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Brazil Launches Sanctions Against US

Thursday, March 11, 2010

The Brazilian government has announced that it will introduce retaliatory measures in its dispute with the United States, following last year’s ruling by the World Trade Organization that USD12bn in cotton subsidies, provided by the US government between 1999 and 2002, were illegal.

The Brazilian government on March 8 published a list of over 100 US goods that will be subject to increased tariffs, worth a total of USD591m - shy of the USD829m trade sanctions permitted by the WTO, in what was the second largest ruling of its kind.

According to the Brazilian government, the increase to import taxes on US goods will remain in place for a period of one year starting April but could be revised should the US authorities rescind the subsidies it provides American cotton growers. The tariff increases are to be applied to a wide range of goods including electronic devices and automobiles, but mainly nonessential consumer products.

“The Brazilian government doesn't believe that trade retaliation is the most appropriate means to achieve fairer international commerce,” Brazil’s Foreign Trade Secretary, Lytha Spindola, said, adding: “After eight years of litigation however, and in the absence of more concrete options for resolving the dispute, all that's left for Brazil is to make good on its rights as authorized by the WTO.”

By the end of this month Brazil is expected to produce a second list that will introduce other retaliatory measures, this time involving intellectual property rights and services, worth the remaining USD238m of the authorized amount under the WTO ruling.