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Senators doubt WTO would uphold U.S. ethanol tariff
Workers at the end of the day at the Santa Elisa sugarcane farm, northeast of Sao Paulo April 21, 2007.
Credit: Reuters/Paulo Whitaker
BRASILIA |
BRASILIA (Reuters) - Senators John McCain and John Barrasso said on Monday the extension of U.S. ethanol subsidies and a tariff on imports is likely illegal under international trade rules, lending some support to Brazil's opposition to U.S. ethanol policy.
"I believe the WTO would rule against the United States because it's clearly a subsidy that is neither warranted nor in keeping with WTO regulations," Senator McCain of Arizona told reporters after a meeting with Brazilian President Dilma Rousseff in Brasilia.
In December, the U.S. government extended through end-2011 a 54-cent-per-gallon import tariff on ethanol as well as a 45-cent-per-gallon subsidy for blenders worth up to $6 billion.
Brazil's powerful sugar and ethanol industry is pressuring its government to take the United States to the World Trade Organization over its policies on the biofuel that Brazilian producers say are illegal.
Brazil successfully won its last two WTO cases, against U.S. cotton and EU sugar subsidies.
"I'm unalterably opposed to ethanol subsidies," McCain said as part of a bilateral delegation here to discuss security, defense and other regional issues.
The United States and Brazil are the world's two biggest producers and consumers of fuel ethanol.
Wyoming Senator John Barrasso added that clean energy should be made available to all citizens as quickly as possible.
"We agree with the president here (Rousseff) that (the U.S. tariff) should not be there," Barrasso said.
(Reporting by Raymond Collit; Writing by Reese Ewing; editing by Jim Marshall)
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By the way, the tariff on imported sugar drove many domestic candy manufacturing operations OUT OF THE COUNTRY, resulting in many lost jobs (and lost tax revenues).
As the cost of petroleum continues to rise the cost of importing ethanol from Brazil will climb (diesel fuel for ships) and as the cost of domestic ethanol continues downward (ethanol production rapicly getting more efficient) any difference in price will narrow.
Let’s not forget, any product made domestically ADDS to the GDP (and tax revenues). Any product imported REDUCES GDP (and reduces tax revenues). Thus any nominal ’savings’ may not be a real savings to the country after all. The economics of the situation is far too complex to fit on a bumper sticker.
Of course, if we want to develop a domestic cellulosic ethanol industry, having a domestic starch based ethanol industry would facilitate the commercialization of cellulosic ethanol. Bringing cellulosic ethanol on-stream in an already profitable ethanol operation will shorten the time to bring cellulosic ethanol to commercially viabile reality by AT LEAST TEN YEARS. If having a domestic industry which will provide jobs to Americans as opposed to importing ethanol from Brazil and exporting jobs out of our Country is important to anybody.
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