S. America plows biodiesel, ethanol crops

Fuelish notions
Such a partnership would be a new spin on an old story. Thanks to geography, Uncle Sam has historically been a fossil-fuel friend of its Latin American neighbors, buying black gold from oil-flush nations like Ecuador and Venezuela, which provides some 10 percent of all U.S. oil imports. For many, those historic relations and proximity make bio-imports a no-brainer. But will the U.S. ethanol industry, which some see as a subsidy-heavy pet project of farm-belt politicians, fight that flow? Early signs point to yes.

For instance, U.S. ethanol makers now have their corn boiling over plans by U.S.-based Cargill to build a refinery in El Salvador. The ag giant will take advantage of a trade-law loophole in the Caribbean Basin Initiative: by processing Brazilian ethanol in a CBI signatory country, Cargill can export the fuel duty-free into the U.S. The Central American Free Trade Agreement could have closed the loophole, but didn't.

In reports and position papers, the Minneapolis-based Institute for Agriculture and Trade Policy, a think tank, claimed CAFTA could let millions of gallons of Brazilian ethanol into the U.S. without tariffs. "CAFTA stands to destroy thousands of jobs created by the U.S. ethanol industry and make the U.S. dependent yet again on foreign fuel supplies," says Ben Lilliston of IATP.

And what about the U.S. biodiesel industry, a neophyte with production rates of only 30 million gallons last year? South America will not likely find new amigos there, especially after a boat full of South American biodiesel docked in Florida last month, qualifying for a U.S. biodiesel tax break. The American Soybean Association immediately called on Congress to eliminate a loophole in the 2004 law in question.

Some things are going well for the U.S. biofuel market, like the odd assortment of environmentalists, evangelical Christians, and conservatives running around Washington pitching it as a key to America's fuel security. Lawmakers are drumming up ways to protect ethanol makers from a deluge of imports, and the energy bill President Bush signed this summer requires the country to use an annual 7.5 billion gallons of ethanol and biodiesel by 2012.

But America's homespun biocombustibles industry, especially ethanol, is still in a knot over South American competition. Um, samba lessons anyone?

Kelly Hearn is a writer in South America. He is a former UPI staff reporter and a correspondent for the Christian Science Monitor and other publications.