Brazil against US at WTO

Brazil Loses Strength Against US at WTO

RENATA AGOSTINI

20.05.2014

Brazil is preparing for another dispute with the US at the World Trade Organization (WTO) amid a deadlock in negotiations over US cotton subsidies.

The country knows, however, that its main pressure tactic, trade retaliation, is now much less effective than in the past.

The value of the sanctions to which the country has the right fell to something close to US$ 500 million, well below the US$ 829 million foreseen in 2010, when it was close to adopting the measure.

The value prevents retaliation regarding intellectual property, according to technicians from the ministries of Foreign Affairs, Agriculture and Development polled by Folha. By involving the breaking of patents, it becomes the sanction most feared by the US.

Retaliation in terms of goods, which foresees an increase in import tariffs, continues to be considered valid.

The Brazilian government in January resume public consultations with the private sector on the issue, but did not mention any obstacle.

The understanding is that there are technical arguments in order to fight for an increase in the amount allowed, but this depends on a new WTO process.

The move was made to pressure the Americans. In order to not suffer the retaliation authorized by the WTO, the US had agreed four years ago to pay US$ 147.3 million per year to Brazilian producers.

At the time, Brazil had already published which products would have their import tax readjusted. Payment was already being made, but it was discontinued in October of last year.

The approval of the new US farm bill, in February of this year, should resolve at once the dispute, which dates back to 2003, when Brazil questioned the subsidies. The new rules, however, ended up harming WTO norms in Brazil's point of view.

IMPASSE

The assessment is that a new panel request (committee to hear the case) should be done by June. The two governments have initiated meetings to try to reach a new agreement, but they have reached an impasse.

Programs for direct subsidies to cotton producers can only be changed by American lawmakers, which is not feasible at the moment.

The Americans have made it known that they do not intend to resume financial compensation, but they brought to the table the option of giving trade benefits for the entry of Brazilian products.

In government calculations, the benefit would be advantageous for sugar, but no agreement has been made yet.

The talks are focused on financial programs for exportation, also condemned by the WTO, and that the US executive branch can change.

The US has given assurances of 24 months for private loans to farmers, which reduces rates. Thus, they can offer better prices. Brazil has asked for the timeframe to be cut in half.

For Brazil, any negotiated solution must pass through the debt settlement of US$ 60 million of Americans nationwide, accumulated since the interruption of payments.

Another pressure point is the use of money. Today, the IBA, an institute created to receive American money, has many restrictions and about US$ 362 million stuck.

fonte: Folha Internacional