12/26/05: Free trade could harm production of ethanol here - Hiroshi Kanno

Free trade could harm production of ethanol here

Madison Capital Times

December 26, 2005

At risk of fueling the smoldering ethanol debate, here are some issues that Americans should examine.

First, from the reports I have read, sugar cane and sugar beets produce more gallons of ethanol per acre than corn. Therefore, Brazil, with an abundance of sugar cane, can produce ethanol at 1/2 to 1/3 the cost of ethanol produced from corn in the United States. Brazil is the leading producer of ethanol in the world.

Second, Cargill and other transnational corporations are importing ethanol from Brazil by way of El Salvador and Jamaica. They are doing this to take advantage of the recently passed Central American Free Trade Agreement.

Because of this and earlier agreements countries in Central America can export quantities of ethanol to the United States without paying a tariff. By shipping hydrous ethanol from Brazil and dehydrating it in El Salvador and Jamaica, transnational corporations like Cargill can take advantage of this loophole and not pay any tariff when they import the ethanol which originates in South American countries. On top of this they also receive the federal subsidy for this ethanol.

Third, when and if the Free Trade Area of the Americas is agreed upon, then the flood of cheap ethanol from Latin American countries could overwhelm our locally produced corn ethanol.

How long will Archer Daniels Midland and Cargill and other ethanol processors buy Wisconsin corn ethanol when they can readily get ethanol at a cheaper price directly from Brazil? Their "loyalty" to American farmers will last until the cheaper ethanol has tariff-free access to our markets. Shades of the Wal-Mart's "Buy American" campaign of the 70s and 80s.

Fourth, ethanol is just one of the complex relationships created by these so-called free trade agreements. It seems to me that if we want to protect investments in Wisconsin corn produced ethanol then we must oppose FTAA and work to limit the access of ethanol from Brazil. Both U.S. Senators from Iowa have bills to limit such imports.

One thing is certain. Cargill and ADM are looking out for their bottom line. The aim of FTAA is to help these transnational corporations. The well being of local family farmers and local investors in Wisconsin ethanol plants will not be part of their bottom line considerations.

Hiroshi Kanno,

Wisconsin Dells