Brazil Suspends Trade Retaliation Against United States

Brazil Suspends Trade Retaliation Against United States

Originally published in the June 22 edition of World Tax Daily (Copyrights Tax Analysts)

Brazil’s Foreign Trade Chamber (Câmara de Comércio Exterior, or CAMEX) has suspended the application of Brazil’s retaliatory measures — particularly higher import tax rates for some U.S. products — against disputed U.S. cotton subsidies.

CAMEX Resolution 43/2010, published in the official gazette of June 18, expressly suspends the application of CAMEX Resolution 15/2010, which listed dozens of U.S. products that would be subject to higher import rates (up to 100 percent) until the measures generated totaled $591 million.

CAMEX Resolution 43/2010 also expressly suspends all proceedings of CAMEX Resolution 16/2010, which opened a public consultation on tax measures to retaliate against the U.S. in response to the cotton dispute before the WTO. Those measures would generate a total of $238 million. CAMEX Resolution 16/2010 allowed interested parties to comment on a government plan to impose taxes on royalties paid to U.S. companies for sales of their products in Brazilian markets. The taxation would extend to pharmaceuticals, movies, books and publishing, software houses, and other sources of intellectual property.

The suspension of retaliation measures signals that both countries are about to reach an agreement satisfactory to Brazilian cotton producers and the U.S. government.

David Roberto R. Soares da Silva