August 31, 2009
Brazil to retaliate against US cotton subsidies
Brazil is preparing to break patents on US pharmaceutical products if the WTO rules it can do so, in retaliation against subsidies to US cotton farmers, according to Brazilian press reports.
Brazil led a challenge against US cotton subsidies in 2002, and two years later the WTO ruled that the subsidies had distorted global prices and violated trade rules. However, the US continued the practice, arguing the measures were consistent with its WTO obligations, despite the WTO's support for Brazil.
A retaliatory measure is to raise import tariffs against US products, but Brazil is a relatively small US market, accounting for only US$32 billion out of US$1,287 billion of US exports last year.
Therefore Brazil is preparing to take action over intellectual property, where it will hurt the US, and the WTO is expected to give its backing. The action will allow Brazilian pharmaceuticals companies to copy medicines protected by US patents.
The move comes in view of growing frustration in Brazil at the US government's reluctance to act on farm subsidies affecting cotton and other sectors of Brazilian agribusiness.