Brazil warns EU on green biofuel controls

BRASILIA Fri May 9, 2008 7:13pm BST

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BRASILIA (Reuters) - Brazil will contest any attempt by the European Union to place limits on biofuel exports because of environmental concerns, a senior Brazilian official said on Friday.

The European Union's environment chief said last month that biofuels, which Brazil hopes to export to the EU, must meet certain criteria regarding potential harm to the environment and social conditions. It is now discussing guidelines.

"If the criteria were trade-distorting we will appeal," Andre Aranha Correa do Lago, head of the Foreign Ministry's energy department, told reporters.

Brazil is the world's largest exporter of ethanol, which it derives from sugar cane.

President Luiz Inacio Lula da Silva has rejected most criticism of Brazilian biofuels as an attempt by international competitors to protect trade.

Correa said further studies were required to see if ethanol production was displacing other crops and cattle in the Amazon forest. Brazil also needs to step up its controls of working conditions on cane plantations, he said.

Most of Brazil's cane production has no social or environmental problems, he said.

Brazil is eager to discuss the EU criteria, Correa said.

"If Brazil wants to export ethanol to the EU, it is the first to want the EU to consider it sustainable," he said.

As part of a diplomatic offensive to counter criticism, Brazil will hold an international conference on biofuels, including a ministerial-level meeting, in November.

Other measures may include bringing a case against the United States to the WTO if proposed ethanol tax rules are approved as part of a new U.S. farm bill, Brazil's chief trade negotiator, Roberto Azevedo, said on Thursday.

The proposed new farm bill would extend an import tariff of 54 cents per gallon for two more years and reduce an ethanol blenders' tax credit to 45 cents per gallon from 51 cents. Brazilian producers say the rules would distort prices and discourage imports or sugar cane-based ethanol.

(Reporting by Raymond Colitt; editing by Angus MacSwan and Mohammad Zargham)

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