Ethanol plays role in Mercosur summit

29 June 2007 20:38  [Source: ICIS news]

HOUSTON (ICIS news)--Ethanol continued to feature in South American regional trade talks on Friday during a Mercosur heads of state summit in Assuncion, Paraguay, official sources said on Friday.

Brazil’s massive production of ethanol remains controversial in South America, chiefly because of opposition by Venezuela President Hugo Chavez and Bolivia President Evo Morales, both of whom resent the growing ties between Brazil and the US in the biofuels sector.

The US and Brazil signed a biofuels partnership agreement in March through which the two countries plan to launch ethanol production in several Latin American countries.

Brazil sees ethanol production as a means to foster economic development in poor countries, whereas Morales and Chavez believe mass production of the biofuel will drive foodstuff prices up.

Morales said ethanol was a “sinister idea”, citing similar views by Cuban President Fidel Castro.

Brazil President Luiz Inacio Lula da Silva defended biofuels for their social, economic, and environmental potential.

“[Brazil’s experience] shows as well that this programme does not in any way compromise food security for our countries,” Lula said, according to official government news service Agencia Brasil.

Lula spoke with Chile President Michelle Bachelet about increasing Brazilian investments in Chilean biofuels, according to Brazilian Chancellor Celso Amorim.

“There is interest in increasing Brazilian investments there,” Amorim said.

Chile also voiced support for Brazil’s efforts at the World Trade Organisation (WTO) to reduce trade barriers for agricultural products, which include ethanol, Amorim said.

Earlier this month talks among the G4 group of Brazil, India, the US and the EU broke down over the issue of reducing agricultural subsidies in developed countries, which would be favourable to exports of ethanol from India and Brazil.

“If the [G4] is not dead, it’s hibernating,” Amorim said.

Mercosur is a trade organisation that includes Argentina, Brazil, Paraguay, Uruguay and Venezuela. Associate members include Bolivia, Chile, Colombia, Ecuador and Peru.

(Additional reporting by William Lemos)

By: John Waggoner
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