So I'll remember later here's an explanation of the
US import tariff on ethanol and why it may be a biggie for WTO.
Currently, the ethanol industry is protected from most foreign competition by a 54 cent per gallon duty imposed on all imported ethanol. But there is concern that Brazil will use the World Trade Organization and the ongoing Doha Round of talks to eliminate the tariff.
Although the Doha Round is on its back, the WTO will be looking at ethanol in the future, I confidently predict. It is currently looking at the global corn or maize market. Will the tariff fall in future?
Not if this quote from Brownfield AG news for America is anything to go by
Senator Chuck Grassley of Iowa says the ethanol tariff is non-negotiable in current WTO negotiations and in future trade talks.
This isn't directed particularly at Senator Grassley, though, he's been pretty hard on competitive ethanol from Brazil. It is just that his position is indicative of what's wrong with much of the US thrust in to ethanol from corn. Grassley's worries with ethanol from Brazil seem mostly to stem from the fact that it might be a US company producing it there... and not the locals. Speaking of the Caribbean Basin Initiative a couple of years ago he said
"These provisions were intended to help create jobs in impoverished Central American and Caribbean countries, not to enable U.S. corporations to transship ethanol from countries like Brazil with little or no effect on jobs in the Caribbean. There are plenty of opportunities for U.S. companies to expand ethanol production in Iowa."
Grassley's announcement responded to reports that Cargill was considering investment in a dehydration plant in El Salvador to process Brazilian ethanol to market in the United States.
One one level this is nuts. He wants the US to subsidise its farmers to grow corn to be made into ethanol in plants that will be subsidised by tax cuts or grants at Federal, State and Local level. All of that on the off-chance that there will be enough ethanol in Brazil to export to the US. Diverting corn into ethanol though has forced the price of corn up.
On another level there are no votes for Grassley in Brazil. And there is an argument that becoming reliant on sugarcane from South America could be as bad as becoming reliant on oil from the Middle East. But how do these tariff barriers benefit anybody other than the farmers and ethanol producers in the US. You tell me.
Comments (2)
You say "there is an argument that becoming reliant on sugarcane from South America could be as bad as becoming reliant on oil from the Middle East". I know you are not necessarily endorsing such an argument, but what is the risk, other than that associated with becoming too dependent on any one source for energy (and Brazilian ethanol would, could, never contribute more than 10% of total U.S. energy demand)? The main one I can think of -- and it applies also to domestically produced ethanol -- is the risk of crop failure.
Posted by Ron Steenblik (Global Subsidies Initiative) | February 9, 2007 8:18 AM
Posted on February 9, 2007 08:18
Hi Ron,
you are exactly right. I'm not endorsing that as an argument. I put it forward because I think that is the kind of emotional response that could arise to news that tariffs were to fall (which I guess, sadly, they're not). It seems to me that the power of emotional arguments in politics is an order of magnitude greater than the power of rational argument in many cases.
In this case emotional arguments seem to be being deployed to help everyone except the US consumer and Brazilian workers who would have to staff the plants and grow the sugar cane even if it were processed by a US company.
Rainfall, sunshine, soil and water are the fundamental variables affecting crop growth.
Simon
Posted by Biofuelsimon | February 9, 2007 10:11 AM
Posted on February 9, 2007 10:11