U.S. corn farmers and ethanol makers will continue to have less competition from foreign imports of the renewable fuel until 2009. Included in legislation passed overnight by the U.S. House of Representatives and U.S. Senate was an extension of the 54-cent-per-gallon tariff on imported ethanol.

The tax was set to expire in October, 2007, but will continue to be imposed until January, 2009, said U.S. Sen. John Thune, R-S.D.  A leading producer of ethanol is Brazil, which presumably would be the source of more supply.

Brazil, however, has its own gasoline supply concerns and is uncertain how much additional fuel it would be able to provide.  The tariff encourages domestic ethanol production, discourages dependence on foreign energy and keeps other countries from competing with U.S. production.

Doug Sombke of Conde, president of the South Dakota Farmers Union, said the U.S. has environmental and other standards imposed on farmers and ethanol producers that foreign competitors don’t have.
His group supports fair trade but not free trade, he said. “If other countries are competing on the same playing field as we are, that’s one thing. But when they’re not, that’s a whole different issue.”

Republican and Democratic farm state members of Congress who pushed for the tariff extension went against the wishes of President George W. Bush, who earlier this year supported at least a temporary reduction of the import tax on ethanol.

“I think it makes sense ... when there’s a time of shortage of a product that’s needed, so consumers have a reasonable price, it seems to me to make sense to address those shortages,“ Bush said in a May interview.
“And dropping a tariff will enable the foreign export of ethanol (to get) into our markets, which will particularly help on our coasts,” Bush said.

Thune, however, said the problem is transportation, not a shortage of ethanol.