The United States recently overtook Brazil as the world's largest producer of fuel ethanol. Now the two countries appear ready to team on further development of the renewable fuel.
 	
 President George W. Bush met today with Brazilian President Luiz Inacio Lula da Silva on the first day of Bush's weeklong, five-nation trip through Latin America. Ethanol was the main focus of today's meeting. "I appreciate very much the innovation that's taking place here in Brazil," Bush said while touring a Petrobras terminal in Sao Paulo, Brazil. "If you're the leader in ethanol I believe you'll continue to come up with technologies that should be available for others."
 	
 A memorandum of understanding to advance cooperation on biofuels was signed Friday morning by Secretary of State Condoleezza Rice and Brazilian Foreign Minister Celso Amorim. The agreement is intended to advance the research and development of new technologies to promote biofuels and its use. 
 	
 The United States and Brazil expect to support feasibility studies and technical assistance in partnership with the Inter-American Development Bank, the United Nations Foundation and the Organization of American States, the agreement said. The countries also intend to work through the International Biofuels Forum to examine the development of common biofuels standards and codes to facilitate the commoditization of biofuels.
 
 The nations agreed to help third countries, beginning in Central America and the Caribbean, to stimulate private investment for local production and consumption of biofuels.
 
 Under the Caribbean Basin Initiative, countries in Central America and the Caribbean have had duty-free access to the United States since 1989 for ethanol from regional feedstocks, according to the office of the United States Trade Representative.
 	
 Perhaps most notable in today's announcement was the lack of mention of the 54 cent-per-gallon import tariff the United States places on imported ethanol. In fact, a U.S. Department of State <a target="_blank" href="http://www.state.gov/r/pa/prs/ps/2007/mar/81589.htm">fact sheet</a> said the understanding doesn't include discussion of United States trade, tariffs or quotas.

 
 The possible lifting of the tariff was a major source of speculation leading up to Bush's visit. On Wednesday, Sens. John Thune of South Dakota and Chuck Grassley of Iowa hosted a press conference in which they questioned a potential U.S.-Brazil ethanol accord. "South Dakota and Iowa have spent years promoting and building an ethanol industry to reduce this nation's dependence on foreign energy," Thune said. "To put the great achievements of this industry at risk is unacceptable. The goal of producing ethanol here in America is to replace imported oil with home-grown renewable fuel. Importing ethanol defeats this purpose."
 
 The Renewable Fuels Association (RFA) also opposed a lift in the import tariff. "Simply put, the credit offset merely asks Brazilian ethanol producers to pay back the tax incentive for which their product is eligible," said RFA President Bob Dinneen. "Congress correctly put this offset in place to prevent foreign ethanol industries access to American taxpayer dollars while not preventing access to the U.S. market."
 	
 According to the International Trade Commission, U.S. ethanol imports jumped significantly to 653 million gallons in 2006. In 2005 the United States imported 135.5 million gallons.
 	
 Of the 653 million gallons imported in 2006, the RFA said 434 million came directly from Brazil. "Last year's record ethanol imports clearly show the credit offset on imported ethanol serves as no barrier to entry," Dinneen said. 
 	
 The United States produced approximately 4.86 billion gallons of ethanol in 2006. Brazil is the world's leading ethanol exporter. 
 	
 Sen. Dick Lugar of Indiana expressed praise for today's agreement. "Working with Brazil will help turn ethanol into a global commodity and reduce our dependence on oil," Lugar said. "It also demonstrates to our friends in the hemisphere that we are ready partners in advancing our common interest for energy security. If implemented vigorously and funded generously, a policy of partnerships in biofuels production could rehabilitate the U.S. in the eyes of everyday Latin Americans."
 	
 Meanwhile the National Farmers Union (NFU) said the agreement could have a negative impact on family farmers, ranchers and American taxpayers. "Using U.S. taxpayer dollars to encourage new ethanol production in foreign countries will only directly compete with production right here at home," said NFU President Tom Buis. "Instead, we should be investing in our resources in building our own domestic renewable fuels capacity. This agreement is the wrong step in the wrong direction and the wrong time."
 	 
 U.S. annual ethanol imports (in millions of gallons):
 2002—45.5

 2003—60.9
 2004—159.9
 2005—135.5
 2006—653
 
 Dave Nilles is Online Editor for Ethanol Producer Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.
 
 Posted: 1:45 p.m. CST Friday, March 9, 2007

U.S. and Brazil agree on ethanol partnership

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U.S. and Brazil agree on ethanol partnership