BRASILIA (Reuters) - Senators John McCain and John Barrasso said on Monday the extension of U.S. ethanol subsidies and a tariff on imports is likely illegal under international trade rules, lending some support to Brazil's opposition to U.S. ethanol policy.

"I believe the WTO would rule against the United States because it's clearly a subsidy that is neither warranted nor in keeping with WTO regulations," Senator McCain of Arizona told reporters after a meeting with Brazilian President Dilma Rousseff in Brasilia.

In December, the U.S. government extended through end-2011 a 54-cent-per-gallon import tariff on ethanol as well as a 45-cent-per-gallon subsidy for blenders worth up to $6 billion.

Brazil's powerful sugar and ethanol industry is pressuring its government to take the United States to the World Trade Organization over its policies on the biofuel that Brazilian producers say are illegal.

Brazil successfully won its last two WTO cases, against U.S. cotton and EU sugar subsidies.

"I'm unalterably opposed to ethanol subsidies," McCain said as part of a bilateral delegation here to discuss security, defense and other regional issues.

The United States and Brazil are the world's two biggest producers and consumers of fuel ethanol.

Wyoming Senator John Barrasso added that clean energy should be made available to all citizens as quickly as possible.

"We agree with the president here (Rousseff) that (the U.S. tariff) should not be there," Barrasso said.

Wed, Jan 12 2011

Reporting by Raymond Collit;

Writing by Reese Ewing;

Editing by Jim Marshall

Source: reuters.com

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