Brazil Gets Approval for Sanctions on U.S. Over Cotton

The World Trade Organization on Nov. 19 allowed Brazil to start imposing sanctions on the United States over unfair U.S. cotton subsidies, a trade source said.

"Today is the day that Brazil received authorization to retaliate... They can start imposing sanctions whenever they want," the source said.

The WTO in August ruled that Brazil can impose sanctions of up to $147.3 million a year in retaliation for subsidies that dampened international cotton prices.

In addition, it allowed another annual sum to be levied for U.S. cotton subsidies that breached trade rules.

This portion, determined according to a mathematical equation, was calculated at $147.4 million based on 2006 data.

Brazil has said that its calculation for this year shows that sanctions should reach some $800 million.

The variable part of awarded sanctions was not raised during the WTO's dispute settlement body (DSB) meeting on Nov. 19, during which Brazil sought authorization to begin imposing punitive levies on U.S. products.

Meanwhile, the United States said it intended to "comply" with the trade body's ruling and that therefore it would be unnecessary for Brazil to begin imposing sanctions.

"While the United States understands that the DSB will today be authorizing the suspension of concessions or other obligations, we do not believe that it will be necessary for Brazil to exercise that authorization," it added.

Under WTO rules, sanctions can be imposed until the offending party brings its trade regime into line with international rules.

Brazil has drafted a list of 22 imported U.S. products, including oils, drinks, medicines, hygiene products and some cotton products and electronic goods, on which it could levy punitive duties.
The list is being submitted to public scrutiny until the end of the month, after which it would decide on a selected number of goods.

Copyright Agence France-Presse, 2009