CAMEX approves agreement negotiated between Brazil and the US for the cotton dispute

CAMEX approves agreement negotiated between Brazil and the US for the cotton dispute

The Council of Ministers of the Chamber of Foreign Commerce, presided over by the Minister of Development, Industry, and Foreign Commerce, Miguel Jorge, approved today (17 June) the agreement negotiated between Brazil and the United States which carries forward the undertakings in the Memorandum of Understanding signed in April of this year.  The agreement was approved four days before the deadline (21 June) given by Brazil to begin retaliation in products against the USA.

The agreement approved today suspends retaliation in products and also in intellectual property until 2012, but is not final.  Until the deadline there will be negotiations, consultations and revisions.  The text of the agreement provides for trimestral consultations and semestral revisions until the end of the process of writing of a new US agricultural law, estimated for the end of 2012.  The objective is to seek a satisfactorily mutual agreement by the end of this process, but retaliation can be undertaken again at any moment if the USA does not comply with the agreement.

Annual compensation of US$ 147 million

As part  of the negotiations, it was decided that there would be compensation of more than US$ 147 million annually for the agricultural sector.  The amount should be deposited by next week and will be administrated by a management council which will be formed by three representatives of the private sector and three representatives of the Brazilian government.

The final agreement establishes as well that, regarding domestic assistance, the discussions with the Americans have as a base a maximum limit of expenditures and agricultural subsidies for cotton.   This amount has not been specified yet and must be approved by the American Congress, but should be less than the average between 1999 and 2005 - this was the period examined by the dispute resolution mechanism of the WTO.

The value of the retaliation authorized to Brazil and set by the WTO arbitrators is the second largest in the history of the WTO and is a result of the noncompliance, by the USA, with determinations of panels and appellate bodies [of the WTO].



Walter W. Palmer
  • 06-18-2010

On a related note, the Brazilian Congress approved the law which provides the legal framework for “cross-retaliation” in IP last week – up until that point, it had been merely a Presidential decree-law that would have expired had it not been approved by Congress.  Once signed by President Lula, the law will become a permanent part of Brazil’s legal system.