Brazil to Set $829 Million in Sanctions on U.S. Goods
December 22, 2009 By Bradley S. Klapper
BusinessWeek
Brazil told the World Trade Organization on Monday that it would set $829.3 million worth of annual sanctions on U.S. goods for the United States’ failure to eliminate illegal subsidies to American cotton growers.
The South American country didn’t say when it would start punishing U.S. products in retaliation, but that an August ruling by the WTO means it can focus $268 million worth of penalties on American trademarks, patents and commercial services. The rest will be on American goods.
The United States took note of the Brazilian statement at a closed-doors session of the WTO’s dispute body without disputing the figures, according to documents.
Brazil thanked Washington for providing accurate data on its cotton support programs, which have been ruled illegal in a number of landmark WTO decisions over the last five years.
The WTO in August authorized Brazil to punish the U.S. for continuing to hand out billions in illegal cotton subsidies, creating a formula that would let Latin America’s largest nation to set sanctions according to how much the U.S. support programs are worth each year.
The award was the second largest in the 14-year-old trade body’s history, but it only let Brazil retaliate in the sensitive sector of intellectual property rights if U.S. payments exceeded a minimum threshold.
Brazil says the U.S. has been able to retain its place as the world’s second-largest cotton producer by paying out some $3 billion to American farmers each year. China is the largest exporter of cotton, while Brazil is fifth.
In response to the legal defeats, the U.S. Congress has scrapped some export credits and in 2006 repealed the “Step-2” cotton-marketing program that made payments to exporters and domestic mill users as compensation for buying higher-priced American cotton.
But last year it approved a new farm bill worth nearly $300 billion that left a number of other contentious cotton programs intact.
The WTO’s condemnation of the U.S. cotton programs has been seen as a victory for Brazil and for West African countries that claimed to have been harmed by the subsidies. Three decisions since have confirmed that U.S. payments unfairly help U.S. producers undersell foreign competitors and depress world market prices, dealing a double blow to cotton growers in Brazil and elsewhere.
(Story found in original format here.)
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