US Energy Secretary says new US budget, due Monday, will “deal with” Brazilian ethanol tariff

January 30, 2008

In Washington, U.S. Energy Secretary Sam Bodman, commenting on the future of the ethanol tariff, said that the Bush Administration “will start to deal with that question” in the 2009 US Budget that the President will send to Congress on Monday. The 54-cent tariff, which primarily applies to Brazilian ethanol, tariff is due to expire at the end of this year.

Critics say that it should not be renewed in order to reduce ethanol prices and bring more supply to East Coast markets. Bodman did not comment on the 51-cent per gallon ethanol subsidy, which will not expire until 2010.

In New York this month, Sen. Charles Schumer (D-N.Y.) said that he would introduce a bill to temporarily repeal the ethanol tariff, to make more corn available for dairy farmers and reduce milk prices. He noted that milk prices have increased 38 percent in the past year in New York, and that the ethanol tariff of 54 cents on every gallon of imported ethanol, had made the problem worse. The ethanol tariff, he pointed out, was established in 1980 when ethanol production was negligible, but that production had increased to more than 7 billion gallons in 2007.

Last month, the Brazilian Foreign Minister, Celso Amorim, said that “if we want to be serious about climate change, trade barriers must be removed promptly and unconditionally.” He added criticism of the United States for not signing the Kyoto Treaty.

President Bush affirmed in March that the tariff on Brazilian ethanol would remain in place until 2009. Earlier in December, Brazil accused the United States and Europe of having a “biased and protectionist agenda” at the World Trade Organization. Brazil was criticizing a proposed compromise on commercial rules which it said are biased towards the US.

The offer from the US and the European Union was to exempt 43 “green products” from trade tariffs to stimulate use of climate-friendly products, but excluded ethanol and other goods primarily produced in Brazil.

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Written by Jim Lane · Filed Under International, Policy, Producer News