Subsidy arbitrage in international trade is not a new issue. It is popping up again in the biofuels sector, this time regarding the collection of ethanol blending credits on fuel that is then shipped out of the United States. Not surprisingly, producers in the receiving markets are not happy about it. Robert Rapier has writting a good overview of the issue and the industry's denials (
I should have linked to this last month, but better late than never. Robert Rapier has done a nice review of the Renewable Fuel Association's rather exuberant claims on the impacts of killing VEETC. Given that the mandate still requires the use of almost all of the ethanol produced domestically, the mechanism of support may shift (from tax credits to transfers from consumers, as illustrated by rising prices on compliance credits under the renewable fuel standard) but the demand will remain.
Subsidy recipients rarely admit their government largesse is a subsidy rather than some sort of altruistic investment they've reluctantly agreed to accept on behalf of their good work for the commonweal. This natural spin tends to go into hyperdrive when the public affairs team of a trade association strays too far from the policy folk.