	Introduction

Recent high oil and gas prices and concerns about global climate change have heightened interest in ethanol and other biofuels as alternatives to petroleum products. On March 9, 2007, the two countries signed an agreement to (1) advance research and development bilaterally, (2) help build domestic biofuels industries in third countries, and (3) work multilaterally to advance the global development of biofuels. Many Bush Administration officials and Members of Congress note that the new biofuels partnership with Brazil may help improve the U.S. image in Latin America and diminish the influence of President Chávez in the region. Increasing biofuels cooperation with Brazil and other countries in Latin America may prompt challenges to existing U.S. trade, energy, and agriculture policies. In the 109 th Congress, legislation was introduced that would have eliminated current tariffs on foreign ethanol. This report examines the opportunities and barriers related to increasing U.S. cooperation with other countries in the hemisphere on biofuels development, focusing on the U.S.-Brazil agreement. Brazil and the United States: Hemispheric Leaders in Ethanol Production

Brazil and the United States are by far the world's largest ethanol producers. Brazilian ethanol is produced almost exclusively from sugar cane. Figure 5 shows U.S. ethanol imports over the past eight years. U.S.-Brazilian Memorandum of Understanding on Biofuels

On March 9, 2007, the United States and Brazil signed a Memorandum of Understanding (MOU) to promote greater cooperation on ethanol and biofuels in the Western hemisphere. 109-432 ). Members have cited Brazil as an example of a country that has successfully reduced its reliance on foreign oil by using alternative energies. However, in December 2006, Congress voted to extend the duties on foreign ethanol through December 31, 2008 ( P.L. In the 110 th Congress, S. 1106 (Thune) would extend those tariffs through 2011, and H.R. 196 (Pomeroy) would make the tariffs permanent. Several legislative initiatives in the 110 th Congress would increase hemispheric cooperation on energy issues, including biofuels development and distribution. S. 193 (Lugar), the Energy Diplomacy and Security Act of 2007, calls for the establishment of a regional-based ministerial forum known as the Hemisphere Energy Cooperation Forum that would, among its many activities, be involved in developing an Energy Sustainability Initiative to promote the development, distribution, and commercialization of renewable fuels in the region. Another initiative, S. 1007 (Lugar), the United States-Brazil Energy Cooperation Pact of 2007, calls for the same cooperation groups as S. 193 , and directs the Secretary of State to work with Brazil and other Western Hemisphere countries to develop partnerships to accelerate the development of biofuels production, research, and infrastructure. The bill was introduced on March 28, 2007, and referred to the Senate Foreign Relations Committee. H.Res. While some Members of Congress have been supportive of energy cooperation efforts like the U.S.-Brazil MOU, others might not support any initiatives that they feel will adversely affect U.S. corn-based ethanol producers.
In the past several years, high oil and gas prices, instability in many oil-producing countries, and concerns about global climate change have heightened interest in ethanol and other biofuels as alternatives to petroleum products. Reducing oil dependency is a goal shared by the United States and many countries in Latin America and the Caribbean, a region composed primarily of energy-importing countries. In the region, Brazil stands out as an example of a country that has become a net exporter of energy, partially by increasing its production and use of sugar-based ethanol.
On March 9, 2007, the United States and Brazil, which together produce almost 70% of the world's ethanol, signed a Memorandum of Understanding (MOU) to promote greater cooperation on ethanol and other biofuels in the Western Hemisphere. The countries agreed to (1) advance research and development bilaterally, (2) help build domestic biofuels industries in third countries, and (3) work multilaterally to advance the global development of biofuels.
Many analysts maintain that the United States would benefit from having more energy producers in the region, while Brazil stands to further its goal of developing ethanol into a globally traded commodity. In addition to these economic benefits, some analysts think that an ethanol partnership with Brazil could help improve the U.S. image in Latin America and lessen the influence of oil-rich Venezuela under Hugo Chávez. However, obstacles to increased U.S.-Brazil cooperation on biofuels exist, including current U.S. tariffs on most Brazilian ethanol imports.
While some Members of Congress support greater hemispheric cooperation on biofuels development, others are wary of any cooperative efforts that might negatively affect U.S. ethanol producers. The Energy Diplomacy and Security Act of 2007, S. 193 (Lugar), approved by the Senate Foreign Relations Committee on March 28, 2007, would increase hemispheric cooperation on energy. S. 1007 (Lugar), the United States-Brazil Energy Cooperation Pact of 2007, calls for the same hemispheric cooperation groups as S. 193, and directs the Secretary of State to work with Brazil and other Western Hemisphere countries to develop biofuels partnerships. H.Res. 651 (Engel) recognizes and supports the importance of the U.S.-Brazil MOU on biofuels. In the 109th Congress, legislation was introduced that would have eliminated current tariffs on foreign ethanol, but in December 2006, Congress voted to extend the ethanol tariffs through December 31, 2008 (P.L. 109-432). In the 110th Congress, S. 1106 (Thune) would extend those tariffs through 2011, and H.R. 196 (Pomeroy) would make the tariffs permanent.
This report discusses the opportunities and barriers related to increasing U.S. cooperation with other countries in the hemisphere on biofuels development, focusing on the U.S.-Brazil agreement. This report may be updated. For more information, see CRS Report RL33290, Fuel Ethanol: Background and Public Policy Issues, by [author name scrubbed], and CRS Report RL33693, Latin America: Energy Supply, Political Developments, and U.S. Policy Approaches, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].