El Salvador, Brazil Promote Free Trade

December 14, 2007
BRASILIA – Brazilian President Luiz Inácio Lula da Silva and his counterpart from El Salvador, Tony Saca, agreed last week to strongly promote relations between the Mercosur trade bloc and the countries of Central America with a view to a future free-trade agreement.
“We’re going to see if it’s possible to reach a free-trade accord between Mercosur and SICA (Central American Integration System) by the end of next year,” Lula said while giving a toast during a lunch in honor of Saca, who last week visited Brazil on a two-day visit.
Since 2004,Mercosur – which is composed of Argentina, Brazil, Paraguay and Uruguay, with Venezuela in the process of joining the bloc – has been mulling the possibility of a free-trade deal with SICA, but comments last week by Lula and Saca represented a stronger push in that direction.
Another key issue in the talks between the two leaders was energy cooperation, since Brazil intends to help El Salvador develop biofuels, especially sugarcanederived ethanol.
In that sense, both leaders agreed on the importance of biofuels as an alternative to oil and also touted that industry as a strong generator of jobs and a tool in the fight against global warming.
Saca especially underscored the potential financial savings of the new fuels for a country like El Salvador, which almost  exclusively consumes crude and derivatives and whose oil imports are expected to total roughly $1.4 billion at the close of this year.
El Salvador, along with the Dominican Republic, Haiti and St. Kitts and Nevis, was chosen by Brazil and the United States for the development of pilot ethanol production  programs, under which it will be entitled to funding and even technology transfers.
 

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