US could trim tariff on Brazil ethanol – RFA

25 February 2009 19:45  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS news)--The US ethanol industry on Wednesday conceded that a small reduction in the tariff on Brazilian imports would be fair, given the reduction in the US tax credit for blending the biofuel.

But the two sides remained far apart on whether there should be any tariff at all.

The US levies a 54 cent/gal duty restriction on imports of the biofuel, which Brazil claims hurts free trade and should be removed or lowered.

The US industry says the tariff is needed to offset a federal credit of 45 cents/gal it gives blenders to mix ethanol to gasoline.

"Unless one is dyslexic, 54 cents/gal is more than 45 cents/gal," Joel Velasco, the chief US representative for Brazil’s sugarcane industry association Unica, said during a panel discussion at the National Ethanol Conference in San Antonio.

Bob Dinneen, president of the Renewable Fuels Association (RFA) and the chairman of the panel, acknowledged the difference.

The RFA, which represents 90% of US producers, was considering support for parity between the tariff and the credit, Dinneen said.

But Dinneen defended the US position, pointing out that Brazil had also taxed US ethanol at 25% when it imported the product in the 1990s.

Velasco said the Brazilian group had also opposed the tariff at that time. Unica opposes any type of trade restriction, he said.

The tariff dispute came under the spotlight this week on news that Brazil would not join a newly created global biofuels alliance between the US, Europe and Canada.

Dinneen said he hoped Brazil would eventually join the group despite their differences on trade.

Velasco told delegates that the decision not to join at this time was due to resource restrictions. He did not directly link the decision to the trade dispute.

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By: William Lemos
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