Brazil and USA reach accord on cotton dispute, saving tariff hikes on pharma products

The long-running trade dispute relating to subsidies for cotton growers between the USA and Brazil reached an agreement yesterday, just a day before the latter country was due to start imposing sanctions on American products of up to $830 million authorized by the World Trade Organization, which had rules that the subsidies violated global trade laws.

Last month, Brazil's government announced a whole host of retaliatory measures against US goods and services. The sanctions were to include $591 million in higher tariffs on a wide array of goods, including autos, pharmaceuticals, medical equipment, electronics, textiles and wheat. As far as the medicinal products are concerned, Brazil raised the import tariff on those containing paracetamol or bromide (not in measured doses) from 14% to 28%. However, for the majority, the rise was from 8% to 14%, notably - according to the list published by the government - for medicines in measured doses containing: polypeptides or their derivates; oestrogens or progestogens; alkaloids or derivatives (The Pharma Letter March 12).

'We now have a clear path forward, one that is in the best interest of both the United States and Brazil," said US Trade Representative Ron Kirk in a statement. "As a result of our discussions with Brazil we have avoided imposition of higher tariffs against hundreds of millions of dollars in US goods exports which were scheduled to go into effect this week," Mr Kirk added.