USA-BRAZIL TRADE:  RULES OF TRADE
ARTICLE BY ROSALIENE BACCHUS
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In a global marketplace of unequal partners, trade laws and regulations are essential to level the playing field.
The World Trade Organization (WTO) is the international forum responsible for determining these rules.
Agreements negotiated and ratified by its 153-member nations aim to promote and expand trade among
nations for economic growth and prosperity of all peoples.

As WTO members, the United States and Brazil agree to adhere to the General Agreement on Tariffs and
Trade (GATT) for goods; General Agreement in Trade in Services (GATS); Trade-Related Aspects of
Intellectual Property Rights (TRIPS); and other agreements for specific sectors or issues. Details of these
agreements are available on the organization’s Website (www.wto.org).

The WTO Secretariat in Geneva, Switzerland, serves as watchdog for global trade. It administers and monitors
the application of agreed rules, reviews trade policies, and settles disputes among members regarding the
interpretation and application of the agreements. One such dispute between Brazil and the USA was settled in
June 2008.

In 2002, Brazil claimed that US agricultural subsidies on upland cotton were illegal under the WTO Agreement
on Agriculture. The subsidies caused the fall in cotton prices on the world market. As at July 2009, the USA
has not removed its illegal cotton subsidies. On 31 August 2009, the WTO granted Brazil $147.4 million in
sanctions for Fiscal Year 2006. A formula will determine values for subsequent years. Brazil’s total estimation
of $800 million is a far cry from the anticipated $2.5 billion.

US agricultural subsidies were an impediment for the formation of the Free Trade Area of the Americas
(FTAA). Initiated in December 1994, the proposed trade agreement sought to extend the North American Free
Trade Agreement (NAFTA) – between Canada, Mexico, and the United States – to include Central America,
South America, and the Caribbean (www.ftaa.alca.org).

Negotiations reached a stalemate at the last summit held in Argentina in 2005.  The USA wanted more trade in
services and intellectual property rights. Developing nations, led by Brazil, sought free trade in agricultural
goods and an end to agricultural subsidies. This contention persists today in WTO negotiations for expanding
global trade.

American importers can take advantage of benefits granted to Brazil under the program known as the
Generalized System of Preference (GSP). Established in 1968 by the United Nations Conference on Trade
and Development (UNCTAD), the GSP program promotes economic growth in developing countries by offering
preferential tariff rates for selected products in the markets of industrialized nations.

The United States is one of 13 countries that grant these preferences. In his Press Release on 30 June 2009,
the US Trade Representative Ron Kirk announced that in 2008 the GSP Program facilitated $31.7 billion in
imports of nearly 5,000 types of products from 131 developing countries (www.ustr.gov). The US government
conducts an annual review of all products and countries eligible under the program. All eligible products enter
the USA duty-free. Excluded by law from this list are most textiles, watches, footwear, handbags, luggage, flat
goods, work gloves, and other leather apparel.

The U.S. Generalized System of Preferences (GSP) Guidebook, published by the Office of the United States
Trade Representative (USTR) in February 2009, is available at www.ustr.gov. To determine if your Brazilian
grown, produced or manufactured product is eligible for duty-free benefits under this program, access the
Website of the United States International Trade Commission (USITC) at dataweb.usitc.gov.

Brazil’s status as a GSP beneficiary country cannot be taken for granted. In 2001, the International Intellectual
Property Alliance (IIPA) petitioned Brazil’s exclusion from the program for inadequate protection of intellectual
property rights. As concerns still exist, Brazil remains on the GSP IPR Watch List 2009. Through its National
Council for Combating Piracy and Intellectual Property Crimes (CNCP www.mj.gov.br), the Brazilian
government advances in its combat against piracy and counterfeiting.

Article published in the Brazil Explore Magazine, Los Angeles, California, USA, October 2009.
Reprinted with permission.
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