Yes and No to Brazil Deal

Cindy Zimmerman

The Renewable Fuels Association says yes to promoting a global ethanol market, but no to allowing Brazil to benefit from the U.S. tax credit for ethanol.

RFARFA President Bob Dinneen issued the following statement regarding President Bush’s upcoming meeting with Brazilian President Luiz Inacio Lula da Silva concerning a hemispheric partnership to expand ethanol production.

“Expanding the marketplace for ethanol around the globe is an admirable goal and one that should be commended and explored. But it must be done in the context of fair trade. No effort to encourage ethanol production in the Western Hemisphere or around the world should require American taxpayers to bear the burden. Yet, that is exactly what President Lula and the Brazilian government are asking for in calling on President Bush to end the credit offset which prevents U.S. taxpayer subsidies for foreign ethanol. The credit offset poses no barrier to Brazilian ethanol which has enjoyed more than 30 years of government support dating back to the military dictatorships of the 1970s.

“Simply put, the credit offset merely asks Brazilian ethanol producers to pay back the tax incentive for which their product is eligible. Congress correctly put this offset in place to prevent foreign ethanol industries access to American taxpayer dollars while not preventing access to the U.S. market. Last year, the U.S. imported 433 million gallons of ethanol straight from the shores of Brazil, representing roughly 10 percent of Brazil’s annual production. Clearly, Brazilian imports compete quite effectively when needed.

“We applaud President Bush’s effort to expand the role of renewable fuels around the world. And he is right to tell the Brazilians that discussion of the credit offset is off the table. While the U.S. ethanol industry wants to see a world market for ethanol develop, it ought not come out of the pockets of Americans.”

Ethanol, International, News