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Brazil Groans Against Threat of Losing US’s Preferential Treatment

Brazil’s Minister of Development, Industry and Foreign Trade, Luiz Fernando Furlan, criticized news from the US that the United States is considering putting and end to old trade preferences granted Brazil and another 12 developing countries. 

"Unilateral measures are always a bad option between two countries," said Furlan, adding: "In the meeting that we had with secretary Gutierrez (Carlos Gutierrez, the US Trade Secretary) about two months ago, we created a group to facilitate trade. Unilateral measures are going to jeopardize companies that operate in both countries creating a climate not conducive to the evolution of bilateral relations"

In 2005, the US imported US$ 26.7 billion in products from 133 developing countries under the so-called Generalized System of Preferences (GSP) maintained by the American government. That’s the first time in 20 years that the preferences system is being reviewed.

Created in 1974 the program favors products originating in poorer countries. About 20% of all products exported to the United States by Brazil benefit from the preferences system.

In the past the American government has already threatened to deny Brazil preferential treatment as punishment for a country that has maintained a years-long feud with the United States in trade matters.

In one of the most notorious cases Brazil has complained to the WTO (World Trade Organization) against US cotton subsidies and won, forcing the Bush administration to change its policy. 

Since the Doha round collapse Brazil has hinted that it might once again appeal to the WTO so it may retaliate against the United States imposing billions of dollars in trade sanctions. 

According to the USTR (United States Trade Representative) the Bush administration is studying if it "restrains, suspends or cancels" the eligibility of 13 countries that in 2005 either shipped more than US$ 100 million in products to the US under the preferences program or represented more than 0,25% of the world exports.

Besides Brazil, the other 12 countries threatened to be deprived of their preferential status are: Argentina, Croatia, India, Indonesia, Kazakhstan, Philippines, Romania, Russia, Southern Africa, Thailand, Turkey and Venezuela.
 
American senator Chuck Grassley said recently that he would support taking Brazil and India from the GSP list due to their less than constructive behavior "Why should we continue to give them preferential treatment?" Grassley asked. "India, Brazil and other developing nations don’t want to give us access to their markets in the World Trade Organization negotiations," he said.

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  • Show Comments (1)

  • ch.c.

    Unilateral measures !
    These measures, when they were implemented, were also done unilaterally.
    No one criticized…..of course !
    Why should they then not decided unilaterally for the restraints, continuation or cancellation ????

    Why no one, including the mentally retarded Furlan answers the simple question : “Why should we continue to give them preferential treatment?”
    Does Brazil gives the same reciprocity to U.S. goods ? NOOOOOOO !
    Brazil has already an annual trade surplus with the USA of over US$ 10 billions. This equals of over 20 % of your 2005 overall trade surplus. A similar amount is with the EU !
    Is this not enough ?
    The USA and the EU should implement a reciprocity law : whenever you tax imported goods from these 2 regions, the same tax rate will be applied to goods you export to them !
    Simple and fair….but not in Brazilian minds ! smile……. ! Guess why !

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