Sweden and Brazil to cooperate on biofuels

STOCKHOLM (Reuters) - Sweden and Brazil signed a deal on Tuesday to promote bioenergy and foster a world market for biofuels, the Swedish government said.

The two countries will also work to increase cooperation between researchers and companies to improve techniques for sustainable production.

"Sweden as a small but technology-promoting country needs international agreements to develop the next generation's fuels," it said.

Brazil is the world's largest ethanol producer.

The deal was signed during a tour of the Nordic region by Brazilian President Luiz Inacio Lula da Silva.

Brazil has steadily increased its business ties with Sweden in recent years. Trade between the two countries has grown, although for both nations the amounts are relatively small.

Sweden runs a trade surplus with the Latin American giant, although rising Brazilian exports to Sweden have cut into the Nordic country's advantage.

Last year Sweden imported 3.95 billion Swedish crowns ($585 million) of goods and services from Brazil, compared with 2.78 billion in 2000. Swedish exports to Brazil meanwhile have risen to 6.76 billion crowns from 6.20 billion in the same period.