Brazil Announces Final Retaliation List in Cotton Dispute; Gives U.S. 30 Days to Negotiate a Settlement

March 8, 2010

Today, Brazil published its final list of 102 U.S.-made products that it will target with increased tariffs in retaliation for the U.S.’s failure to comply the World Trade Organization’s ruling in the Upland Cotton Dispute. The list, which includes cars, boats and variety of agricultural products, will become effective 30 days from today (on or about April 7, 2010).

The 30-day grace period is intended to give the U.S. an opportunity to negotiate a bilateral settlement and Secretary of State Hillary Clinton has already dispatch two high-level diplomats to meet with the Brazilians. However, most of the changes demanded by Brazil would require the U.S. Congress to amend the 2008 Farm Bill, which would be politically difficult for the Obama Administration to achieve.

Brazil recently indicated that it could wait for the U.S. Congress to pass legislation reforming the country’s agricultural subsidy programs so long as the Obama Administration pledged to do so and it was compensated for damages until its approval. Such a compensation package could include a mix of U.S. investments in Brazilian cotton research and the elimination/reduction of tariffs on Brazilian products, such as beef, orange juice and ethanol, entering the U.S.

Should the two sides fail to reach an agreement, Brazil stated in its Official Gazette notice implementing the retaliation that it may take additional measures to persuade the U.S. to make the desired changes to its agricultural subsidy programs. These additional measures will likely include the suspension of up to $270 million in U.S. intellectual property rights on pharmaceuticals and other service sector trade concessions made to the U.S. A preliminary list of these additional measures is expected to be published by March 23^rd.  

For more information on how this may impact your business, please contact a Barnes/Richardson attorney. To view an unofficial translation of the list of U.S. goods that will be subject to increased tariffs should the two countries fail to reach a settlement by April 7, 2010, click here