NCPA - National Center for Policy Analysis


March 28, 2007

The U.S. tariff on foreign ethanol is important in helping the United States expand its renewable-energy industry, which will decrease U.S. reliance on foreign fuels. Otherwise, we'll replace U.S. dependence on foreign oil with a dependence on foreign ethanol, says Sen. Chuck Grassley (R-Iowa).

The United States already provides generous duty-free access for imported ethanol under the Caribbean Basin Initiative (CBI):

  • Under CBI, ethanol fully produced in the Caribbean countries can enter the U.S. market duty-free.
  • CBI also provides that ethanol produced in Brazil and other countries -- that then undergoes the minimal dehydration in a CBI country -- can enter the U.S. duty-free up to 7 percent of U.S. consumption.
  • This 7 percent cap has never been reached. Brazil and other countries aren't taking full advantage of their current ability under the CBI program to ship ethanol duty-free to the U.S. market.

According to Grassley, there is no reason to discuss lifting the tariff unless they do.  In the same vein, there is no urgency to end the CBI preference.  The preference isn't currently hurting U.S. energy independence.

It's necessary to diversify and expand domestic, renewable energy supplies.  If America doesn't ramp up domestic, renewable supplies of energy sooner rather than later, America's economy will continue to suffer under a precarious reign of energy insecurity, says Grassley.

Source: Letter to the Editor, Sen. Chuck Grassley (R., Iowa), "A Vote to Continue Tariff On Imported Ethanol," Wall Street Journal, March 28, 2007.

For text:


Browse more articles on Environment Issues