Brazil Raises Tariffs on U.S. Goods, to Break Patents (Update3)

[rabs]

Source: Bloomberg (Businessweek)


By Iuri Dantas and Mark Drajem

March 8 (Bloomberg) -- Brazil will raise tariffs on 102 U.S. exports, including wheat, cars, boats and chewing gum, and break patents worth $238 million in a bid to force the U.S. to end subsidies to cotton producers.

Acting on a World Trade Organization ruling, Brazil will impose levies of 14 percent to 100 percent, according to a list published in the government’s Official Gazette. The sanctions, which take effect in 30 days, represent $591 million in trade with wheat goods the largest target, Carlos Marcio Cosendey, head of Foreign Ministry’s economic department told reporters.

The government of President Luiz Inancio Lula da Silva plans to take additional steps and break U.S. patents as part of the $829 million retaliatory measures, Cosendey said. The ministry will publish a draft for public consultation of sanctions over intellectual property March 23, he said.


Read more: http://www.businessweek.com/news/2010-03-08/brazil-raises-tariffs-on-u-s-goods-to-break-patents-update2-.html

---

Hillary was in Brasilia last week and was unable to stave off the sanctions. Lula da Silva's government also told her to butt out of Brazil's diplomatic and trade relations with Iran.

(Edit to correct -- Businessweek, not Newsweek)

[Mithreal]

1. World Trade Organization

[rabs]

2. U.S. kept breaching, breaching, breaching, breaching WTO trade disciplines.

(So all that breaching finally caught up with Washington and U.S. exporters are going to pay the price.)

-------------------------------
The retaliation level that was authorized to Brazil and determined by the WTO arbitrators is the second highest in the history of the Organization. It results from the U.S. non-compliance with the rulings of WTO panels and its Appellate Body, which confirmed four times that the U.S subsidies to its cotton producers and exporters breached multilateral trade disciplines. The authorized countermeasures may remain in effect as long as the United States persists in the current situation of non-compliance with those disciplines.


The authorization granted to Brazil to take countermeasures in the areas of services and intellectual property reflects the recognition, by the WTO, that in the present case it would not be “practical” or “effective” to adopt countermeasures solely with respect to goods. Such authorization also stems from the fact that “circumstances are serious enough” to justify resort to measures in other areas, so as to induce the United States to heed the decisions of the highest instances of the WTO. The list of goods will be complemented, in the near term, by a list of measures related to intellectual property and other rights, following the conclusion of a process of public consultations that is expected to be launched by 23 March, the date of the next CAMEX meeting.

The Brazilian Government regrets having to take these measures, since it believes that trade retaliation does not constitute the most appropriate means to attain international trade on a fairer basis. However, after almost 8 years of litigation and over 4 years of continuing non-compliance with the rulings of the Dispute Settlement Body on the part of the United States, and in the absence of the offering of concrete and realistic options that could allow for the negotiation of a satisfactory solution to the dispute, it remains for Brazil to exercise its right, as authorized by the WTO. Brazil thus seeks to safeguard the credibility and the legitimacy of the multilaterally agreed dispute settlement system.

Brazil remains open to a dialogue with the United States that may facilitate the achievement of a mutually satisfactory solution to this dispute.

http://www.isria.com/pages/8_March_2010_113.php

[pampango]

3. Here's more from the WTO's Dispute Settlement Body (DSB).

http://www.wto.int/english/news_e/news09_e/dsb_19nov09_e.htm

US — Subsidies on Upland Cotton: authorization to impose countermeasures.

Brazil recalled that in July and October 2005, it had requested the authorization to take countermeasures in response to the US' failure to comply with the DSB's recommendations and rulings in this dispute and that as a result of the US' objection, the matter was referred to arbitration. The Arbitrator's Decisions were circulated on 31 August 2009 and Brazil accordingly submitted requests to the DSB to authorize the suspension of concessions or other obligations (WT/DS267/41 and WT/DS267/42). The US reiterated its intention to comply with the DSB's recommendations and rulings and therefore did not believe that it would be necessary for Brazil to exercise that authorization. The US added that suspending concessions or obligations could present economic and other challenges for both Brazil and the US. The DSB agreed to grant Brazil authorization to impose countermeasures consistent with the Arbitrator's decisions contained in documents WT/DS267/ARB/1 and WT/DS267/ARB/2 and Corr.1.

Looks like the US lost this case in 2005, Brazil was authorized to impose sanctions but the US appealed the sanctions, so that went to arbitration. The US lost this on August 31 last year and Brazil is now imposing the sanctions allowed by the arbitrator.

[naaman fletcher]

4. I'm not sure how..

Causing Brazilian citizens to pay more for their wheat, cars, boats, and chewing gum hurts the US. The patent breaking sure does though.

[TreasonousBastard]

6. How's the wheat crop in Canada and Argentina this year? Everything else...

can also be bought somewhere else, or is made in Brazil, or they can just wait it out if they really, really need a new Hatteras 40.

[Happy Hippy]

5. In response....

we should outlaw Brazilian fruits. Let our Floridian farmers do what they are known for without having to compete with an unregulated, child labor using, Brazilian agriculture industry.

That would be my response.

[cosmicone]

7. ummmmm .... yeah right

Brazil acted according to the terms of a treaty signed by the US and followed proper procedures.

US retaliating on a court's decision would be like a mafioso convicted of killing a cop ordering the killing of two more cops.

[denverbill]

8. Or end subsidies for cotton growers.

After all, why should everyone else suffer so a handful of wealthy southern farmers can get government aid? They need to stand on their own two feet and stop taking handouts from Washington. And if they can't compete who cares? These are the same folks that cheer when manufacturing jobs get outsourced.

[izquierdista]

22. And where are those cotton growers?

Look at a map of where cotton is grown and a map of major Bush donors and it will be hard to tell the difference. Question is, where is the "change we can believe in"?

[Dr.Phool]

10. The Florida agriculture industry still gets busted using SLAVE labor.

It pops up in the news around here every so often.

[Commie Pinko Dirtbag]

17. What the fucking hell do you know about Brazil?

This isn't China. This is a democratic country. There are individual rights. The government cracks down on child abuse to the best of its abilities.

The US is in the wrong here and YOU KNOW THAT.

[girl gone mad]

30. Sorry, but this response made me laugh.

"The government cracks down on child abuse to the best of its abilities."

You mean like when the Brazilian cops http://en.wikipedia.org/wiki/Candel%C3%A1ria_massacre">hunt down and murder homeless children in cold blood?

[galileoreloaded]

9. Thank god we reactivated the Fourth Fleet.........n/t

[Dr.Phool]

11. He's been hanging out with that Chavez guy again.

[onethatcares]

12. what does this mean in plain English?

that the price of wheat shipped to Brazil from the U.S. of A was artificially propped up by taxes paid by Brazilian citizens?? I'm serious, I don't quite grasp this

[Mithreal]

13. Neither do I, but we did give up some of that thing the rightwingers like

to rail about, sovereignty.

It's not just NAFTA destroying the American economy.

[pampango]

15. The price of the wheat shipped to Brazil was subsidized by US taxpayers who subsidize American wheat

farmers. On the one hand, you'd think that Brazilians would be thanking US taxpayers for the money we spend to make wheat cheaper for them to buy, but, of course, their wheat producers don't like having to compete with such cheap wheat.

[rabs]

16. It's complicated because of the technical language

but in a nutshell Brazil says U.S. subsidies of cotton growers in the United States depresses the price of cotton worldwide, hurting Brazilian and other cotton-growing nations.

here is an easier to understand report and graphic about the dispute.

http://siteresources.worldbank.org/INTRANETTRADE/Resources/Pubs/TradeNote16.pdf

As for wheat, Brazil can always turn to its neighbor, Argentina, to get its wheat, which will hurt U.S. exporters.
---------------------------------------
The Brazilian action is apparently so serious that this blurb appears in the Jornal do Brasil newspaper today:

O secretário americano do Comércio, Gary Locke, visitará Brasília nesta terça-feira, confirmou a embaixada dos Estados Unidos à AFP.
18:25 - 08/03/2010

(The American Secretary of Commerce, Gary Locke, will visit Brasilia on Wednesday (tomorrow), the U.S. Embassy confirmed to AFP.)

[pundaint]

23. Yea Brazil, now how about those Corn and Peanut subsidies

[Downwinder]

24. The same thing killed the rice production in Haiti and the

subsistence farmers in Mexico.

[RUMMYisFROSTED]

14. Lol.

"Reap meet Sow."

[hedgehog]

18. Go Brazil! I want to end subsidies to cotton producers, too!

[Joanne98]

19. This is Senator Shelby's karma for putting a hold on all of Obama's nominees

[Judi Lynn]

20. Considering what this country has done to the rest of the world to protect US businesses

it's stunning when ANYONE has the courage to do something to protest the exploitation and destruction of its own citizens.

It's important Lula da Silva did this before leaving office when his term expires. It means a lot to Brazilian growers.

[Mithreal]

28. Would be something if American labor got that sort of protection

[dipsydoodle]

21. butt out

:rofl:

[Vidar]

25. Bravo Brazil! Vive Lula!

[The abyss]

26. Recommend!

Hey rabs, thanks for this story. I didn’t see this until I checked into DU.

[rabs]

27. You're welcome and fyi Financial Times of London talks about a "trade war"

Brazil actually has left the window open for negotiations, but a barely open window -- 30 days. Article says the U.S. farm bill would have to be modified by Congress, which ain't gonna happen in 30 days.

Hillary went down last week, could not get anything done. So tomorrow Gary Locke, US commerce secretary, and Michael Froman, deputy national security adviser for international economic affairs, are heading to Brasilia. (I did not even know that Obama has a "national security adviser" for international trade.)

That is some heavy-duty diplomacy, the secretary of state, the commerce secretary and a national security adviser for economic affairs, so sure looks like Lula da Silva has rattled Washington's cage.

To paraphrase; "A half billion here, a half billion there, and soon you are talking big money ..." that U.S. exporters stand to lose.

--------------------------
Snips

Brazil has made it clear that it is open to a settlement before the new tariffs take effect, but officials have stressed that any deal must apply specifically to cotton.

It is unclear how much room for manoeuvre the US has. Significant changes to the cotton subsidy programme would require changes to the farm bill - and securing congressional approval might be difficult.

"The only way this is not going to turn into a train wreck is if Brazil is offered something meaningful," said Jon Huenemann, an adviser at Miller & Chevalier. "There are potential ways out of this but they require a lot of creativity because of the political situation in both countries."

The US is the world's largest exporter of cotton.

http://www.ft.com/cms/s/0/c5da3202-2b1a-11df-93d8-00144feabdc0.html

[dipsydoodle]

29. BBC News link

Brazil published a list of 100 US goods that would be subject to import tariffs in 30 days, unless the two governments reached a last-minute accord.

It said it regretted the sanctions, but that eight years of litigation had failed to produce a result.

http://news.bbc.co.uk/1/hi/world/americas/8556920.stm

[Rapier09]

31. I assume that visit from the "Carl Vinson" went well

I mean we weren't going to sell them that hardware anyway.

I guess we won't be selling them anything.

[rabs]

33. The upshot is that Brazil has forced the U.S. to the negotiation table

to come up with a solution or be on the receiving end of trade sanctions, which the U.S. has gleeful imposed on other nations in the past.

-------------------------------------

?
Gary Locke in Brasilia today


(Today in Brasilia)

US seeks talks to avert trade war with Brazil

1 hr 55 mins ago
BRASILIA (AFP) – Visiting US Commerce Secretary Gary Locke said Tuesday that Washington was seeking talks with Brazil before it imposes retaliatory trade tariffs for US cotton subsidies the WTO ruled as discriminatory.

After meeting with Brazilian Foreign Trade Minister Miguel Jorge and cabinet chief Dilma Rousseff, Locke said US President Barack Obama's administration would launch negotiations with Brazil shortly.

Jorge said neither Washington or Brasilia wanted a trade war and that Brazil was "ready to negotiate." Neither official confirmed any upcoming trade talks and provided no further details of the effort.

snip .... (Even a bushie repub recognizes the seriousness of the U.S. not heeding the WTO)

In Washington, a US lawmaker warned Tuesday that the United States could be on the losing end in a trade war with Brazil.

"You would be shocked at how much international support Brazil has. I think if you were to go in that direction, Brazil would have a lot of friends," said Republican Senator Mike Johanns.

"Get ready, they're going to pick the most sensitive areas they can possibly pick, target those for retaliation," said Johanns, who underlined that "Brazil is not standing alone on this issue."

And "they have gotten to a point, now, where they've won every stage and step in this WTO process," said Johanns, who served as agriculture secretary under former president George W. Bush.

http://news.yahoo.com/s/afp/20100310/bs_afp/wtotradedisputebrazilusfarm


-------------------------

and it looks like Brazil can weather any trade war with the U.S. (From Jornal do Brasil newspaper in Rio de Janeiro reporting from SÃO PAULO today.)
-------------

Reservas internacionais sobem para US$ 242,311 bilhões

SÃO PAULO, 9 de março de 2010 - As reservas brasileiras internacionais avançaram em US$ 212 milhões na ontem no conceito de liquidez internacional, segundo o Banco Central (BC). Com isso, o total das reservas brutas passou de US$ 242,099 bilhões para US$ 242,311 bilhões.
(Elaine Cristina Adriano - Agência IN)

(Translation mine) Internation reserves climb to US$ 242.311 bbbillion
International Brazilian reserves increased by US$ 212 million yesterday in regards to international liquidity, according to the Central Bank. With that, the total of brute reserves increased from US$ 242,099 bbbillion to US$ 242.311 bbbillion.

16:19 - 09/03/2010

[Endangered Specie]

32. Heh, we can always bomb them...

:sarcasm: