When President George Bush visits Sao Paulo, Brazil on Friday he can expect to hear his host, Brazil's President Luiz Inacio Lula da Silva, ask him to cut the U.S. import tariff on ethanol. The US biofuels industry benefits under current law from tax credits worth 51 cents per gallon for ethanol, and an import tariff of 54 cents per gallon on imported ethanol. The credit is supposed to expire in 2010, the tariff in 2008.
President Lula said Monday he will ask President Bush to end the import tariff when the two meet as part of Bush's swing through South and Central America. US officials quickly dismissed the idea of a tariff cut. "The tariff is not under negotiation and we have no intention to propose altering the tariff," White House national security adviser Stephen Hadley said in a Washington, DC press briefing.
Lula is also expected to push Bush to make larger concessions on farm subsidy cuts than so far offered in languishing World Trade Organization negotiations. There is no indication that the Bush Administration has changed its stance on subsidy cuts in the WTO's Doha Round. American negotiators have said they can offer steeper subsidy cuts, on the provision that other governments improve their offers on market access for U.S. agricultural products.
"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," says Renewable Fuels Association president Bob Dinneen. "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."