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US Senator Seeks Clarification On Brazilian Ethanol Tariff

by Leroy Baker, Tax-News.com, New York

30 July 2009

United States Senator Chuck Grassley is seeking clarification of the White House’s position on keeping the US tariff on imported ethanol after a statement in favor of lifting the tariff from the President’s nominee for ambassador to Brazil.

“As a senator and as a presidential candidate, President Obama supported keeping the US tariff on imported ethanol,” Grassley said. “Now, the President’s nominee for ambassador to Brazil says the removal of the tariff would be ‘beneficial.’ It’s important to know whether the Administration’s position has changed before this nomination goes forward.”

Grassley, the senior Republican on the Senate Finance Committee, has written to Secretary of State Hillary Clinton and United States Trade Representative Ron Kirk to seek a clarification of comments from Thomas A. Shannon, Jr., to be ambassador to Brazil, made during a nomination hearing earlier this month.

Grassley said that he has long held the position that the US tariff on imported ethanol is “appropriate.” Brazil, a major ethanol producer, can already import ethanol tariff-free to the United States through Caribbean countries as part of a separate trade preferences program. The tariff-free treatment is subject to a cap, but Grassley says that Brazil has “never come close” to meeting this.

“Mr. Shannon’s stance on the ethanol tariff is at variance with that of the Congress,” Grassley’s letter observed. “The ethanol tariff was extended by Congress in 2008. Just one year earlier, in 2007, the Senate soundly rejected an amendment to remove the ethanol tariff. In maintaining and extending the tariff, Congress has recognized the important role that the tariff plays in reducing US dependence on foreign energy sources.”

“It also appears that Mr. Shannon’s statement is contrary to the position of President Obama,” the letter went on to note. “While a United States Senator, the President recognized the benefits of the domestic biofuels industry and supported the tariff. He maintained this position as a presidential candidate.”

“The view expressed by Mr. Shannon calls into question the current position of President Obama on the ethanol tariff,” Grassley wrote.

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