FUEL ETHANOL. IMPORTS FROM CARIBBEAN BASIN INITIATIVE COUNTRIES

The 1983 Caribbean Basin Economic Recovery Act permits eligible products from designated countries and U.S. insular possessions in Central America and the Caribbean (referred to as CBI countries) to be imported into the U.S. duty-free. Duty-free treatment was granted to all eligible products if at least 35% of their value was added in the CBI countries. Legislation was enacted in 1986 providing that ethanol qualified for duty-free entry only if raw materials from the region accounted for at least 30% of the value of the ethanol when it entered the U.S. in 1987, 60% in 1988, and 75% in 1989. This study was to assess whether the local feedstock (raw materials) requirement for 1989 is economically feasible for ethanol producers and if not, to recommend modifications to the requirement that (1) will insure meaningful production and employment in the region, (2) discourage the processing of feedstock obtained outside the region, and (3) not result in harm to ethanol producers in the U.S. The effects of CBI ethanol imports on U.S. producers was also studied. The study found that, given current sugar and gasoline prices, it is not economically feasible for CBI ethanol producers to meet the 75% local feedstock requirement. To date, ethanol imports from CBI countries have been small and have not had much impact on the U.S. market. However, eliminating any requirement would give CBI ethanol producers an advantage in the U.S. market if the CBI companies can readily obtain subsidized European wine alcohol supplies at low prices. This report contains information to assess the tradeoffs and discusses options for modifying the 75% local feedstock requirement.

• Record URL:
  • http://www.gao.gov/docdblite/summary.php?recflag=&rptno=NSIAD-89-106
• Supplemental Notes:
  • Report to Congressional Requesters.
• Corporate Authors:

  U.S. General Accounting Office

  441 G Street, NW
  Washington, DC  United States  20548
• Publication Date: 1989-2

Media Info

• Features: Appendices; Tables;
• Pagination: 42 p.

Subject/Index Terms

• TRT Terms: Economic development; Ethanol; Legislation
• Geographic Terms: Caribbean Area; United States
• Old TRIS Terms: Duty-free imports
• Subject Areas: Economics; Highways; Law; Society; I10: Economics and Administration;

Filing Info

• Accession Number: 00482426
• Record Type: Publication
• Report/Paper Numbers: GAO/NSIAD-89-106
• Files: TRIS
• Created Date: Apr 30 1989 12:00AM