US may eliminate ethanol tariff by the end of 2011 - trade group

07 June 2011 19:03  [Source: ICIS news]

SAO PAULO, Brazil (ICIS)--The US tariff on ethanol imports could be removed at the end of 2011 if the US stops subsidising the product, the Renewable Fuels Association (RFA) said on Tuesday.

US policy on ethanol could change dramatically at the end of the year and existing incentives for the product may no longer be there, said RFA president Bob Dinneen during a presentation at the 2011 Ethanol Summit in Sao Paulo.

Dinneen said the US industry recognises that the level of support it has may not be needed.

The US gives a 54 cent/gal tax credit for refiners to blend ethanol in gasoline, while imposing a 45 cent/gal tariff on imports of the biofuel.

If the domestic subsidies go away, the tariff will probably go as well, Dinneen said during a panel, which included a representative of Brazilian sugarcane group Unica.

Unica, which organised the event in Sao Paulo, is a staunch critic of the US tariff on ethanol.

A Unica representative speaking at the panel renewed calls for the end of trade barriers on biofuels imposed by the US and Europe.

A representative from a European association attending the event defended the trade restriction, saying Europe needed tariffs because it was still developing its ethanol industry.

The RFA also downplayed pressure from the Brazilian group, saying the US was the main importer of Brazilian ethanol in recent years despite the tariff.

Unica said that “trade would work even better without the tariff”. The group said the tariff actually hurt US consumers by stifling competition.

Brazil used to impose a 20% tariff on ethanol imports, but removed the restriction in 2010 and recently imported ethanol from the US because of tight domestic supply.

Market participants said Brazil would continue to rely on imports of US ethanol because domestic supply is expected to remain tight this year.

The 2011 Ethanol Summit opened on Monday and closes on Tuesday.

For more on ethanol visit ICIS chemical intelligence
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