US Secretary of State Condoleezza Rice and Brazilian Foreign Minister Celso Amorim signed the memorandum of understanding to cooperate in promoting ethanol on the sidelines of US President George W. Bush's five-nation Latin American tour.

Bush and Brazilian President Luiz Inacio Lula da Silva described the pact as significant for both the environment and global security.

"If you're dependent upon oil from overseas, you have a national security issue. In other words, dependency upon energy from somewhere else means that you are dependant upon the decision from somewhere else," Bush said after touring a biofuels depot in Sao Paulo, Brazil's biggest industrial hub.

Washington wants to reduce US dependence on the Middle East and other external suppliers of oil and natural gas.