Brazil Releases List of Intellectual Property Retaliation Measures in U.S. Cotton Dispute

Brazil on March 15 announced the second phase of its threatened retaliation against U.S. cotton subsidies, publishing in the government's official gazette a list of 21 intellectual property measures affecting patents and copyrights for prescription drugs, chemicals, biotechnology, music, films, books and software.

Brazil on March 15 announced the second phase of its threatened retaliation against U.S. cotton subsidies, publishing in the government's official gazette a list of 21 intellectual property measures affecting patents and copyrights for prescription drugs, chemicals, biotechnology, music, films, books and software.

The Brazilian government estimated the value of the new sanctions at $238 million. 

The latest proposal comes in addition to the March 7 publication of more than 100 U.S. goods that will be subject to tariffs totaling $591 million as a result of the cotton dispute. The tariff hikes are scheduled to take effect April 7. 

The list was labeled as preliminary and was opened to public consultation for 20 days, after which the government will release its final list. 

According to government officials, one of the measures would permit Brazil to suspend the patent for a U.S. prescription drug, allowing any Brazilian pharmaceutical firm to manufacture a copy of the drug. The list did not mention a specific drug and officials said this would be determined during the consultation period.  

Another four measures would under certain circumstances permit Brazilian companies to copy books, films, or biotechnical processes for U.S. agricultural products without having to pay licensing or copyright fees. Three other measures would open the door for parallel imports of products currently imported exclusively by U.S. firms in Brazil. 

Another measure would create a special tax for the registration of U.S. patents by Brazil's patent office and for the registration of U.S. copyrights for films, books and software. 

Should Brazil apply cross retaliation measures in the area of intellectual property, this would be the first time that a country has adopted this procedure with the blessing of the World Trade Organization. Cross retaliation has been approved before by the WTO but has never been put into effect. 

"Brazil isn't adopting any measure in the area of intellectual property that affects legislation or our commitment with protection of intellectual property," said Carlos Marcio Cozendey, director of the economics department at Brazil's foreign-relations ministry. "We're certain that the sectors interested in intellectual property will help us in Washington to change the measures that were considered illegal."

In rationalizing their move, Brazilian officials said they believed that contrary to the case of direct retaliation, the retaliation against intellectual-property rights would tend to reduce the cost of goods imported from the United States.

Officials said the government opted to propose the measures against intellectual property because it hadn't yet received any concrete proposals from the United States for compensation for cotton subsidies. 

"We made important contacts with high-level U.S. officials last week," said Cozendey. "These representatives gave firm indications of their interest in negotiation, but said they need more time for discussions with the U.S. Congress." 

The WTO ruled in 2005 that U.S. marketing loan payments, countercyclical payments, and export credit guarantees caused serious prejudice to the trade interests of Brazil by depressing global prices for cotton. It also ruled that U.S. export credit guarantees for cotton and other commodities such as rice, soybeans, and corn under the GSM-102 program constitute illegal export subsidies.

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