Lula & Bush Didn’t Discuss What Brazil Wanted Most: Tariff Reductions

Presidents Bush and Lula talk about ethanol at Transpetro, in São Paulo, Brazil Brazil and the United States signed today, March 9, a memorandum of cooperation in the biofuels sector. The agreement provides for an advance in research and development of technology for ethanol and biodiesel production.

"The United States are going to be an extraordinary partner in this enterprise," said the president of Brazil, Luis Inácio Lula da Silva, during the visit of George W. Bush, president of the United States, to Transpetro, a subsidiary of Petrobras, in the municipality of Guarulhos, in the southeastern Brazilian state of São Paulo.

"I hope that Brazilians and Americans are optimistic regarding the use of alternative sources. There is a great potential," Bush said.

According to him, investment in biofuels is considered a matter of national security for the United States, which have set a goal of reducing gasoline consumption by 20% over the next 10 years. "We are willing to diversify, we must find alternatives for petroleum," he stated.

Bush also said that the United States intend to increase alcohol consumption in the country from 5 billion gallons per year to 35 billion gallons.

"We have already invested US$ 12 billion in research for new technologies that will allow us to achieve economic independence and better environmental quality," he claimed.

The president of the United States also said that his country is going to invest US$ 1.6 billion on research over the next 10 years, with the objective of developing alternative sources.

According to Lula, Brazil and the United States must also form alliances with other countries in order to diversify production of biofuels. Initial work should be carried out in Central American and Caribbean countries to encourage local production and consumption.

Lula also stated that planet Earth must be cleansed from pollution through the use of biofuels. "Dependence on fossil fuels must be overcome in order to reduce global warming," he said.

Another point touched upon by the Brazilian president was the fact that the increased number of sugar cane plantations generated new jobs, especially in the northeastern semi-arid region. "The gains stemming from the creation of new job positions in Brazil are already being reflected on the economy. Brazil has more than tripled its cane production," he said.

The memorandum of intention signed by the two countries also forecasts the expansion of the biofuels market, through cooperation at the International Biofuels Forum, established by the United Nations.

Nevertheless, the memorandum does not address the reduction in export tariffs for ethanol to the United States, one of the most anticipated issues for Brazilian businessmen.

The agreement was signed this morning by the Brazilian minister of Foreign Relations, Celso Amorim, and by the secretary of state of the United States, Condoleezza Rice.

During Bush's visit to Transpetro, also in attendance were the president of Petrobras, Sérgio Gabrielli; the Brazilian minister of Development, Industry and Foreign Trade, Luis Fernando Furlan, and minister Amorim.

A subsidiary of Petrobras in the transport sector, Transpetro owns 16 tanks with capacity for storage of 164 million liters of diesel, aviation kerosene, gasoline, anhydrous alcohol, and hydrated alcohol. President Bush was received at the Petrobras truck fueling station, which supplies fuel to 250 trucks per day.

Gabrielli showed the ethanol production process to the president of the United States, and spoke of Petrobras' projects in the biofuels sector. Currently, 12% of the Brazilian fleet uses flex fuel motors (which run both on alcohol and gasoline).

According to the president of the National Association of Vehicle Manufacturers (Anfavea), Rogélio Golfarb, the goal is to have a fleet of 15 million flex-fuel motor equipped vehicles by 2013, which will account for 70% of the national fleet.

Anba

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