UPDATE 1-Bush, Lula agree to closer U.S.-Brazil ties

Fri June 20, 2003 05:29 PM ET (updates with joint statement) By Randall Mikkelsen

WASHINGTON, June 20 (<a href=reuters.com>Reuters) - U.S. President George W. Bush, who comes from the business world, and Brazilian President Luiz Inacio Lula da Silva, his country's first working-class president, agreed on Friday to seek closer ties despite differences over Iraq.

The commitment came in a joint statement issued after Bush and Lula held their first face-to-face talks since the Brazilian was sworn in as president on Jan. 1. The statement made no mention of the U.S.-led war on Iraq, which Lula strongly opposed.

"The United States and Brazil resolve to create a closer and qualitatively stronger relationship," it said.

The two men agreed their governments will have regular and high-level consultations on issues ranging from counter-terrorism to African poverty relief -- a pet issue for both.

The warming ties between the seemingly political odd couple has come as a surprise, and reflects U.S. hopes Brazil can be a stabilizing influence in Latin America at a time when the region's democracy movement has come under strain.

The countries announced joint initiatives including U.S. support for Lula's anti-hunger program in Brazil, cooperation on energy and fighting AIDS in Africa.

"Without any question, I believe that we can surprise the world in terms of the relationship between Brazil and the United States," Lula told reporters in the Oval Office with Bush at his side.

Lula brought 10 ministers with him. For the United States, Agriculture Secretary Ann Veneman, Special Trade Representative Robert Zoellick, and Energy Secretary Spencer Abraham were among those expected to take part an expanded meeting following the Bush-Lula meeting.

Brazil and the United States have clashed over trade in the past, particularly subsidies and tariff barriers slapped on key Brazilian exports like orange juice, textiles and steel.

The two countries also co-chair the Free Trade Area of the Americas talks to create a hemisphere-wide free trade zone by January 2005. The FTAA is central to Bush's policy of promoting trade and democracy in Latin America, and the joint statement reaffirmed the leader's aim to conclude negotiations on time.

Most of the region suffered a recession in 2002, with Venezuela and Argentin