US-Brazil Could Become OPEC of Ethanol

John Davis

Pres. Bush and Luiz Inacio Lula da Silva
The news sites are all abuzz today about a pending deal that could turn the United States and Brazil into what the AP calls the “OPEC of ethanol.”

President Bush is traveling to Brazil late this week and is expected to ink the deal with Brazilian President Luiz Inacio Lula da Silva:

The deal is still being negotiated, but the two leaders are expected to sign an accord on Friday to develop standards to help turn ethanol into an internationally traded commodity, and to promote sugar cane-based ethanol production in Central America and the Caribbean to meet rising international demand.

Across Latin America’s largest country, Brazilian media were billing the Bush-Silva meeting as a bid to create a new two-state”OPEC of ethanol,” despite efforts by Brazilian and US officials to downplay the label amid concerns that whatever emerges would be viewed as a price-fixing cartel.

One point of contention expected to be addressed at the meeting is a 14-cent-a-liter U.S. tariff on Brazilian ethanol imports. This story on shows just how much the Brazilians, of course, don’t want the tax:

“If we’re going to have free commerce, then let’s have free commerce, so that people have the opportunity to buy and sell. The high tariffs the U.S. imposes on Brazilian ethanol don’t make any sense,” Lula said on his weekly radio address to the nation today.

Ethanol is certainly king in Brazil as eight out of 10 cars runs on the alternative fuel.

Ethanol, Government, International, News