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ANALYSIS-Brazil battling back against biofuel critics

SAO PAULO - Brazil has long touted its ethanol program as meriting global recognition but has become alarmed at recent attacks from critics abroad blaming the biofuel for famine, slavery and deforestation of the Amazon.

Brazil's plan to be the world's main supplier of the alternative automobile fuel may be facing its biggest diplomatic challenge, as rising food prices around the world are inciting riots and even toppling governments.

Brazil believes that it is unjustly coming under fire for problems with European and U.S. biofuels.

President Luiz Inacio Lula da Silva has come out in defense of the ethanol industry, calling critics "veiled protectionists." The Foreign Ministry also created a new post to launch diplomatic efforts against trade challenges to Brazilian biofuels.

"The broader the debate, the better for Brazil," said Andre Aranha Correa do Lago, head of the ministry's energy department, adding that the government plans to hold an international conference on biofuels in November.
Correa do Lago and specialists in the ethanol industry acknowledged that Brazil could improve regulation and oversight of cane mills but the vast majority of them are in-line with labor and environmental laws.
"Roughly 99 percent of cane output is 2,000 kilometers from any Amazon forest," Alfred Szwarc, environmental spokesman for Brazil's Cane Industry Association (Unica), said.

But environmentalists have argued that the boom in sugar cane is pushing other less profitable farming into the Amazon, a phenomena called agricultural displacement, which Correa do Lago admits deserves further study.
The boom in cane planting has raised land prices and can indirectly force less profitable farming and ranching into sensitive areas.
But the link between cane and deforestation may be a difficult case to prove at the World Trade Organization, if Europe imposes bans based on this argument, specialists say.

Late last week, the Foreign Ministry said it will take Europe and the United States to the WTO again, if they impose trade distorting restrictions on ethanol imports. [ID:nN09490049] [ID:nN08425850]
Brazil has already won WTO challenges against U.S. cotton and EU sugar subsidies.

By Reese Ewing