WASHINGTON - On Monday, the Brazilian Chamber of Foreign Trade said it would remove the country??s 20 percent ethanol tariff until Dec. 31, 2011, Congress Daily reports. With the temporary elimination of the tariff, Brazil was hoping to pressure the United States into lowering or removing its own tariff and taxes on imported ethanol. Currently, imported ethanol is subjected to a 2.5 percent ad valorem tax and an additional 54 cents a gallon surcharge, which terminates Dec. 31, 2010.

The Brazilian Sugarcane Industry Association is urging both countries to eliminate the ethanol tariffs. "Consumers win when industries compete," said Joel Velasco, chief North American representative for the association. "Brazilian ethanol producers are willing to compete for consumers. What about American producers?"

The United States, with its corn-based ethanol, produces most of the world??s ethanol, while Brazil??s sugar cane ethanol comes in second. However, Brazil is heads the list in ethanol exports.

Ethanol trade coalition Growth Energy wants the United States to stay the course with its ethanol tariffs but would like the country to provide more subsidies to ethanol produces like Brazil does. "The U.S. would do well to follow their example and promote American ethanol producers rather than giving tax breaks to foreign ethanol and increasing our dependence on foreign energy," said Growth Energy CEO Tom Buis.

This year, the current 45 cents a gallon ethanol tax credit will go away. Rep. Earl Pomeroy (D-ND) sponsored a bill that would keep the credit and tariff for another five years. Sen. Chuck Grassley (D-IA), ranking member of the Senate Finance Committee, has plans to introduce a companion measure after the spring recess.

Read more about Brazil??s ethanol market in the March issue of NACS Magazine??s "Global Trends" section.