Commerce Secretary Travels to Brazil for Trade Talks

Ethanol tariff will be discussed with Brazilian officials.

Published on: Oct 7, 2008

This week Secretary of Commerce Carlos Gutierrez travels to Brazil to chair the U.S.-Brazil Commercial Dialogue Ministerial Meeting and co-chair the third meeting of the U.S.-Brazil CEO Forum with Assistant to the President for International Economic Affairs Dan Price in Sao Paulo.

The main goal of the trip is to strengthen the U.S.-Brazil economic relationship between senior government officials and business leaders from both nations. On Monday, Gutierrez said that during the bilateral trade talks this week, the tariff of 54 cents per gallon on ethanol will be a topic that gets attention.

"We have had very candid discussions and the administration has been very clear about our desire to revisit those tariffs," Gutierrez said.

Although there have been some attempts to lower the tariff, they have not met with much support in Congress. The U.S. ethanol industry has argued for the tariff on the grounds that Brazil heavily subsidizes its ethanol production and oil companies receive a tax credit for blending ethanol with domestic or imported fuels, which the tariff is designed to offset.

The tariff was extended as part of the 2008 Farm Bill through 2010. To change the tariff would require Congressional action and with the limited time, heavy schedule and opposition to cutting the tariff, Gutierrez says it's not likely to happen in the near future.

However, Brazilian ethanol can be imported tariff-free through Caribbean countries as part of a separate trade preferences program, which was also extended through 2010 as part of the farm bill.