Brazil to Release Final List of U.S. Products Subject to Additional Duties in Connection with WTO Cotton Dispute on March 1st

February 11, 2010

According to a press release made by Brazil’s Ministry of Development, Industry and Foreign Trade (MDIC), the country’s Foreign Trade Chamber (CAMEX) will announce the final list of U.S. products that may be subject to increased tariffs in connection with on March 1, 2010.   The final list will be drawn from the 222 products included in CAMEX’s preliminary list, which was published in November 2009.

Based on fiscal year 2008 data, Brazil has claimed the right to impose up to $830 million in retaliatory sanctions, of which $560 million will be applied in the form of increased tariffs on select U.S. products. CAMEX’s preliminary list represented products valued at nearly $2.7 billion. Potential targets, included in the preliminary list, are agricultural and textile products, as well as electronics, cosmetics, cars, medical equipment and pharmaceuticals among other things. However, the Chamber’s Executive Secretary, has stated that the final list will be whittled down the $560 mark and will exclude goods or inputs from the list need to support Brazil’s domestic industry.

The remaining $270 million in sanctions that Brazil is authorized to impose may be used in a second round of retaliation on services and intellectual property. Among these, telecommunication services and pharmaceutical patents are the most likely items to be targeted. This is because Brazil believes these industries are politically influential in Washington and can force the U.S. Trade Representative (USTR) to negotiate a settlement.

For its part, USTR has stated that they hope to reach a solution with Brazil over the cotton dispute, but has failed to offer any specifics on what negotiations may consist of. Brazil has yet to announce when the additional duties would take effect, possibly to see what response the final list will elicit from USTR.