Wednesday, 10 March 2010

The Final Retaliation List of American Products is Published by Brazil: Where have the Suspension and Limitation of IP Rights gone?

It was with high expectation that Brazil published yesterday the final list of American products that will be subject to increased import duties, following the WTO’s decision that upheld Brazil’s move against the cotton farmers subsidies granted by the American government.

Those expecting Brazil to take the chance and strongly strike back the United States were disappointed, since the country preferred to adopt a more realistic approach in view of the already intricate commercial relationships with the American government. Further to that, the excellent export results and the stunning US investments in the past years should be preserved. Brazil cannot afford suffering stringent collateral effects from the retaliation.

In this perspective, from the 220 products initially previewed, only 102 items were finally contemplated (the full list in English will be provided tomorrow). Also, retaliation will start in 30 days but only in case a new round of negotiations is not successfully concluded.

Further to that, the retaliation list also focused on luxurious goods (such as cosmetics, sailing boats and refined cars) and it encompassed different categories. See below the categories of goods, as provided by the Ministry of Development, Industry and International Trade:

This fact has called the attention of the critics who have been arguing that the list has limited effects to the American cotton producer and to the subsidies.

The Brazilian government has argued at its end that the objective is to increase the pressure on the American Congress by finding opposing groups to cotton producer. For example, Brazilian subsidiaries of American companies are still evaluating the impact of the retaliation, but it is believed that some of them will be very much affected by it. One should take into consideration the electronics, hygiene products and foodstuff field sectors, as the Americans suffer fierce competition to conquer the Brazilian consumers. Therefore, the subsidiaries will soon start complaining to the American government and opposing strongly to the subsidies, as they will lose profits in Brazil.

Some Brazilians have argued that a heavier contender to the cotton producer would be the patent and innovation sector, especially in the pharma industries. But the government has not referred to patent limitation or IP restrictions yet; neither has it mentioned to the temporary prohibition of royalty remittances.

Is the government saving the most aggressive player for the 2nd half, like in football? Maybe, but the patent limitation runs the risk of never being called upon to the game due to the pressure of the opponent or the moment of the game. The 2nd. half will start on March 23 next when the government will render a final decision on whether or not it will use cross retaliation on American IP matters.

Till then, new rounds of negotiations are to start, but they are not set to end.

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