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U.S. and Brazil to Cooperate on Ethanol

The two countries reached an agreement to increase cooperation in promoting biofuels, but the U.S. tariff on Brazilian ethanol stands.

President Bush and Brazilian President Luiz Inacio Lula da Silva agreed to cooperate to promote ethanol in the Americas as an alternative to oil. The agreement also aims to increase cooperation on biofuels technology and to develop international biofuels standards.

Meeting with Lula in Brazil, Bush refused to discuss a reduction the U.S. 54-cent-per-gallon tariff on Brazilian sugar-cane ethanol imports. Brazil wants the U.S. to lower that tariff, but according to National Farmers Union President Tom Buis, ethanol producers may get around the tariff by channeling Brazilian ethanol through other countries.

"It is additionally troubling to see press reports that this new pact will open the door for foreign ethanol producers to by-pass the 54-cent-per-gallon ethanol tariff by simply importing Brazilian sugarcane and processing it in the Caribbean, which is exempt from the tariff," he says. "The current tariff ensures U.S. taxpayer dollars do not subsidize foreign-produced ethanol."

The Renewable Fuels Association is not opposed to the agreement, although Monte Shaw, executive director of the Iowa Renewable Fuels Association, said, "We'll be watching very closely to make sure that someone doesn't morph this into a mechanism or a tool for sucking U.S. taxpayer dollars to Brazil or other countries."

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