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August 12th, 2009

Grassley: Standing with U.S. Farmers

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Written by: The Iowa Republican
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By U.S. Senator Chuck Grassley

grassleytirRecently, several major media outlets have attempted to yet again debunk the positive aspects of ethanol and the federal policies that have worked to help this homegrown, renewable fuel gain traction in the United States.

The latest attacks show it’s abundantly clear that people still have a lot to learn about U.S. ethanol policies. My letter to President Obama received a great deal of attention when I called to the president’s attention a statement regarding the ethanol import tariff made by his nominee to be the U.S. ambassador to Brazil.

It’s hard to believe that the media outlets could omit some basic facts like the reality that the United States already provides duty-free access for ethanol from Brazil and other countries. Through a carve-out in a U.S. trade preference program, the Caribbean Basin Initiative, ethanol produced in Brazil that is dehydrated in a Caribbean country can enter the United States duty-free up to 7 percent of the U.S. ethanol market. Brazil has never come close to filling this duty-free cap, including this year, where Brazil has used a tiny fraction of its allowance. Since Brazil has yet to take full advantage of the ability it already has to ship ethanol duty-free to the U.S. market, where’s the logic in bending over backwards to provide Brazil with more duty-free access?

In addition the editorials failed to point out that Brazil applies its own 20 percent tariff on ethanol imports coming into its country. Does the old saying, “people living in glass houses shouldn’t throw stones” ring a bell?

Separately, Caribbean countries have developed an ethanol dehydration industry because of the existing carve-out, creating employment and wealth in the region. Removal of the U.S. ethanol tariff could destroy jobs in the Caribbean countries. The Jamaican ambassador to the United States says a mere lowering of the U.S. ethanol tariff would be a “doomsday scenario.”

As Ranking Member, and former Chairman, of the Senate Finance Committee, I have promoted economic development in the Western Hemisphere by advancing our free trade agreements with Central America, the Dominican Republic, Peru, and Chile, by resisting efforts to renegotiate the North American Free Trade Agreement, and by working actively for the implementation of free trade agreements with Colombia and Panama. The U.S. ethanol tariff is another way to promote economic development among the vulnerable economies of our neighbors in the Caribbean.

The editorials also continued the folklore that began when the Grocery Manufacturers Association started a smear campaign against ethanol to justify the rising food prices of their members. I debunked it once, and I’m happy to clear it up again. Experts, including the Congressional Budget Office, agree that ethanol has next to nothing to do with the rising costs of energy and food. In fact, the CBO said “the increased use of ethanol accounted for about 10-15 percent of the rise in food prices between April 2007 and April 2008,” or between 0.5-0.8 percentage points of the 5.1 percent increase in food prices measured by the consumer price index. The CBO also determined that “higher energy costs had a greater effect on food prices than did the use of ethanol.”

The major media organizations appear to take it as fact the propaganda that Big Oil and Big Food have used to line their pockets, while scapegoating a domestic, green fuel.

Those of us in rural America have seen the benefits of ethanol for nearly 30 years. Federal tax incentives provided a jumpstart to the market and helped fuel research and development funding to help unlock technological advances. And, while fierce opposition over the years from the likes of Big Oil and Big Food have tried to derail efforts to expand and renew the public policy breakthroughs that have allowed ethanol to gain acceptance, a bipartisan, bicameral coalition on Capitol Hill prevailed on the merits of investing in homegrown energy to shield the United States economy and boost energy security from volatile regions of the world.

This debate comes down to a few simple questions.

Do we want more production of green fuels?

Do we want greater dependency on Venezuela and other unfriendly governments for our energy needs?

Do we want to create jobs here at home?

I know where I stand. That’s with the home-grown, clean burning, renewable fuel produced by U.S. farmers who are working to create jobs here at home and lessen America’s dependence on foreign oil.


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The Iowa Republican





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