The agricultural protectionist stylings of one Barack Obama are well-documented. He's already suggested that, for him, the welfare of relatively well-off American farmers is more important than that of impoverished Kenyan ones when it comes to maintaining farm subsidies. Here we have another example just as he is about to become the American president. Like the EU, the United States has long kept punitive tariffs on Brazilian sugarcane, a biofuel source that is not only less expensive than US corn but also less environmentally destructive [1, 2, 3]. Since lessening global warming is one of if not the key goal in using biofuels, this criticism is not a trivial one.Unsurprisingly, the ethanol lobby is keen on consolidating its gains with a new president assuming the reins of power. During his campaign, Obama was spotted touring with Tom Daschle (D-SD), senator-turned-ethanol lobbyist. Now, the Renewable Fuels Association is seeking to keep things just as they are. Rust never sleeps; rent-seeking never ends. As our American friends like to ask, "Who's you're (sugar)daddy?"
The US ethanol industry on Tuesday renewed calls for a continuation of the US tariff on Brazilian ethanol, arguing US taxpayers should not be required to subsidise biofuels made abroad. The US levies a 54 cent/gal tax on imported Brazilian ethanol, which the Renewable Fuels Association (RFA) claims is used to offset a tax credit the US gives for blending ethanol in gasoline. The RFA represents 90% of US ethanol makers. [Don't these guys have the argument backwards?]And yes, Brazil should take this sorry piece of policy to the WTO dispute settlement mechanism to administer an old-fashioned whupping.
RFA president Bob Dinneen downplayed talk of possible changes on the blending credit system that could eventually lead to changes on the tariff side. “If it ain’t broke don’t fix it,” Dinneen said during a conference call.
Brazil has for years decried the US import restriction on ethanol, saying it goes against free-trade principles. Brazil has also threathened to challenge US ethanol subsidies at the World Trade Organization (WTO).
The US Congress in 2008 extended both the import tariff and the blender credit, although the credit was reduced from the earlier 51 cents/gal to 45 cents/gal. The tariff was extended until 2010. President-elect Barack Obama indicated on the campaign trail that he planned to keep both the tariff and blender credit in place.
