Explosive deal

13 March 2007 By Janet El-Saad

A new ethanol technology agreement with Brazil falls short. It may help USLatin relations, but it won t greatly boost fuel supplies. The US needs to cut duties on sugarbased ethanol imports to head off dangerous inflationary pressures from rising domestic corn prices.

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President Bush began a sixday tour of Latin America on March 8. His trip will include visits to Brazil, Uruguay, Colombia, Mexico, and Guatemala in a bid to stem the leftward drift in the region by emphasizing the benefits of free trade. On March 9th he signed an ethanol technologysharing agreement with Brazil, including provisions to help Caribbean and central American countries produce ethanol. Venezuelan President Hugo Chavez will be simultaneously touring Latin America .

Ethanol imported to the US from Brazil is subject to a $0.54 per gallon tariff. Nations covered under the Caribbean Basin Initiative are not subject to ethanol tariffs.

On March 9, the US Department of Agriculture said strong demand for cornbased ethanol is likely to raise consumer prices for chicken and beef. Ethanol is expected to consume 25% of this year's US corn crop. Corn prices have risen to $3.20 per bushel, up from $2 last year.

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