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Going south

Thanks to an unwise policy on ethanol, President Bush isn't likely to get very far on his trip to Brazil.

March 08, 2007

READY FOR YOUR pop quiz about the Americas? Try this: In the run-up to today's meeting between the leaders of the Western Hemisphere's two most populous countries, one president spoke movingly of the need to boost Latin America's struggling trabajadores y campesinos (workers and peasants) while lamenting that U.S. policies have failed to reduce the region's poverty. The other grumbled about unfair agricultural protectionism. Which is the free-trade conservative president of the United States and which the left-wing populist leader of Brazil?

If you matched Luiz Inacio Lula da Silva with the anti-poverty crusading and George W. Bush with the trade-policy gripe, you lose. This seeming role reversal says a lot about the political pressures on both men, and it suggests why the fence-mending presidential summit is unlikely to accomplish either leader's primary goals.

Bush is deeply unpopular in most of Latin America -- a region he has largely ignored -- in part because many feel the U.S. focus on free-trade pacts and drug interdiction may have exacerbated poverty instead of relieving it. Into that breach has stepped autocratic President Hugo Chavez of oil-rich Venezuela, who has backed successful leftist leaders in Bolivia, Ecuador and Nicaragua. During his trip to Latin America, Bush will try to counter Chavez's influence by appealing directly to the region's impoverished underclass and signing energy deals -- such as a partnership with Brazil and other ethanol producers -- that are designed to wean countries from Venezuela's cheap oil.

Lula has other priorities. Fearful of seeming too close to Bush, he is under heavy pressure from Brazilian farmers to protest U.S. agricultural supports -- especially the 54-cents-a-gallon tariff on Brazilian ethanol. But U.S. officials have flatly stated that they have no intention of seeking a reduction in the ethanol tariff. What Bush has offered instead is a variety of small anti-poverty programs that are dwarfed by Chavez's initiatives in the region. The "OPEC for ethanol" that the president is expected to create today with Lula won't actually open the U.S. market to Brazilian ethanol, and as a result it will accomplish little.

Brazil's sugar-based ethanol is more energy efficient and far cheaper to produce than U.S. corn-based ethanol, yet we impose a steep tariff on the Brazilian product to protect domestic corn growers and ethanol producers. The damage wrought by this policy is enormous. It raises consumer prices for all corn products, sabotages long-overdue attempts to move away from dirty fossil fuels and poisons the U.S. relationship with Latin America.

Bush has never shown the political courage to take on the farm lobby, even though U.S. agricultural subsidies and tariffs undermine his free-trade rhetoric. He's not going to win many friends in Brazil unless that changes.

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