duty-free already up to 7 percnt of U.S. domestic production (roughly 700 million gallons) and there’s currently only approximately 3 percent of that 7 percent being used right now…so they could more than double imports. But as peviously noted, most would have to come from Brazil, but they are cutting back on ethanol exports because they need it themselves.

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