Brazil Delays Finalizing List of U.S. Goods Subject to Additional Duties in Cotton Dispute; Could Raise Level of Retaliation.

December 17, 2009

On December 15, 2009, Brazil’s Ministry of Development, Industry and Foreign Trade (MDIC) announced that it will delay finalizing the list of U.S. products that will be subject to additional duties in connection with the World Trade Organization (WTO) upland cotton dispute. Instead, MDIC’s foreign trade chamber will finalize the list subject to additional duties, set the implementation date, and determine the total value of retaliation at its February 2010 meeting.

According to a MDIC spokesperson, the amount of retaliatory duties could vary, depending on the year by which Brazil bases its calculations. By February, MDIC will have fiscal year data for 2009 on the amount of subsidies paid to U.S. cotton producers.

Based on 2008 data, Brazil estimates that it could be entitled to impose up to $829 in additional duties. The overall level of retaliation is, in part, based on the level of U.S. subsidies paid to its cotton growers. Since many of these subsidies are counter-cyclical, Brazil expects the level of retaliation to rise even further with 2009 data.

For its part, the U.S. had stated that it intends to comply with the WTO ruling and to work with Brazil so it does not need to levy the authorized sanctions.