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Another run at opening U.S. to tariff-free Brazilian ethanol?

Agriculture.com Staff 12/07/2006 @ 2:02pm

Reports that the Bush Administration once again wants to eliminate a 54-cent-a-gallon tariff on imported Brazilian ethanol got mixed reviews in Congress Thursday.

A column in the Dallas Morning News Wednesday reported that Under Secretary of State Nicholas Burns says the administration wants to drop the tariff on ethanol as one way of improving relations with South America's largest nation.

One way of making that change palatable in Congress would be to also double renewable fuel standard that currently mandates gasoline retails to sell 7.5 billion gallons of ethanol by 2012. In theory, a 15-billion gallon renewable fuel standard (roughly 10% the nation's gasoline use) would leave plenty of room for ethanol from both corn and sugar cane.

Thursday, Senator Chuck Grassley, R-IA, fired off a letter to the White House to express strong opposition to dropping the tariff.

"I write to you today to express my strong opposition to any proposals that would negatively impact the growth of renewable fuels, including reducing the tax incentive or lifting the tariff on imported ethanol," Grassley wrote.

The letter adds: "Mr. President, under your leadership and the leadership of this Republican Congress, we have put in place and maintained supportive polices and incentives that have led to an extraordinary growth in the production of renewable fuels. With your guidance, Congress enacted a strong Renewable Fuels Standard that will ensure the use of 7.5 billion gallons of ethanol annually by 2012. We've maintained a tariff on imported ethanol that prevents our nation from becoming dependent on foreign ethanol or subsidizing ethanol produced in foreign countries. Perhaps most important, we improved and extended the ethanol tax incentive.

Each of these polices has contributed to the expansion and strong growth of the alternative fuels industry. But we are at a critical time. The outstanding growth in the production of ethanol is primarily a recent occurrence. The industry continues to need the certainty of these existing policies to grow and expand. And, if we are to be successful in the development of commercial cellulosic ethanol production, each of these policies must be maintained and extended, not lifted or eliminated."

Senator Tom Harkin, the Iowa Democrat who takes over the Senate Ag Committee next year, didn't reject the administration's ideas immediately when asked about them Thursday. He said that members of Congress may discuss the idea of lifting the tariff in imports into the southeastern U.S. Later that region may rely on domestic ethanol made from cellulose, he added.

Reports that the Bush Administration once again wants to eliminate a 54-cent-a-gallon tariff on imported Brazilian ethanol got mixed reviews in Congress Thursday.

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