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Cotton Case Affects Other Trade

Brazil revealed on March 15 a preliminary list of U. S. patents and intellectual property rights it could restrict unless both countries settle a long-standing dispute over U. S. cotton aid.

It is the second set of measures Brazil has unveiled in a week to pressure Washington to obey a ruling by the World Trade Organi zat ion that found the U. S. cotton subsidies and export credit guarantee program illegal.

Diplomats, trade experts and business leaders are closely watching the case, one of a few in which the WTO has allowed cross-retaliation, in which the wronged party can retaliate against a sector not involved in the dispute.

Brazil would become the first country ever to apply cross-retaliation under WTO rules.

The new measures, which are subject to public hearings for 20 days, allow the government to anticipate the expiration of U. S. patents on pharmaceuticals, chemicals and biotechnology. That would allow Brazilian companies to start producing equivalent drugs earlier than expected.

They would also allow Brazil to issue compulsory licences without compensation in the drugs, chemical, music and audiovisual industries. The measures listed in an official publication would also allow the government to increase fees and tighten regulations on the registration of intellectual property rights.

“These measures are not designed to change the rules of the game. Brazil hasn’t changed its attitude toward intellectual property rights,” said Carlos Marcio Cozendey, head of economic affairs at the Foreign Ministry.

“These are temporary measures designed to put pressure on the United States.”

On March 8 Brazil detailed 102 U. S. goods that will be subject to import tariffs within 30 days unless a last-minute agreement is found.

Total retaliation between both series of measures would be $829 million.

The WTO gave Brazil the formal go-ahead last year to impose sanctions on U. S. imports.

U. S. Trade Representative Ron Kirk said last week the United States still hoped to strike a deal with Brazil to avoid the sanctions. If it cannot, it will have to try to persuade Congress to change the U. S. cotton program to satisfy Brazil’s concerns, he said.

“They told us they want to try to resolve this before these measures go into effect,” Cozendey said in reference to comments by U. S. officials.

Brazil has indicated it could accept a U. S. pledge to send a reform bill to Congress if Brazil were compensated for damages until the bill’s approval. Some Brazilian business leaders have proposed compensation through U. S. investments into cotton research, as well as more U. S. imports of Brazilian beef, orange juice and ethanol.

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