Ethanol: With an American Friend Like This Brazil Needs No Enemies

US Senator Charles GrassleyIn a recent letter to President Obama, the Republican Senator from Iowa, Charles Grassley, threatened to hold U.S.-Brazil relations hostage to his insatiable thirst for corn fed ethanol.  Senator Grassley’s Iowa is the largest producer of ethanol in the U.S.  For years Senator Grassley has played a key role in protecting U.S. ethanol producers from Brazilian ethanol imports, as both Chair and now as the minority’s ranking member of the Senate Finance committee that oversees all U.S. international trade policy.

Under the long standing policy of protecting the Senator’s family of corn fed ethanol producers, Brazilian ethanol imported into the United States is subject to two customs duties: an ad valorem tariff rate of 2.5 percent and a secondary tariff of 54 cents per gallon. 

These illiberal tariffs punish consumers, investors, and efficient producers while rewarding foreign producers of oil who indirectly benefit from the inefficiencies of corn-fed ethanol.  The tariffs act as an indirect subsidy to such transnational enterprises as the Archer Daniels Midland Corporation (ADM), the largest U.S. producer of ethanol. 

As Senator Grassley advocates for continued protection and subsidies for ethanol producers, such as ADM, this transnational company is busy planning future investments in Brazilian biofuel production and partially financed from these indirect subsidies!  Apparently, the bittersweet irony of this policy outcome escapes Senator Grassley as he continues his blind crusade for corn.

In July, the Senator alerted the President, Secretary of State Hillary Clinton, and U.S. Trade Representative Ron Kirk that he would hold up Obama’s nominee for Ambassador to Brazil, Thomas Shannon, until the administration recommitted itself to a biofuel policy that benefits large transnational agribusiness groups and protects the most inefficient producers of ethanol. 

Moreover, every time motorists fill up at the gas pump, Senator Grassley and his corn fed friends shake them down for a nickel or dime per gallon.  These coins add up to boost ADM’s revenues, allowing the company to spend millions in campaign contributions and soft money donations to Grassley’s Republican Party over the past decade.

Worried about Ambassador Shannon’s public recognition of this tortured trade policy, Senator Grassley tried to explain his corn cob logic, “Now, the president’s nominee for ambassador to Brazil says the removal of the tariff would be ‘beneficial.’ It’s important to know whether the administration’s position has changed before this nomination goes forward.” 

This means that Senator Grassley is threatening a “hold” on a full Senate confirmation vote for the President’s nominee to represent the U.S. in Brasília even after the well respected career diplomat was endorsed by the Senate Foreign Relations Committee by a 14 to 4 margin. 

Not only is Grassley’s threat as ugly as a scarecrow, but it reveals his perverse foreign policy views; positions that place the cultivation of corn above national economic interests and sensible international cooperation. 

Yes, with friends like Grassley, Brazil really does not need enemies.

Paradoxically Senator Grassley tactics all but confirm that Ambassador Shannon was correct to observe that opening up biofuel trade with Brazil would be “beneficial.”  Despite Grassley’s consistent support for expanding free trade and economic globalization, his stubborn sponsorship of all things corn defies the scientific findings that indicate that corn cultivation has a carbon footprint nearly equal to gasoline itself while Brazilian sugarcane fed ethanol measures a remarkable and sustainable energy balance that makes it a partial solution to global warming and keeps more dollars in the pockets of millions of motorists and taxpayers. 

It is time that U.S. trade policy and Senator Grassley come to terms with their outstanding commercial conflicts with Brazil, including the punitive tariffs on Brazilian ethanol imports.  The world needs more U.S-Brazil cooperation to frame the negotiations underway for a post-Kyoto Protocol treaty to rapidly reduce greenhouse gas emissions and to establish a global economic development agenda that reduces poverty and inequality around the world.

Our future peace and prosperity now depend on the Obama administration’s capacity to overcome powerful private interests, including those rooted to corn fed ethanol production.  The President’s choice for U.S. Ambassador to Brazil, Thomas Shannon, demonstrates such a capacity and seizes the opportunity to deepen cooperation with Brazil on a number of issues of vital concern to the United States, Brazil, and much of the world.

So with all due respect to Senator Grassley and his corn fed family of friends, this is not the time for playing scarecrow.  He should shuck his ethanol policy position in favor of the national interest and international cooperation.

Mark S. Langevin, Ph.D. is Director of BrazilWorks (www.brazilworks.org), adjunct Associate Professor of Government and Politics at the University of Maryland-University College, and Associate Researcher at the Political Studies Laboratory of the Federal University of Espírito Santo, Brazil.  He researches and writes on U.S.-Brazil relations.  He can be contacted at Mark.brazilworks@gmail.com.

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