Sticking point with Brazil


BOB MOON: Brazil’s President, Luiz Inacio Lula da Silva, will visit President Bush at the Camp David retreat in Maryland this weekend. It’ll be the second meeting this month for the two presidents and once again ethanol will be on the agenda. Both presidents are pushing for biofuels to replace oil, but as Marketplace’s Dan Grech reports from the Americas Desk at WLRN, political realities may complicate their plans.
DAN GRECH: The last time Presidents Bush and Lula met, they agreed to share technology on biofuels to promote ethanol production. So far, so good.

But Larry Birns with the Center on Hemispheric Affairs says negotiations have hit a roadblock.

LARRY BIRNS: Brazilian ethanol is being kept out of the United States by tariffs. And the United States has made no particular effort to eliminate that tariff.

That 54-cent duty protects U.S. ethanol producers.

And the Bush administration says it’s not up for negotiation.

BIRNS: Up to this point, the Bush administration hasn’t been prepared to commit political suicide over ethanol. Its support by Republican farm states, that’s all-important to Bush, far more so than any developments over ethanol.

Brazil can produce sugar-cane ethanol for 83 cents a gallon, while U.S. corn-based ethanol costs $1.14. But the tariff makes Brazilian ethanol far less economical in the U.S.

I’m Dan Grech for Marketplace.