Obama to discuss ethanol tariff in Brazil, but no policy shift

15 March 2011 22:53  [Source: ICIS news]

WASHINGTON (ICIS)--President Barack Obama will discuss the US tariff on Brazilian ethanol during his visit there this weekend, but is unlikely to announce any changes to it on the trip. a top advisor said on Tuesday.

Obama leaves on Saturday for a five-day tour of key Latin American trading partners that also will take him to Chile and El Salvador.

In a White House briefing about the trip, Deputy National Security Advisor Mike Froman said that the president would have a “broad-based dialogue with Brazil on biofuels and areas of cooperation within the area of biofuels”.

In meetings with Brazil’s newly-installed President Dilma Vana Rousseff and other top officials, Froman said Obama expects that the tariff issue will be raised.

The US maintains a 54 cent/gal tariff on imports of bio-ethanol, a trade barrier chiefly designed to keep Brazil’s sugar cane ethanol out of the US market, and to protect US domestic corn ethanol producers.

US bio-ethanol producers also benefit from a 45 cent/gal tax credit that the federal government provides to US refiners and fuel blenders to encourage the use of corn ethanol in the nation’s transportation fuels mix.

The tariff and the subsidy have come under increasing criticism in the US Congress, and Brazilian ethanol producers have pressed the country's government to initiate an unfair trade complaint against the US before the World Trade Organization (WTO).

Froman said that the tariff “is an issue of high importance to them, and it will be part of the overall dialogue” that Obama will have with Rousseff.

He added that the US “is interested in looking at the whole broad biofuel relationship” with Brazil. 

That broad category includes “what we can do together in terms of research, what we can do vis-a-vis third countries in terms of helping third-country production, and also looking at new areas where we might be able to use biofuels”, Froman said, adding: “All those will be on the agenda.”

He said that the tariff issue necessarily would be part of the overall dialogue on biofuels with Brazil, but he appeared to dismiss speculation that Obama might announce an end to the tariff during his visit there.

“I don’t think we expect an announcement on ethanol tariffs during the trip,” he said.  “I think this is just part of our overall dialogue about how to cooperate on biofuels.”

By: Joe Kamalick
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