THE AMBASSADOR'S SEPTEMBER 28 MEETING WITH BRAZILIAN

UNCLAS SECTION 01 OF 02 BRASILIA 002233

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USDA FOR DUS TERPSTRA/ITP PAT SHEIKH/DLP HOWARD WETZEL
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STATE PASS USTR:SCRONIN/MSULLIVAN

TOFAS 158
SENSITIVE
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E.O. 12958: N/A
TAGS: EAGR EINV ETRD ENRG PREL PGOV BR
SUBJECT: THE AMBASSADOR'S SEPTEMBER 28 MEETING WITH BRAZILIAN
MINISTER OF AGRICULTURE GUEDES



1. (SBU) SUMMARY: AMBASSADOR SOBEL, ACCOMPANIED BY EMBASSY
AGRICULTURAL AND ECONOMIC COUNSELORS, MET WITH MINISTER OF
AGRICULTURE LUIS CARLOS PINTO GUEDES ON SEPTEMBER 28 TO DISCUSS
GENERAL AGRICULTURAL ISSUES. DISCUSSION CENTERED ON BRAZIL'S RAPID
RISE AS A WORLD AGRICULTURAL EXPORT POWER, U.S. INTEREST IN
RESTORING U.S. ACCESS TO BRAZIL'S CATTLE AND BEEF MARKETS (CURRENTLY
LIMITED BY BSE-RELATED TECHNICAL RESTRICTIONS),APPROVAL OF GMO
PRODUCTS, AND BIOFUELS. THE MINISTER SAID HIS STAFF IS OPEN TO
TECHNICAL DISCUSSIONS ON BSE RESTRICTIONS CURRENTLY IN PLACE, BUT
THERE SEEMED LITTLE PROMISE OF REMOVING THE BARRIERS SOON. THE
MINISTER ALSO INDICATED THAT THEY ARE PRESSING THE MINISTRY OF
FOREIGN AFFAIRS TO ELIMINATE A REQUIREMENT THAT ALL USDA OFFICIAL
CERTIFICATES RELATED TO TRADE IN ANIMAL PRODUCTS BE STAMPED BY A
CONSULAR OFFICIAL IN THE UNITED STATES, WHICH PUTS U.S. EXPORTERS AT
A DISADVANTAGE. POST IS FOLLOWING UP WITH BOTH MINISTRIES. END
SUMMARY.

BRAZIL'S AGRICULTURAL RESEARCH MACHINE: EMBRAPA


2. (SBU) AMBASSADOR SOBEL ASKED MINISTER GUEDES HOW BRAZIL WAS ABLE
TO BUILD ITS ENORMOUS AGRICULTURAL PRODUCTION AND EXPORT CAPACITY IN
SUCH A SHORT TIME, WHICH RESULTED IN ABOUT US $35 BILLION IN WORLD
EXPORTS IN 2005, A 130 PERCENT INCREASE SINCE 1999. MINISTER GUEDES
NOTED FOUR REASONS FOR BRAZIL'S SUCCESS: 1)THE COUNTRY'S NATURAL
COMPARATIVE ADVANTAGES IN AVAILABLE LAND, SOIL, AND CLIMATE; 2)ITS
LARGE INVESTMENT IN AGRICULTURAL RESEARCH OVER THE PAST 30 YEARS;
3)PRESCIENT PUBLIC POLICIES, MAINLY IN TERMS OF LOW-COST
AGRICULTURAL FINANCING; AND 4)THE FLEXIBILITY AND ENTREPRENEURSHIP
OF RURAL PRODUCERS. THESE FOUR FACTORS, THE MINISTER SAID, WERE,
AMONG OTHERS, WHY BRAZIL IS SUCH A LOW-COST PRODUCER, PARTICULARLY
FOR SOYBEANS AND ORANGE JUICE.


3. (SBU) MINISTER GUEDES DESCRIBED EMBRAPA (THE BRAZILIAN
AGRICULTURAL RESEARCH CORPORATION, A PART OF THE MINISTRY OF
AGRICULTURE) AS ONE OF THE WORLD'S MAJOR AGRICULTURAL RESEARCH
INSTITUTIONS. BRAZIL WAS ABLE TO OPEN UP THE CERRADOS REGION (THE
HIGHLAND PLAINS IN THE WESTERN STATES OF GOIAS, MATO GROSSO, AND
MATO GROSSO DO SUL) TO CULTIVATION, A FEAT FEW BELIEVED POSSIBLE,
LARGELY AS A RESULT OF VARIETAL CROP RESEARCH DONE AT EMBRAPA.
GUEDES NOTED THAT USAID GRANTS AND BILATERAL SCIENTIFIC EXCHANGE
EFFORTS THAT PREDATED EMBRAPA HAD HELPED SPUR ALONG MUCH OF THE
CERRADOS RESEARCH.


4. (SBU) THE AMBASSADOR INQUIRED ABOUT CURRENT BILATERAL EXCHANGE ON
RESEARCH AND IF IT MIGHT BE POSSIBLE TO BUILD FURTHER RELATIONS
BETWEEN BRAZILIAN AND U.S. RESEARCH LABS AND ACADEMIC INSTITUTIONS.
THE MINISTER NOTED THAT SUCH BONDS HAVE BEEN STRONG SINCE THE 1960S,
WITH BRAZILIAN INSTITUTES COOPERATING WITH U.S. COUNTERPARTS SUCH AS
OHIO, PURDUE, AND WISCONSIN. THE MINISTER ALSO POINTED OUT THAT
THROUGH IMPETUS OF THE U.S.-BRAZIL CONSULTATIVE COMMITTEE ON
AGRICULTURE (CCA),ESTABLISHED IN 2004, USDA'S AGRICULTURAL RESEARCH
SERVICE AND EMBRAPA HAVE EXCHANGED RESEARCHERS ON A LONG-TERM BASIS
UNDER A PROGRAM CALLED LABEX, WITH THE AIM TO IMPROVE COOPERATION ON
TECHNICAL ISSUES RELATED TO TRADE. WHILE PREVIOUSLY MUCH OF THE
COOPERATION ON RESEARCH WAS PURSUANT TO FORMAL AGREEMENTS,
CURRENTLY, HE SAID, IT WAS MORE OR LESS SPONTANEOUS. THE MINISTER
LATER REFLECTED THAT THERE MIGHT BE SOME OPPORTUNITIES TO COOPERATE
IN THE AREA OF TRAINING ADVANCED GRADUATE LEVEL UNIVERSITY
STUDENTS.

ETHANOL RESEARCH


5. (SBU) REGARDING ETHANOL RESEARCH, WHICH IS APPARENTLY FULLY
FUNDED IN BRAZIL BY THE PRIVATE SECTOR, ANGELO BRESSAN FILHO,
DIRECTOR OF THE SECRETARIAT OF PRODUCTION AND AGROENERGY, MINISTRY
OF AGRICULTURE, WHO IS THE MINISTRY'S LINK TO EMBRAPA, SPOKE ABOUT
ONGOING RESEARCH INTO CELLULOSIC ETHANOL. CURRENTLY, INVESTIGATION
WAS PROCEEDING ON TWO TRACKS, HE SAID. RESEARCHERS WERE LOOKING AT
THE ENZYMATIC ROUTE, WHEREBY CELLULOSE IS CONVERTED INTO SUGAR AND
THEN INTO ALCOHOL. THE CHEMICAL REACTION UNDERLYING THIS PROCESS,
HOWEVER, HAS THE DISADVANTAGE OF BEING SLOW: 25 TO 30 MINUTES. AN
ALTERNATIVE ROUTE, THE ACIDIC PROCESS, IS QUICKER: 5 TO 8 MINUTES.
THE MINISTER NOTED THAT CELLULOSIC RESEARCH HOLDS GREAT PROMISE
GIVEN THE VAST AMOUNT OF RESIDUE LEFT IN SUGAR CANE FIELDS AFTER
HARVEST.


6. (SBU) ON ETHANOL, DISCUSSION CENTERED ON HOW BRAZIL PLANNED TO
PARTNER WITH THIRD COUNTRIES TO HELP DEVELOP THE MARKET. THE
AMBASSADOR INQUIRED WHETHER THE BRAZILIAN GOVERNMENT OR PRIVATE
SECTOR WAS LOOKING TO OTHER COUNTRIES TO HELP SUPPLY SUGAR STOCKS.

BRASILIA 00002233 002 OF 002


BRESSAN REPLIED NEGATIVELY, NOTING THAT BRAZILIAN PRODUCTION WAS
EXPANDING RAPIDLY AND THE COUNTRY WAS OPENING 12-16 NEW REFINERIES
PER YEAR. FROM THE MINISTRY'S POINT OF VIEW, HE SAID, WHERE THERE
MIGHT BE SOME BRAZILIAN INVOLVEMENT OVERSEAS WOULD BE IF THE PRIVATE
SECTOR WERE TO SUPPLY CONSULTANTS TO INTERESTED FOREIGN GROWERS. HE
REVEALED THAT HE PLANNED TO TRAVEL TO GUATEMALA THE FOLLOWING WEEK
AND THAT THERE IS CONTINUING INTEREST FROM INDIA.

APPROVAL OF GMO'S


7. (SBU) THE AMBASSADOR ASKED HOW GENETICALLY MODIFIED ORGANISMS ARE
VIEWED IN BRAZIL. MINISTER GUEDES STATED THAT THERE IS FINALLY A
FEDERAL FRAMEWORK IN PLACE FOR DEALING WITH GMO ISSUES. CTNBIO, A
27-MEMBER BODY IN WHICH 11 MINISTRIES PARTICIPATE, REGULATES THE
FIELD. CTNBIO, CHAIRED BY THE MINISTRY OF SCIENCE AND TECHNOLOGY,
HAS APPROVED 14 GMO REQUESTS FOR RESEARCH AND 8 FOR COMMERCIAL SALE
(EACH REQUEST IS FOR A SINGLE GENE). CURRENTLY, 9 REQUESTS ARE
PENDING, PRINCIPALLY FOR SOY, COTTON, AND CORN. ALTHOUGH STUDIES ON
SUGAR ARE ONGOING, NO REQUESTS FOR SUGAR ARE PENDING.
NOTWITHSTANDING THE FACT THAT EMBRAPA IS A GOVERNMENT ENTITY, IT
ALSO NEEDS CTNBIO APPROVAL BEFORE PROCEEDING. THE MINISTER NOTED
THAT THE ENVIRONMENTAL LOBBY, WHICH WORKS CLOSELY WITH THE MINISTRY
OF THE ENVIRONMENT, HAS SOUGHT TO HINDER CTNBIO FROM MOVING
FORWARD.

OUTSTANDING TRADE IRRITANTS REGARDING ANIMAL PRODUCTS


8. (SBU) THE AMBASSADOR RAISED U.S. INTEREST IN RESTORING ACCESS TO
BRAZIL'S MARKETS FOR CERTAIN CATTLE AND BEEF PRODUCTS (BREEDING
CATTLE, BONELESS BEEF AND CATTLE BLOOD),WHICH IS CURRENTLY LIMITED
BY BSE-RELATED TECHNICAL RESTRICTIONS THAT THE U.S. VIEWS AS NOT
SCIENCE-BASED. THIS MATTER WAS RAISED AT THE BILATERAL CONSULTATIVE
COMMITTEE ON AGRICULTURE (CCA) IN 2005, THROUGH AN OFFICIAL U.S.
DEMARCHE MADE TO THE MINISTRIES OF AGRICULTURE AND FOREIGN AFFAIRS
IN APRIL, AND IN A FOLLOW-UP OFFICIAL LETTER FROM THE EMBASSY IN
EARLY SEPTEMBER. THE MINISTER SMILED AND SAID THAT BRAZIL WOULD
ALSO LIKE TO HAVE ACCESS TO THE U.S. MARKET FOR FRESH BEEF, THEN
OFFERED THAT HIS STAFF MEET WITH USDA COUNTERPARTS FOR TECHNICAL
DISCUSSIONS ON BSE RESTRICTIONS. IN A FOLLOW-UP MEETING, THE
EMBASSY AGRICULTURAL COUNSELOR AND APHIS STAFF MET WITH THE
INTERNATIONAL OFFICE OF THE MINISTRY OF AGRICULTURE; BOTH SIDES
AGREED TO ARRANGE A BILATERAL TECHNICAL MEETING IN EARLY 2007.


9. (SBU) THE AMBASSADOR ALSO ASKED ABOUT THE STATUS OF BRAZIL'S
EFFORTS TO ELIMINATE ITS ANTIQUATED REQUIREMENT THAT ALL USDA
OFFICIAL DOCUMENTS RELATED TO EXPORTS OF U.S. ANIMAL PRODUCTS HAVE A
CONSULAR STAMP FROM A BRAZILIAN CONSULATE IN THE UNITED STATES
BEFORE ACTUAL SHIPMENTS CAN ENTER BRAZIL. THIS REQUIREMENT
INCREASES RED TAPE AND COSTS AND, THEREBY, PUTS U.S. EXPORTERS AT A
DISADVANTAGE. THE U.S. FIRST RAISED THIS ISSUE DURING THE FIRST
MEETING OF THE CCA IN 2004 AND BRAZIL PROMISED RESOLUTION. A FORMAL
LETTER FROM EX-MINISTER PRATINI DE MORAES TO FORMER U.S. SECRETARY
VENEMAN ALSO PROMISED TO RESOLVE THE ISSUE. THE DECREE DATES FROM

1952. THE MINISTER SAID HIS STAFF WAS WAITING FOR A RESPONSE FROM
THE MINISTRY OF FOREIGN AFFAIRS, THE MINISTRY THAT MUST TAKE ACTION.
STEPS FOR A SOLUTION TO THIS ISSUE WERE EXPLORED IN THE FOLLOW-UP
MEETING BETEEN THE EMBASSY AGRICULTURAL COUNSELOR AND THE
ITERNATIONAL OFFICE OF THE MINISTRY OF AGRICULTURE.MINISTRY STAFF
REQUESTED THAT THE EMBASSY RAISE HIS ISSUE WITH THE MINISTRY OF
FOREIGN AFFAIRS INAN EFFORT TO ENCOURAGE A FAVORABLE LEGAL OPINIONON THIS ISSUE. A DIPLOMATIC NOTE IS BEING SENT FRO THE EMBASSY TO
THE FOREIGN MINISTRY TO THIS END BUT MOVEMENT ON THIS OUTSTANDING
TRADE ISSUE ISNOT EXPECTED UNTIL AFTERTHE OCTOBER 29 PRESIDENTIAL
ELECTIONS.

THIRD OUNTRY COOPERATION


10. (SBU) THE MINISTER OF AGICULTURE RAISED WITH THE AMBASSADOR THE
IDEA OF WORKING TOGETHER ON AGRICULTURAL RESEARCH IN AFRICA. HE
SUGGESTED INVOLVING SELECT AFRICAN COUNTRIES, BRAZILIAN AGRICULTURAL
RESEARCHERS, AND U.S. INTEREST GROUPS OR INSTITUTIONS. UNDER THE
MINISTER'S PROPOSAL, THE U.S. WOULD SUPPORT BRAZILIAN TEACHING
FELLOWSHIPS FOR BRAZILIAN DOCTORAL CANDIDATES IN LUSO-PHONE AFRICA.
SUCH TRILATERAL COOPERATION, THE MINISTER DECLARED, WOULD BENEFIT
BOTH BRAZIL AND THE U.S. AS WELL AS THE AFRICAN COUNTRIES INVOLVED.
THE AMBASSADOR REPLIED THAT THE USG WAS ALREADY WORKING WITH THE MFA
ON SIMILAR INITIATIVES FOR LUSO-PHONE AFRICA AND WE COULD PUT THE
MINISTER'S SUGGESTIONS INTO THE MENU OF POSSIBILITIES.

SOBEL