U.S. Says it Will Comply with WTO Cotton Ruling, Work with Brazil to Avoid Add'l Duties
On November 19, 2009, U.S. Diplomat to the World Trade Organization Millan told the WTO dispute settlement body that the U.S. intends to comply in the Brazil-initiated dispute over U.S. subsidies to its producers, users, and/or exporters of upland cotton, and therefore, Brazil would not need to levy its WTO-authorized sanctions.
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(In August 2009, the WTO authorized Brazil to impose millions in countermeasures against the U.S. due to its failure to comply in the cotton dispute, and on November 6, 2009, Brazil's Foreign Trade Chamber (CAMEX) issued a notice seeking comment on a preliminary list of 222 U.S. products for possible retaliation. (See ITT's Online Archives or 11/12/09 and 11/16/09 news, 09111205 and (09111620), for BP summaries.)
USTR Says U.S. Seeks Solution to Avoid Countermeasures, Is Consulting with Stakeholders
The Office of the U.S. Trade Representative commented on Millan's statement, stating that "we are interested in working with Brazil to identify a solution without Brazil applying countermeasures. The issues in this dispute are complex, and we are consulting with stakeholders on next steps."
If Brazil Not Satisfied with U.S. Progress, Sanctions Could Take Effect in January
Brazil's Ministry of Development, Industry and Foreign Trade (MDIC) has stated that once a product is included on the final list and a final determination to apply the duties is made, the duties on that product could increase up to 100%1 after January 2010. MDIC Executive Secretary Spndola states that the government is targeting the January date, and that if necessary, it will exercise its rights.
Preliminary list. MDIC has stated that the preliminary list that was issued by CAMEX contains 222 items, represents 10.6% of 2008 U.S. exports to Brazil, and is valued at $2.7 billion dollars.
Final list. Based on public input and final decision of CAMEX's Council of Ministers, the list of products will be narrowed so to represent a value of $450 million, the amount of countermeasures MDIC believes was authorized by the WTO.
Further retaliation. In addition, Brazil may initiate a second round of retaliation valued at $450 million on intellectual property and services, bringing its total retaliation to a value of $900 million.
(Note that there is some controversy over the amount of countermeasures actually authorized by the WTO. See ITT's Online Archives or 09/01/09 news, 09090110, for BP summary of WTO authorization reports allowing Brazil to impose the countermeasures.)
1CAMEX has characterized the additional duty differently, stating that the targeted products would be subject to additional duties of up to 100%. For example, CAMEX has stated that if a selected product had a 12% duty rate, and CAMEX decides to impose an additional duty of 100% on that product, the new duty rate would be 112%.
Copies of Millan's statement available by emailing a request to documents@brokerpower.com
MDIC press release (in Portuguese, dated 11/09/09) available at http://www.mdic.gov.br/sitio/interna/noticia.php?area=1¬icia=9454