RFA Speaks Out on WTO Compliance
Letter explains how tax incentive and tariff are legal.
Compiled by staff
Published: Jan 20, 2011
Senators John McCain, R-Ariz., and John Barrasso, R-Wyo., believe that current ethanol tax and trade policies are illegal under World Trade Organization agreements. But the Renewable Fuels Association has sent letters to the pair to the contrary. RFA believes the Volumetric tax incentive and the offsetting secondary tariff are WTO compliant.
Dealing specifically with the tax credit and a potential WTO challenge, RFA President Bob Dinneen says the U.S. is able to raise powerful defenses to an actionability finding against VEETC, based on the need to conserve fossil fuel, or the fact that it is available to both domestic and imported ethanol. If the credit is not shown to be an arbitrary or unjustifiable discrimination between countries, or a disguised restriction on international trade, it will likely survive any WTO challenge.
Summing up RFA's defense of current ethanol tax and trade policy, Dinneen wrote, "We strongly believe that the existing market-based incentives effectively support ethanol growth in the U.S., without creating an unreasonable or unnecessary barrier to trade."
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Tagged: ethanol
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