The Brazilian government and the United States may have satisfactorily resolved a longstanding dispute over US cotton subsidies by opting for US cotton research technology transfer to Brazil, instead of Brazil retaliating to the tune of some US$ 830 million.
Although the retaliation was authorized by a dispute panel at the World Trade Organization, after many years of discussion (eight years to be exact), it never was an attractive proposition for either side.
The matter of the subsidies and retaliation were discussed by Foreign Minister, Celso Amorim, and Secretary of State, Hillary Clinton, last week in Brazilian capital Brasília.
Hillary said that there was still time to find a peaceful and productive solution, adding that “Trade between the US and Brazil is too big for us not to be able to resolve this question.”
Amorim declared that if retaliations were implemented by Brazil, there was no concrete reason to expect “counter-retaliation” by the US, a possibility that was recently mentioned by the new US ambassador in Brazil, Thomas Shannon.
The fact is that Brazil has drawn up a list of products that could be targeted in retaliation, which would basically consist of temporary barriers and increased surtaxes on some imports. It has just been announced that the surtax on American cars will rise from 35% to 50%.
The list includes pharmaceutical goods and drugs – with a threat of patent breaking (also known as compulsory licensing) a possibility.