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Summary

On January 1, 2007, Luis Inácio "Lula" da Silva, of the leftist Workers' Party (PT), was inaugurated for a second four-year term as President of Brazil. Lula was re-elected in the second round of voting with fairly broad popular support. His immediate tasks were to boost Brazil's lagging economic growth and address the issues of crime, violence, and poverty. Despite President Lula's personal popularity, many predicted that inter-party rivalries within his governing coalition would make it hard for him to push his agenda through Brazil's fractured legislature. President Lula enjoys high approval ratings (70% in December 2008) and is benefitting from a relatively strong economy (GDP growth was expected to exceed 5% in 2008), despite the onset of the international financial crisis. Ongoing corruption investigations involving President Lula's PT have not diminished the strength of his second term in office. Some have criticized President Lula, however, for not using his significant political capital to gain legislative approval for a more robust political and economic reform agenda. During the first Lula term, Brazil's relations with the United States were generally positive, although President Lula prioritized strengthening relations with neighboring countries and expanding ties with nontraditional partners, including India and China. Brazil-U.S. cooperation has increased during President Lula's second term, particularly on energy issues. Two presidential visits in March 2007 culminated in the signing of the U.S.-Brazil Memorandum of Understanding (MOU) to promote greater ethanol production and use throughout Latin America. In November 2008, Brazil and the United States announced plans to expand their biofuels cooperation to assist five additional countries in Africa, Central America, and the Caribbean in developing their domestic biofuels industries. Some predict that Brazil could eventually become a major oil supplier to the United States given its recent deep-water petroleum discoveries. The 110th Congress remained interested in Brazil, particularly its role as an ethanol producer, and the 111th Congress is expected to maintain similar interest. On October 9, 2007, the House passed H.Res. 651 (Engel), recognizing the expanding relationship that exists between the United States and Brazil and the importance of U.S.-Brazil biofuels cooperation. On September 9, 2008, the House passed H.Res. 1254 (Engel), supporting the new U.S.-Brazil Joint Action Plan Against Racial Discrimination. On October 16, 2008, the President signed H.R. 7222/P.L. 110-436 (Rangel) into law, which extends current trade preferences for Brazil and other countries under the Generalized System of Preferences (GSP) through December 31, 2009. A number of other bills relating to Brazilian ethanol were also introduced during the 110th Congress. On September 23, 2008, S. 1007 (Lugar)—which would deepen Brazil-U.S. energy cooperation and provide $60 million to support the U.S.-Brazil MOU on biofuels—was reported out of the Senate Committee on Foreign Relations. Two bills were introduced that would eliminate tariffs on imported ethanol: H.R. 6183 (Brown-Waite) and H.R. 6137 (Shadegg). Another bill was introduced, S. 3080 (Feinstein), that would require the President to periodically adjust the ethanol tariff so that it remains the same as the blender's tax credit. This report, which will be updated periodically, analyzes Brazil's political, economic, and social conditions, and how those conditions affect its role in the region and its relationship with the United States.

Related Legislation:
• H.R.7222
• S.1007
• H.R.6183
• H.R.6137
• S.3080
• H.RES.651
• H.RES.1254

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