The Brazilian is preparing to bring the fight over ethanol tariffs to the World Trade Organization’s doorstep. Currently there is a 54 cent tariff on the importation of ethanol into the United States, and Roberto Azevedo, Brazil’s WTO ambassador, said there was a “strong possibility” that the country would formally file a complaint to the WTO in September. Advocates of the tariff suggest that it will protect American farmers and considers ethanol outside the WTO’s jurisdiction.
The ethanol tariff is a blatant violation of free trade principles and does nothing to reduce America’s dependency on foreign oil. After all, if the U.S. wanted to import less oil from OPEC and hostile regimes, wouldn’t it make sense to import as much ethanol as possible, especially in a time where the U.S. is promoting the use of clean energy?
Renewable fuels, and particularly corn-ethanol, have long enjoyed preferential treatment from the federal government here at home. This includes a tax credit worth $0.51 per gallon. In addition, tariffs discourage imports of ethanol, including potentially cheaper sugar cane–based ethanol from Brazil.
Yet the ethanol industry still wanted more, and Congress, concerned about high gas prices, global warming, and domestic energy production, enacted a mandate. The 2005 energy bill contained the first-ever requirement that renewable fuels be mixed into the gasoline supply. The 2007 energy bill increased the mandate substantially. The U.S is now committed to using 9 billion gallons in 2008, rising to 36 billion by 2022.
Now that food prices have risen dramatically, there is bipartisan consent, along with statements from environmental and global hunger groups, that the ethanol mandate has been disastrous. To make matters worse, Brazilian ethanol is cheaper, cleaner, and more energy efficient since it’s produced from sugar.
Furthermore, in his speech at The Heritage Foundation, Dr. Ray Walser said that lifting the ethanol tariff would have a catalytic effect on U.S.-Brazil relations:
This positive move could also encourage Brazilians and others to invest in more research in promising second-generation biofuels such as cellulosic ethanol. Also, working with Brazil to revitalize the Doha Round of global free trade talks will strengthen our hand and forge a stronger U.S.–Brazil partnership.”