Recent Press Releases

Thune Introduces Bill to Extend Tariff on Foreign Ethanol

Extension of tariff would encourage growth of U.S. ethanol market

April 18, 2007

Washington, D.C. —  Senator John Thune has introduced S. 1106, legislation that would extend the U.S. tariff on imported ethanol for two additional years. The current tariff is set to expire on December 31, 2008.

"Extending the U.S. tariff on ethanol imported from foreign countries is a necessary and responsible step, to protect and encourage the growth of our domestic ethanol market and help steer America on the course to becoming energy-independent," Thune said. "Ethanol is being produced domestically at record levels, but this American industry is still in its infancy and needs to be protected from heavily subsidized foreign competition while it continues to grow and establish a foothold. Allowing the tariff on foreign ethanol to expire would lead to more unregulated imports of foreign ethanol, increasing America's dependence on foreign sources of energy and discouraging domestic efforts to produce home-grown renewable fuels.

"There are great strides being made and advanced research is taking place at universities and labs across the country to develop technologies to produce cellulosic ethanol from numerous other renewable, cost-effective sources, such as switchgrass, biomass, and woodchips. With continued support and investment, America has the wherewithal and potential to fulfill our own energy needs, and we need to be taking steps to encourage domestic production of alternative energy. I'm hopeful the Senate will pass the two-year extension of the tariff on foreign ethanol to give a vote of confidence to domestic producers and take us one step closer to energy independence."

Senator Thune's legislation also calls on the U.S. Department of the Treasury to conduct a study on the Caribbean Basin Initiative (CBI), including the source and quantity of ethanol being passed through participating countries into the U.S.

The CBI was developed during the Cold War to promote the political and economic stability of El Salvador, Costa Rica, Jamaica, and Trinidad & Tobago by allowing many goods, including ethanol, to be shipped into the U.S. duty-free. However, some countries such as Brazil are exploiting the CBI loophole by shipping an unknown quantity of ethanol to neighboring CBI countries where it undergoes a final processing and enters the U.S. duty-free. The amount of ethanol that is allowed to be shipped into the U.S. through the CBI without paying the 54-cent-per-gallon tariff cannot exceed 7 percent of the U.S. ethanol market. If the U.S. increases its biofuels production to 35 billion gallons by 2017, approximately 2 billion gallons could be imported through the CBI duty-free.

"I'm concerned that some countries are exploiting the ethanol loophole by shipping unfinished ethanol to neighboring CBI countries where it undergoes a final processing and enters the U.S. duty-free." Thune said. "As our domestic ethanol industry rapidly expands, so does the impact of the CBI ethanol loophole. It is critical that policymakers clearly understand the consequences of CBI ethanol imports as we work to increase our energy independence."