Ethanol Policy in the Clean Air-Free Trade Era

The U.S. corn ethanol industry is a subsidized, high cost, trade protected, limited scale industry; unable to compete in free markets orto efficiently supply new fuel demands of clean air legislation. Lower cost, sugarcane ethanol from Latin America (Brazil) should be asupplementary source, especially for U.S. coastal markets. Counter trade-corn for ethanolwould be more beneficial to U.S. corn producers than domestic ethanol corn markets and would result in more efficient land use, less soil erosion, and less fossil fuel use. A variable producer subsidy should replace the current market subsidies and import tax policies, giving limited protection to the domestic ethanol industry while assuring adequate low-cost ethanol supplies through competitive imports.