January 25,2007

Grassley Objects to Idea of Lifting U.S. Tariff on Ethanol Imports


To: Reporters and Editors
Re: U.S. tariff on ethanol imports
Da: Thursday, Jan. 25, 2007

Energy Secretary Samuel Bodman was quoted in media reports today saying the U.S. tariffon ethanol imports will probably need to be lifted to meet the administration’s goal of increasing theuse of renewable fuels. Sen. Chuck Grassley, ranking member of the Committee on Finance, madethe following comment on that statement.

“Secretary Bodman has called for lifting the ethanol tariff before. Once again, he has itwrong. Brazil is the world’s other major ethanol producer, and that country doesn’t have enoughethanol to export at significant levels now. Brazil isn’t on the verge of being able to exportsignificant amounts. In addition, Brazil already can, and does, ship duty-free ethanol to the UnitedStates. Under the Caribbean Basin Initiative, Brazilian ethanol that is dehydrated in a Caribbeancountry can enter the U.S. market duty-free up to seven percent of the U.S. ethanol market. That’sgenerous access, but Brazil has never even come close to hitting the seven percent cap. The thirdlargestethanol producer, China, is already exporting ethanol to the United States and other countriesand could benefit from lifting the tariff.

“Developing alternative energy is meant to wean the United States from foreign sources ofenergy. Lifting the ethanol tariff would undermine faith in the domestic renewable fuels industry.We need to continue the current supportive policies of the domestic industry. By maintaining thesepolicies, we’ll ensure the growth of the domestic industry. We’ll continue to develop even moresources of ethanol, including cellulosic ethanol from corn stover, switchgrass, and wood waste.Lifting the tariff would only undercut our domestic efforts, virtually eliminate any chance ofdeveloping ethanol from other sources, and potentially leave us dependent on foreign sources for ourethanol when other countries develop their industries.”