Brazil readies list of U.S. goods to sanction

Brazil is working on a list of U.S. goods it can retaliate against following the World Trade Organisation ruling in its case against U.S. cotton subsidies, Foreign Minister Celso Amorim said on Thursday.

“We’ll be having meetings all along next week and hopefully in ten, 15 days we can have a list,” he told Reuters in an interview on the sidelines of a meeting of trade ministers to advance the WTO’s Doha round.

The WTO set out the terms last Monday under which Brazil can impose trade sanctions against the United States for two sets of cotton subsidies found illegal by the trade body but which Washington has not yet removed.

Sanctions on what set of subsidies are variable, depending on the amount of support the United States is providing, but Brazil says it could impose $800 million in the current year, a figure challenged by the United States which says the ruling allows retaliation nearer $300 million.

The arbitration ruling also said that in certain circumstances Brazil could “cross retaliate” targeting services such or intellectual property such as pharmaceuticals patents, rather than simply raising tariffs on other goods.

HITTING THE SPOT
Amorim said Brazil would examine carefully how to impose the maximum leverage with its sanctions.

He said he had been impressed by how the United States, when allowed to retaliate against the European Union in their dispute over bananas, had targeted pecorino cheese. Although this was of little significance in trade terms, it hit a particular group in Italy and would have had electoral consequences, he noted.

Amorim said Brazil had to be careful not to impose sanctions that also hurt itself, for instance by pushing up costs for industry.

“It has to be more detrimental to the other side so that the even more detrimental policy, which in this case is the cotton subsidies, can be removed,” he said.

The object of retaliation was to change behaviour.

“We would hope that the United States would change the policies and we don’t need to retaliate but this is only a hope,” he said.

On Tuesday Amorim said Brazil wanted to negotiate with the United States before retaliating.

Amorim said he believed the Doha round could be completed next year if WTO members really wanted that.

He said he believed the new U.S. trade representative, Ron Kirk, genuinely wanted a deal.

But he warned the United States against trying to change the round from its mandated aim of helping developing countries into a quest for new business opportunities.

“If you want to change and transform the very essence of this round from a development round, a round that was centred on agriculture, to something that is how to extract more from emerging countries in manufactures… then it won’t happen, that’s all,” he said.

Amorim recalled how Brazil and other developing countries, dependent on the International Monetary Fund during the previous set of trade negotiations in the early 1990s, had to acquiesce with the United States for fear of losing the next IMF payment.

“Now we lend money to the IMF, and so does China, and I don’t know if India has already lent, but anyway it’s also part of the recovery. These countries need us also in the G20 and they need our cooperation, it’s not as it was in the past,” he said.