Written by Mark S. Langevin Friday, 31 July 2009 05:23
In a recent letter to President Obama, the Republican Senator from Iowa, Charles Grassley, threatened to hold U.S.-Brazil relations hostage to his insatiable thirst for corn fed ethanol. Senator Grassley’s Iowa is the largest producer of ethanol in the U.S. For years Senator Grassley has played a key role in protecting U.S. ethanol producers from Brazilian ethanol imports, as both Chair and now as the minority’s ranking member of the Senate Finance committee that oversees all U.S. international trade policy.
Under the long standing policy of protecting the Senator’s family of corn fed ethanol producers, Brazilian ethanol imported into the United States is subject to two customs duties: an ad valorem tariff rate of 2.5 percent and a secondary tariff of 54 cents per gallon.
These illiberal tariffs punish consumers, investors, and efficient producers while rewarding foreign producers of oil who indirectly benefit from the inefficiencies of corn-fed ethanol. The tariffs act as an indirect subsidy to such transnational enterprises as the Archer Daniels Midland Corporation (ADM), the largest U.S. producer of ethanol.
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