Originally published in the April 7 edition of World Tax Daily (Copyrights Tax Analysts)
Brazil’s Foreign Trade Chamber (Câmara de Comércio Exterior, or CAMEX) on April 5 officially announced the approval of a resolution postponing the entry into force of Brazil’s retaliatory measures — particularly higher import tax rates for some U.S. products — against disputed U.S. cotton subsidies. Resolution No. 19/2010 was published in Brazil’s official gazette on April 6.
On March 8 CAMEX Resolution No. 15/2010 listed dozens of U.S. products that would be subject to higher import rates (up to 100 percent); the new rates would enter into force 30 days after the ordinance’s publication (April 7). Resolution 19/2010 postpones the entry into force of the new import tax rates until April 22. Until then, the U.S. and Brazil will negotiate to reach a preliminary agreement for the end of the cotton subsidies.
According to the CAMEX official statement, three main topics are under negotiation:
- The creation of a fund to finance Brazilian cotton cultures. This fund would be financed by the U.S. in the amount of $147.3 million per year. According to CAMEX, this is the amount calculated by the WTO as losses and damages suffered by Brazil as a result of U.S. cotton subsidies.
- Negotiations on the new terms of the U.S. Export Credit Guarantee Program (GSM-102).
- Cooperation measures in sanitary handling of animal products, particularly with respect to beef and pork.
The CAMEX announcement also says that if negotiations succeed and preliminary goals are met, it may grant another extension, possibly 60 days, for the entry into force of the retaliation measures. The additional extension would be used to negotiate other aspects of Brazil’s WTO award of its complaint on U.S. cotton subsidies.
David Roberto R. Soares da Silva