Brazil Ready to Punish the US: US$ 560 Million in Tariffs on 222 Products

Drugs in BrazilIn response to protectionist measures adopted by the U.S. government in the cotton sector and after winning its case brought to the World Trade Organization seven year ago, the Brazilian government is ready to retaliate against the US and has already prepared a list of products that will be subject to retaliation.

The Chamber of Foreign Commerce (Camex), an organ linked to Brazil’s Ministry of Development, Industry and Commerce, approved this Tuesday a trade retaliation against the United States valued at approximately US$ 560 million. The final list is expected March 1st.

222 American products imported by Brazil should face additional tariff barriers to enter the Brazilian market. In some cases, the good will double its price due to the levy. No date has been set for the new rates to take effect, however.

Brazil accuses the U.S. government of giving excessive subsidies to their cotton producers undermining the Brazilian producer. The dispute between the two countries in the WTO started in 2002.

The executive secretary of Camex, Lytha Spíndola, informed that the list will be made public March 1st because it needs to go through “technical adjustments.”

This way Camex is giving the United States 20 extra days to cut its subsidies to cotton, which would suspend the punishment. Nobody is expecting the US to change its behavior, however.

The Brazilian government argues also that it needs time to complete the other part of the retaliation, which will be used especially against U.S. companies in the pharmaceutical industry, through suspension of patents or royalties.

Health Minister, José Sócrates, said yesterday that he had submitted to Camex “a set of drugs” that could be targets of such sanctions. “The decision still needs to be thought out by the entire team of government,” he added.

Brazil had the option to retaliate up to about US$ 900 million, according to the WTO decision, but preferred to exclude from the list capital goods and inputs so as not to harm the Brazilian industry that needs to import machines and equipment.

The Brazilian government is also considering a so-called cross-retaliation by which it would impose retaliatory measures not only against products but also against services and even intellectual property.

The new United States ambassador in Brazil, Thomas Shannon, commented last week that “retaliation is always bad, because they generate counter-retaliation.”

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