Fine-Tuning the Discrimination Against Foreign Ethanol

From a press release related to a Senate bill to reduce ethanol tariffs:

U.S. Senator Judd Gregg (R-NH) today introduced a bipartisan measure with Senator Dianne Feinstein (D-CA) to reduce the tariff on imported ethanol. If passed, the legislation would allow U.S. refiners to purchase cheaper and more climate-friendly ethanol from foreign sources, which could then help lower gas prices.

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The Ethanol Subsidy and Import Tariff



Ethanol Subsidies in the Farm Bill  

What does the Feinstein-Gregg bill do?

What would this accomplish?

So if I understand this all correctly, we (the U.S., that is) had this subsidy for the use of ethanol, which helped both domestic and foreign ethanol producers by encouraging the use of ethanol.  To eliminate the benefit to foreign producers, we put a tariff on foreign ethanol in an amount that was just about that of the subsidy, with the result that the subsidy would help domestic producers at the expense of foreign ones.  But now that the latest farm bill has lowered the ethanol subsidy, the tariff exceeds the subsidy by more than it used to, and thus foreign ethanol producers are punished by the tariff to a greater degree than they had been before.  This bill seeks to eliminate that extra harm, and bring us closer to the original situation.

Basically, the bill's authors want to make sure we get the exact right amount of discrimination against foreigner ethanol producers.  Not too much, not too little.

My understanding -- and someone please correct me if I'm wrong -- is that the subsidy is paid to refiners, who blend ethanol with gasoline and are required to use a certain amount of ethanol.  I may be missing something here, but couldn't we simplify all of this by giving the subsidy directly to the domestic ethanol producers?  Then those ethanol producers could reduce their prices by the amount of the subsidy, to achieve the same effect, with only domestic producers benefitting.  Not that I'm recommending this as a matter of policy.  It just seems simpler than the subsidy/tariff combination.   The only reason I can think of for not doing it this way is that perhaps there is a fear that the refiners won't use the ethanol even with the subsidy, so those writing the laws feel they need a mandate to use ethanol combined with a subsidy directly to the refiners.