The Brazilian government has delayed imposing tariffs and lifting patent protections on US$829mn of American goods after the US offered concessions on an export loan guarantee programme.
The concessions to the programme came just one day before Brazil planned to raise import tariffs on a range of American items including automobiles, pharmaceuticals and electronics.
The programme aids Brazil’s export sales by absorbing risk through guaranteeing payments if buyers default, leading to more lenders willing to do business with the Latin American country.
However, Brazil claims that the distribution of the businesses that benefit from the programme is unfair, making it, in effect, a subsidy for US producers.
The US government will make changes to the programme to make a fund of approximately US$147.3mn per year which will go towards technical assistance for Brazil’s export trade.
The bilateral negotiations between the countries are also an attempt to end the long-term trade disagreement over cotton, the last chapter of which ended with the WTO ruling in Brazil’s favour in 2007.
The WTO ruling, which was subsequently upheld in a 2008 appeal trial, found that the US had failed to uphold promises to prevent, among other things, excess cotton production and exports that, in turn, cause low international prices which result in serious prejudice to Brazil.
President Barack Obama’s US trade representative, Ron Kirk, says: “We now have a clear path forward, one that is in the best interest of both the United States and Brazil.”
Last Updated April 08, 2010
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