OAS chief predicts closer Brazil-US ties on ethanol

Feb 26, 2007, 17:19 GMT

Rio de Janeiro - US President George W Bush's visit to Brazil next week will be a 'good first step' for greater energy cooperation between the world's two largest producers of ethanol and will help promote a greater global market for the renewable fuel, observers on both sides said Monday.

Jose Miguel Insulza, secretary general of the Organization of American States (OAS) and US Senator Richard Lugar, said they hoped Bush's visit would create a 'strategic association' in the field of biofuels, in an article published by Brazilian daily Folha de Sao Paulo.

Bush will meet Brazilian President Luiz Inacio Lula da Silva in Sao Paulo on March 9. The two leaders are expected to sign 'an important bilateral agreement to improve cooperation in biofuels in the private sector, to promote the use of ethanol in the (Latin American) region and to start to turn ethanol into a global commodity,' according to the article.

Insulza and Lugar said the deal presents 'an unprecedented opportunity' to build a 'strategic association which would face two of the greatest challenges for the hemisphere: energy insecurity and poverty.'

The agreement to be signed in Sao Paulo is 'a good first step,' but the article said Bush and Lula 'can be more ambitious.'

Senator Lugar, a Republican, said he plans to put a bill before the US Congress with a view to financing private projects across the continent in the field of biofuels.

'An investment programme like that could, in the short run, create a powerful market for biofuels in the Western hemisphere, which would attenuate poverty, create jobs and income, improve energetic security, strengthen the independence of nations and protect the environment,' the article said.

Cooperation in the field of ethanol and other biofuels is set to be the main theme of the meeting between Bush and Lula.

Brazil has recently been surpassed by the United States as the world leader in the production of ethanol. However, the South American country's production is based on sugar cane, while US ethanol is obtained from corn, which is less efficient.

Heavy US tariffs on Brazilian ethanol imports has been one of the main obstacles to an agreement between both nations, which the US has refused to lower despite Brazilian demands. The United States instead intends to propose an association with Brazil to exploit third- country markets.