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PP RUEHRG
DE RUEHBR #1992/01 2621847
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P 191847Z SEP 06
FM AMEMBASSY BRASILIA
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RUEHQT/AMEMBASSY QUITO 1973
RUEHSG/AMEMBASSY SANTIAGO 5790
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEBAAA/USDOE WASHDC
RUCPDO/USDOC WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 BRASILIA 001992 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PGOV PREL EFIN EINV BR
SUBJECT: BRAZIL: AMBASSADOR DISCUSSES BIOFUELS AND OTHER TOPICS WITH 
ABDI PRESIDENT ALESSADRO TEIXEIRA 
 
REF: (A) BRASILIA 1973(B) BRASILIA 1935 
 
¶1. (SBU) Summary:  Ambassador Sobel, accompanied by PolCouns and 
Commercial Counselor, met with Alessandro Teixeira, President of the 
Brazilian Agency for Industrial Development (ABDI) on September 14 
to discuss biofuels issues.  The meeting quickly boiled over to 
cover a range of topics and potential areas for cooperation, such as 
innovation, competitiveness, foreign investment and venture capital 
-- just to name a few of the topics discussed in a lengthy and 
animated conversation during which there was surprising convergence 
of views on many topics. 
 
2.(SBU) Teixeira echoed many of the points made just two days before 
when the Ambassador met with Presidential Chief of Staff for Policy 
Dilma Rousseff, concurring that the U.S. and Brazil need to move 
quickly on biofuels, but first must work through their bilateral 
policy relationship before going forward with cooperation in third 
countries or determining which resources may be tapped to put the 
policy into action.  Like Rousseff, Teixeira expressed great 
interest in meeting with interlocutors on bio-fuels, as well as 
competitiveness and venture capital when he travels to the U.S. at 
the end of September.  Teixeira said he has a very close 
relationship with Rousseff and promised to help reconfirm several 
meetings that the Ambassador has arranged for Rousseff when she is 
in New York and Washington.  End Summary. 
 
¶3. (SBU) On September 14, the Ambassador met for the first time with 
Alessandro Teixeira, President of the Brazilian Agency for 
Industrial Development (ABDI).  Teixeira opened the meeting by 
explaining that ABDI was formed by the Lula administration in 2004 
to coordinate GoB industrial policy and promote industrial and 
technological development through competitiveness and innovation. 
The agency receives policy guidance from the National Council of 
Industrial Development, which falls under the direction of the 
Ministry of Development, Industry and Trade (MDIC) and the Ministry 
of Science and Technology (MST).  (Note: Previoius Mission contact 
with Teixeira was during the Commercial Dialogue meetings in Rio 
this past June, on the margin of the Ethanol Forum on September 5 - 
Ref B). 
 
¶4. (U) The Ambassador told Teixeira that his meetings in the U.S. on 
biofuels had only reinforced his commitment to move forward with the 
Brazilians and expand the opportunity for third countries.  He 
reiterated the complexity of the USG interagency process, but 
expressed our interest in still moving forward quickly. 
 
¶5. (U) Like Rousseff, Teixeira expressed strong interest in 
cooperating with the USG and provided an update of such cooperation 
beginning with the visit of ex-Minister of Agriculture Rodriques to 
the U.S. in June 2005.  He said that Brazil has made significant 
progress in research and development at the Ministry of 
Agriculture's research institute (EMBRAPA), the Sugarcane Technology 
Center (CTC), and Petrobras's Research and Development Center 
(CENPES).  Teixeira finished by noting that Brazil is the only 
country in the world with a complete production chain in biofuels - 
including seeds, crops, ethanol production and distribution, and 
full-flex automobiles along with the research and development of 
technology in all of these areas.  On the international side, he 
added that Brazil has ""more than 20 countries ready to form 
agreements"" and he questioned the inclusion of "small countries 
like Kits and Nevis" in the U.S. Draft Biofuels Strategy. 
 
¶6. (U) Wondering whether the U.S. is ready to implement a vertically 
and horizontally integrated policy on bio-fuels, Teixeira noted what 
he called "different positions from different parts of the U.S." 
referring to recent visits to Brazil by the Florida FTAA group which 
expressed certain policy stances, and another visit from Californian 
bio-fuels'' specialists who proposed other policies.  He asked if 
the Ambassador was "not afraid in the U.S. of a big fight in these 
areas?" 
 
¶7. (U) The Ambassador responded that in the U.S., like Brazil, there 
are different political and commercial interests that need to be 
worked out before a national policy is implemented, and he also 
 
BRASILIA 00001992  002 OF 002 
 
 
recognized the U.S. has two different feed stocks for ethanol 
production, i.e., corn and sugar cane.  He added that we also 
require coordination amongst our government agencies - both at the 
state level as well as the federal level - but despite all the 
differences we are close to an inter-agency agreement. 
 
¶8. (SBU) The Ambassador mentioned the need to keep environmental 
concerns in the development of a bio-fuels policy, adding "we need 
to keep our eye on the environment."  Teixeira vigorously responded 
that "we need more than just one eye on it."  He said he is tired of 
hearing stories about "our NGOs" (referring to supposed Brazilian 
NGOs) adding, "they are NOT 'our NGOs' - they are international 
organizations".  He added, "many NGOs don't know what they are 
talking about."  He said that Rousseff is pushing for a "strong - 
but not tight - environmental regulatory regime for bio-fuels." 
 
¶9. (SBU) In other areas of mutual interest the Ambassador and 
Teixeira discussed the need for Brazil to attract DFI as well as to 
have modern equity fund and venture capital markets.  Teixeira 
complained agencies that evaluate countries for risk consitently 
rate China and India better for markets for foreign investment.  He 
said he was familiar with both countries and could not believe that 
they are rated higher than Brazil.  Teixeira also expressed interest 
in the U.S.'s leadership in the area of venture capital funds and 
the private equity market.  Teixeira will be speaking in New York 
City at the Brazilian Venture Capital and Private Equity Day 
luncheon to he held in New York City on September 25. 
 
¶10. (U) On the topic of competitiveness, ABDI is currently 
negotiating MOUs with the U.S. Council on Competitiveness and the 
Brazilian Competitiveness Movement.  Teixeira will be visiting with 
Deborah Wince-Smith on September 28 when he is in the U.S. 
 
¶11. (U) Teixeira asked why there is not more direct investment and 
the Ambassador said there are agreements like and F.T.A and a tax 
treaty which we have with many other countries that would support 
more American direct investment. Teixeira said Brazil opposes these 
agreements today because there is not yet a sound analysis as to 
what the impact would be in particular industries. Teixeira went on 
to say; until we are able to estimate the effects the GOB cannot 
begin to discuss the Free Trade Agreement. 
 
 
¶12. (U) Teixeira is very interested in meeting with USG and private 
sector interlocutors on biofuels and other issues, and expressed 
interest in the Ambassador's offer to assist in scheduling such 
meetings with at the National Renewable Energy Labs and/or the 
University of California-Berkley.  He will be in the U.S for one 
week from September 24 through 30 and would like to visit one of 
these labs the day of September 29. 
 
 
Chicola