Rangel Introduces Bill to Extend Ethanol Duty, Benefitting U.S. Producers and Refiners in the Caribbean and Central America

(Congressman Charles Rangel (D- NY 15) Congressman Charles Rangel on December 2, 2011, introduced legislation to extend "other duty or charge" (ODC), a key component of the Caribbean Basin Economic Recovery Act (CBERA), that provides duty-free treatment to ethanol imports from the Caribbean and will expire at the end of this year. Rangel's bill will extend the duty for three years, until December 31, 2014.

"My legislation would preserve duty-free ethanol for the U.S. as well as ensuring that the gains achieved for the Caribbean remain intact," stated Rangel. "Extending the ODC for three years will help maintain U.S. investments in the Caribbean, which benefits our long-term trade relationships in the region."

As a result of the ODC, Caribbean and Central American countries have developed a vibrant refining industry, with over $300 million in investment and the capacity to produce approximately 700 million gallons of ethanol annually for the U.S. market. Permitting the ODC to expire will restore the ethanol duty to a $0.54 per gallon, impact Carribbean ethanol industry and greatly benefit Brazil – a major agricultural trade competitor of the United States and the only other major sugar cane ethanol producing country.

"It is critical for U.S. businesses and consumers to help our partners in the Caribbean Basin Initiative retain a vibrant ethanol refining industry," added Rangel "Allowing a single country to have an advantage over this critical energy source could devastate businesses in the region and drive up energy costs. It would also create market instability at a time when our country continues to steer a stable economic recovery."

The Caribbean currently has the capacity to supply virtually the entire foreseeable U.S. demand for sugar based ethanol duty-free under the CBERA for the next several years.

"I urge Congress to pass this extension and continue the pace of good news for businesses and consumers heading into the New Year." READ MORE and MORE (Ethanol Producer Magazine)

Excerpt from Ethanol Producer Magazine: However, according to data recently released from the U.S. International Trade Commission ethanol imports from CBI countries have bottomed out and no longer play a role in the U.S. fuel ethanol supply. In a report evaluating the impact of CBERA on U.S. industries and consumers in 2009 and 2010, the USITC found that while fuel ethanol was at one point a significant portion of U.S. energy imports, developments in recent years have drastically reduced Caribbean ethanol imports. In fact, U.S. imports of fuel ethanol under CBERA fell 97 percent from 2008 to 2010 and no ethanol has been imported from those countries since March 2010. “This drastic plunge was caused by developments in the global sugar market and the domestic Brazilian ethanol market that results in lower exports of ethanol from the Brazil,” the USITC stated in its report. India’s poor sugarcane harvest in 2008-’09 drove up world sugar prices, which in turn diminished Brazil’s sugarcane-to-ethanol production as producers increased their sugar output to meet demand. At the same time, moderating corn prices and increased capacity utilization in the U.S. enabled domestic producers to churn out more ethanol. “These market conditions virtually shut off the supply of hydrous ethanol from Brazil that is used as a feedstock by CBERA dehydrators,” the USITC said in its report, adding that there are currently no economically viable alternative ethanol sources for CBERA refiners. READ MORE