Brazil Delays U.S. Trade Retaliation to Allow for More Talks

Brazil’s government delayed the implementation of $830 million in trade sanctions against the U.S. to allow time for a negotiated solution over subsidies paid to American cotton producers.

Brazil postponed the higher tariffs until at least April 22 after the U.S. signaled it may revise cotton subsidies, ease requirements for meat imports and establish a $147 million fund to promote Brazilian cotton producers, Carlos Cosendey, head of the Foreign Ministry’s economic department, told reporters yesterday in Brasilia.

“Now we have a serious negotiating process,” Cosendey said, adding that implementation of the sanctions could be delayed another 60 days. “Given these signs, Brazil agreed to postpone the retaliation.”

Brazil was scheduled to impose higher tariffs on 102 U.S. goods, such as chewing gum, ketchup, cars and boats April 7 after the World Trade Organization ruled in August that U.S. subsidies to cotton producers violate global trade rules.

The Geneva-based trade arbiter allowed Brazil to adopt $591 million in annual penalties against the U.S. and also withhold payment on intellectual property rights or break patents worth $239 million annually.

Foreign Minister Celso Amorim cautioned that any breakthrough in talks would provide only a temporary solution until the U.S. congress and President Barack Obama overhaul the subsidy program.

Higher Tariffs

“Whatever understanding that is reached outside of what the WTO mandated will be by definition temporary,” he said in an e-mailed statement yesterday. “Still, any procedural changes that offer adequate guarantees, although temporary, are welcomed.”

U.S. goods that would be subject to higher tariffs include refrigerators, medicine, personal care products, methanol, raw cotton, auto parts, earphones and cell phones. Agricultural goods to be sanctioned include pears, canola oil, cherries, soybean oil, raisins, hazelnuts, walnuts, plums and potatoes.

Brazil’s decision to break intellectual property rights on U.S.-made products including prescription drugs, movies and software may discourage investment in Latin America’s biggest economy, the Office of the United States Trade Representative said last month in an e-mailed statement.

President Luiz Inacio Lula da Silva blamed “fighting” over agricultural subsidies on the U.S.’s refusal to sign an accord during the Doha round of global trade talks.

“We want to show the U.S. that it doesn’t matter if you are big or small, or how much money you have as a nation,” Lula said March 10. “We all want to be respected and to be treated fairly.”