Washington, D.C. - U.S. Senators Craig Thomas and Mike Enzi, both R-Wyo., said discriminatory tariffs imposed by Brazil are harmful to Wyoming soda ash production and the practice must end.

The senators urged U.S. Trade Representative Robert Zoellick in an Oct. 16 letter to file an official protest with the Government of Brazil to remove a discriminatory tariff on American soda ash.

The senators said the tariff violates Brazil's national treatment commitments under the World Trade Organization (WTO), and removing the discriminatory tax would benefit the U.S. economy through increased U.S. soda ash exports by as much as $10-15 million a year.

"Needless to say, this tax discrimination has harmed U.S. exports for the sole purpose of protecting a domestic company from competition," the senators wrote. "If WTO-illegal measures such as these are allowed to continue without serious protest from the U.S. Government, then they will continue to proliferate and discourage others from doing business abroad."

The senators said approximately 80 percent of U.S. soda ash production occurs in Wyoming, and it employs about 20,000 workers both directly and indirectly.

Sen. Gordon Smith, R-Ore., also signed the letter.

The senators' letter follows.

The Honorable Robert B. Zoellick
U.S. Trade Representative
Office of the U.S. Trade Representative
600 17th Street, N.W.
Washington, DC 20508

Dear Ambassador Zoellick:

This letter follows up on a request that two of us sent to you in April of this year. At the time you were preparing a trip to Brazil for discussions on the FTAA and we asked that a bilateral trade issue be raised with Brazilian officials. The issue involves a tax advantage that is granted to Brazil's sole domestic producer of soda ash. This company, Companhia Nacional de Alcalis ("Alcalis"), faces a Merchandise and Service Circulation ("ICMS") tax of 2% under a decree of the State of Rio de Janiero, while all other foreign producers are subject to a much higher ICMS tax. This tax, imposed on U.S. exports, increased from 18% to 19% this year, resulting in a 17 percent point tax differential.

Needless to say, this tax discrimination has harmed U.S. exports for the sole purpose of protecting a domestic company from competition. Using internal tax policy in such a way is violation of Brazil's national treatment commitments under the World Trade Organization. Alcalis' uncompetitive production of soda ash should not be subsidized at the expense of the Rio de Janeiro taxpayer and U.S. workers. Removing this discriminatory taxation would benefit the U.S. economy by increasing U.S. soda ash exports by as much as $10-15 million a year. Approximately 80% of U.S. soda ash production occurs in Wyoming, and it employs about 20,000 workers both directly and indirectly. Soda ash is also the second largest export from the port of Portland, Oregon.

For these reasons, we respectfully request that the Administration file an official protest with the Government of Brazil and establish a timetable for consultations aimed at convincing Brazilian officials to eliminate the discriminatory ICMS tax imposed by the State of Rio de Janeiro. If WTO-illegal measures such as these are allowed to continue without serious protest from the U.S. Government, then they will continue to proliferate and discourage others from doing business abroad.

On a final note, we understand that the U.S. soda ash industry has recently forwarded to your office a draft petition under Section 301 of the Trade Act of 1974, as amended. While we share the industry's interest in seeking resolution of this issue, thereby avoiding a protracted and more litigious procedure, we also feel strongly that WTO signatories such as Brazil should comply with their international trade obligations.