The Times Republican, which is edited in Iowa, has an article written by David Kruse which explains why ethanol should be subsidized, and then have an additional tariff when being imported. A mess? Let me try to explain his point of view a little bit.

First of all, all ethanol blended with gasoline in the U.S. has a tax credit of 51 cents per gallon. This, for WTO regulations, means that any blended ethanol is qualified, either if it's made stateside or it's imported from a third country. But, there is a 54-cents-per-gallon tariff on imported ethanol created to offset the previous credit. This protects U.S. ethanol against imports (and allows the claimed benefits of reducing foreign dependency on oil, job creation, etc.) and avoids foreign ethanol from being actually subsidized by the U.S.

Kruse tells a similar story about biodiesel in the EU, which actually has triggered a few complaints in the Old Continent. Europe subsidizes importation of U.S. biodiesel, which already qualifies for a $1/gallon tax credit. Kruse thinks that this is bad for the U.S., because it means less biodiesel is available for Americans.

So, definitely, Mr. Kruse is positioning himself to keep the imported ethanol tariff and the subsides on ethanol. What's your opinion on this?

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[Source: Times Republican]


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