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US House leader calls for ethanol import tariff cut

Written by: Staff
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WASHINGTON, May 9 (Reuters) U.S. House of Representatives Majority Leader John Boehner said today that a temporary reduction in fuel ethanol import tariffs would help reduce motor fuel pump prices.

''We don't have enough ethanol in production today. It's coming on board, but if we were to temporarily reduce the tariff on ethanol coming into our country, I think that would ease the pressure that's out there, resulting in lower gasoline prices,'' the Ohio Republican told reporters.

U.S. President George W. Bush last week also called on Congress to lift the tariffs now on fuel ethanol imports.

Asked if votes were there in both chambers to lift the ethanol tariffs, Boehner said, ''I think it's possible.'' But that could be a tall order based on statements last week by key Midwestern senators, including Sen. Charles Grassley of Iowa, chairman of the Senate Finance Committee, the panel which would likely review tariff changes. Iowa is the nation's largest producer of corn, the most often used feedstock for U.S. fuel ethanol.

''Lifting the tariff would be a victory for the oil companies, a kick in the face to rural America where the ethanol comes from, and leave consumers with the same high gas prices we have today,'' Grassley said in a joint statement with Sen. John Thune, a pro-ethanol Republican from South Dakota last week.

But Boehner said that people in the ethanol industry are not necessarily opposed to the idea.

''(They) are supportive of this because to the extent they can use imported ethanol to help establish the market while bigger plants are being built, it would be a big benefit to them,'' he said.

Caribbean nations are now allowed to ship up to 269 million gallons of ethanol to the U.S. market without being slapped with the normal 54 cents-a-gallon duty and a 2.5 percent ad valorem tariff.

However, ethanol exports from the region are expected to fall way short at only 80 million gallons.

Brazil, which makes its ethanol from sugar cane unlike U.S.

corn-based production, can export ethanol but has to pay the U.S.

fees. This offsets the 51 cents-per-gallon tax credit the United States provides for blending 10 percent ethanol into gasoline.

Along with reducing the tariff, Boehner called on the Bush administration to suspend the ''boutique'' clean fuel requirement when market conditions warrant it. He said that ''Bush has that ability for emergencies and after (Hurricane) Katrina hit it was suspended and brought prices down dramatically rather quickly.'' U.S. Environmental Protection Agency head Stephen Johnson said on Monday it was too early to say whether waivers will be granted. Six U.S. states, concerned about summer gasoline supplies, have asked EPA about possible waivers from clean fuel rules.

President Bush ordered EPA two weeks ago to give states regulatory relief, if needed, from pollution requirements for motor fuel if supply problems occur as refiners switch to ethanol from the water-polluting additive MTBE. The transition caused temporary gasoline shortages in some parts of Texas and the East Coast.

The House leadership hopes to move forwardwith new energy legislation this June, including a measure that aims to boost construction of oil refineries.

REUTERS CH PC2319

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