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As Bush arrives in Latin America, he may leave the Midwest behind

Agriculture.com Staff 03/08/2007 @ 2:47pm

President Bush's first stop in a visit to Latin America this week is Brazil, where he is expected to discuss a U.S.-Brazil ethanol accord while visiting that country's president, Luiz Inácio Lula da Silva.

The pact, which President Lula may sign when he visits Bush again in Washington at the end of this month, would set up uniform standards for ethanol made by the two countries. And it would encourage other nations in the Western Hemisphere to make and use biofuels.

But reports that the two nations might build a plant to process ethanol in the Caribbean and Lula's criticism of the U.S.54 cent-a-gallon tariff on ethanol imports both have Midwestern members of Bush's own party nervous.

Two of them, Senator Charles Grassley of Iowa and John Thune of South Dakota, called a news conference Wednesday to "warn the administration against undermining ethanol."

Grassley was careful to praise Bush for past support for U.S. ethanol.

"President Bush's record on ethanol is better than any other president's record," Grassley said. But, "we don't want to replace U.S. dependence on foreign oil with foreign ethanol," he said. "We want to see an even greater focus on domestic production."

Thune praised Bush's fence-mending trip to Latin America, but added "ethanol is not a diplomatic poker chip."

Bob Dinneen, president of the ethanol trade group, the Renewable Fuels Association, explained that the 54-cent-per-gallon tariff criticized by Brazilians, is in place to offset a U.S. tax credit of 51 cents a gallon that goes to blenders of both domestic and imported ethanol.

"Simply put, the credit offset merely asks Brazilian ethanol producers to pay back the tax incentive for which their product is eligible. 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," Dinneen said in a press release.

Still, there may be room for more limited work between the two countries to promote ethanol.

An aide to the Governor of the Brazilian state of Mato Grosso, Blairio Maggi, told Agriculture Online in an e-mail message Wednesday: "He {Maggi] agrees with the Iowa senator about his worries, but on the other hand, what we are expecting with the U.S.-Brazil ethanol accord is more than to be in the American market. We want to work with the States [on an] international basis, in order to supply Europeans, Asians and others with alternative fuels, as we can be very strong in this area. We don't want the U.S. to abandon its ethanol project and that's the way we think the accord will help both America and Brazil."

President Bush's first stop in a visit to Latin America this week is Brazil, where he is expected to discuss a U.S.-Brazil ethanol accord while visiting that country's president, Luiz Inácio Lula da Silva.

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