Brazil's President Lula on trade, agriculture, poverty and biofuels

Fresh on the heels of the EU-Brazil summit on 4 July Brazil's President Lula da Silva and its Foreign Minister Celso Amorin are at the European Parliament. They will hold talks with EP President Pöttering and leaders of the main political groups. Prior to the visit we had an exclusive interview with President Lula in which he talked about world trade talks, biofuels and poverty. Biofuels are vital - the EU's aim is 10% of biofuel use in the petrol and diesel sector by 2020.

Q. At the end of May, the European Commission suggested a strategic partnership between the EU and your country. But only three weeks later, negotiations on trade between Brazil, the EU, the US and India failed. Do you see a contradiction? What will be your message to the leaders of the European Parliament?

The Brazil-EU Strategic Partnership is, first and foremost, a political exercise. Trade negotiations between Brazil and the European Union on the other hand will continue to take place in the sphere of the World Trade Organization and in connection with the negotiations of an Association Agreement between Mercosur and the EU.

My message is that the current round of technical trade negotiations has exhausted itself. I am willing to meet with other leaders to arrive at what must be essentially a political understanding to break the present logjam. In this context, the high level dialogue this week provides a chance to come to grips with the fundamental issues at stake, which require first class political leadership.

Q. The EU Council Presidency has recently described your country as possibly being the future “global farmer”. What do you make of that description?

The performance of the Brazilian agricultural sector has placed the country among the world’s most competitive exporters of agro-industrial products. Reduction in state intervention, market deregulation and trade liberalization, combined with investment in research and technology, have contributed to this achievement.

However, if Brazil is to further enhance its role as one of the breadbaskets of the world, multilateral trade rules must continue to sponsor open, fair trade and we need a successful outcome of the Doha Trade Talks.

Much of the world’s poor are farmers. They are the ones most directly affected by the massive subsidies and high tariffs that reduce trade opportunities for would-be agricultural entrepreneurs in developing countries. That’s why Brazil has emphasized all along that agriculture must be at the centre of the Doha Round.

Q. Biofuels are a great hope in terms of fighting climate change. However, they compete with food production - especially in Brazil where under-nutrition is still a problem. How can Brazil balance these two competing factors?

If you want to evaluate the potential of bio fuels you should keep in mind that hunger is essentially a matter of income distribution – global food production is more than enough to feed the world population.

The Brazilian experience shows that bio fuels can actually contribute to fighting poverty. In Brazil, ethanol production generates more than one million direct and indirect jobs, with higher than average salaries.

We recently also launched a bio-diesel programme which is providing work opportunities for tens of thousands of small land owners, especially in economically depressed regions in the northeast. Ethanol substitutes about 40% of all the gasoline consumed in Brazil, and bio-diesel is also expected to play an increasingly important role.

The influence of the production of biofuels on food prices is modest. More than 70% of the world’s poor live in the countryside and stand to gain even from small increases in the prices of agricultural products.

Finally, the vast majority of developing countries are net importers of petroleum, and these countries stand to gain from the development of local sources of energy that could reduce oil imports.