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Brazil/US WTO cotton retaliatory dispute takes off

Tuesday, March 9th 2010 - 07:32 UTC
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The heaviest penalized imports were US wheat sales with tariff increases to 30% from 10% The heaviest penalized imports were US wheat sales with tariff increases to 30% from 10%

Brazil announced Monday it would levy a total of 591 million US dollars in retaliatory tariffs on US goods under a ruling against US cotton subsidies granted by a World Trade Organization last year. However Brazil also sent a conciliatory message.

Brazil published a list of 102 imports from the US subject to in Brazil’s import tax. The increased tariffs will go into effect in 30 days and remain in effect for one year, pending alterations in US subsidy practices.

“The Brazilian government does not believe that trade retaliation is the most appropriate means to achieve fairer international commerce” said Brazilian Foreign Trade Secretary Lytha Spindola. “But after eight years of litigation, and in the absence of more concrete options for resolving the dispute, all that’s left for Brazil is to make good on its rights as authorized by the WTO, if even only to safeguard the credibility of the system of conflict resolution.”

The list included mostly nonessential consumer products such as cosmetics and electronic devices. It also included some pharmaceuticals, hospital products, and food items, as well as some bigger ticket imports such as automobiles. Among the heaviest penalized imports were US wheat sales, which will see tariff increases to 30% from 10% currently. Brazil bought 45 million USD in wheat from the US in 2009 and 318 million USD in 2008.

In addition to the increased tariffs, Brazil said it would impose 238 million USD in other retaliations against the US, hoping to punish industries such as those involving intellectual-property rights and services. Spindola said that the government would publish another list by Mar. 23 detailing guidelines for retaliation in those areas.

According to Brazilian Foreign Relations Ministry Economic Department Director Carlos Cozendey, Brazil hopes that sectors in the US outside the cotton industry will bring pressure on members of the US Congress to seek changes in subsidy programs.

“We’ve received indications at several political levels that there’s interest in negotiating a solution, but until the moment there hasn’t been anything concrete,” Cozendey said.

Brazil was awarded the right to impose up to 829 million USD in retaliation as part of a WTO trade ruling on a case filed in 2002 against an alleged 12 billion USD in illegal subsidies offered by the U.S. to its cotton industry between 1999 and 2002.

Bilateral trade between the two countries fell to 36 billion USD in 2009 from 53 billion in 2008
 

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