Brazil may contest US rules at WTO
Wire services
Brazil may bring a case against the US to the World Trade Organisation if
proposed ethanol tax rules are approved as part of a new US farm bill,
Brazil's chief trade negotiator said.
The proposed new farm bill would extend an import tariff of 54 cents per
gallon for two more years and reduce an ethanol blenders' tax credit to 45
cents per gallon from 51 cents.
Brazilian producers say this would distort the price of Brazilian sugar
cane-based ethanol in the US market for the benefit of ethanol produced from
US corn. While the tariff is the main objection, lower incentives for
blenders would discourage ethanol consumption and imports, they say.
"In the light of WTO rules, the (import) tariff is questionable. We've been
studying its compatibility with WTO rules," Brazil's chief trade negotiator
Roberto Azevedo said.
"The results of these studies and talks with the private sector will
determine our conduct, which does not rule out challenging it at the WTO,"
Azevedo said.
He did not specify when the government could have a decision on this issue,
but said the proposal of extending the import tariff "reinforces our efforts
to finish the studies."
Brazil would not question the value of the tariff but the tax itself, he
said.
The US Congress is expected to pass the bill next week, but President George
W. Bush will likely veto it, Agriculture Secretary Ed Schafer said yesterday.
Farm-state lawmakers have said they would try to override a veto. Some
analysts have suggested they might also try to pass a slimmed-down version
of a vetoed bill.
A possible WTO challenge is supported by the Brazilian ethanol industry,
which sees the extension of the tariff as a threat to its plans to increase
ethanol exports, reported Reuters.
"We may have no other option but to solve our differences at the WTO. We've
been offering common-ground, consumer-oriented solutions but the response
from the US Congress is more trade-distorting protectionism," said a senior
industry representative who did not want to be named.
Brazilian producers also say renewing the tariff would increase demand for
corn and contribute to an ongoing rise in food prices. Ethanol made from
corn is more expensive and less energy-efficient than the fuel made from
sugar cane.
09 May 2008 03:49 GMT
| last updated:
09 May 2008 03:52 GMT
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