(Readers may remember posts by Shamnad and Prashant earlier on Brazil seeking WTO authorization to cross-retaliate against US due to their long standing dispute regarding cotton subsidies by the US which violated WTO obligations. Also see Shamnad’s paper available on SSRN: Turning TRIPS on It’s Head: An IP ‘Cross Retaliation’ Model For Developing Countries)
They certainly seem to mean business by the looks of the list, which includes patents in the areas of pharmaceuticals, chemicals and biotechnology. Movies and music too are covered under the copyright section of the list. They expect to impose these measures up to the extent of $239 million this year. Earlier in the week, Brazil also revealed a list of 102 U.S. goods which would be subject to import tariffs as well via means of traditional retaliation. In total, the expected retaliation would be around $830 million.
With regards to the patents, the new measures would allow the Brazilian government to anticipate their expiration, allowing for instance in pharmaceuticals, the introduction of generic drugs earlier than expected. “They would also allow Brazil to issue compulsory licenses without compensation in the drugs, chemical, music and audiovisual industries. The measures listed in an official publication would also allow the government to increase fees and tighten regulations on the registration of intellectual property rights.” [as per TD Waterhouse here]
The move to cross-retaliate reflects the seriousness of the issue to Brazil. After 8 years of litigation and 4 years of non-compliance by the US with the Dispute Settlement Body of the WTO, this seems to be one of the few, if any, effective courses of actions left that Brazil can take.
As stated by the Camex (Brazilian’s Chamber of Commerce),
“The Brazilian Government regrets having to take these measures, since it believes that trade retaliation does not constitute the most appropriate means to attain international trade on a fairer basis. However, after almost 8 years of litigation and over 4 years of continuing non-compliance with the rulings of the Dispute Settlement Body on the part of the United States, and in the absence of the offering of concrete and realistic options that could allow for the negotiation of a satisfactory solution to the dispute, it remains for Brazil to exercise its right, as authorized by the WTO. Brazil thus seeks to safeguard the credibility and the legitimacy of the multilaterally agreed dispute settlement system.
Brazil remains open to a dialogue with the United States that may facilitate the achievement of a mutually satisfactory solution to this dispute“
I find it very encouraging that a developing country is taking this strong stance against the usual strong arm tactics of the more developed nations, departing from the usual meek approach.
This cross-retaliation is no doubt a messy last ditch effort, but not one that can be as easily brushed off. Indeed, Brazil too has reason to worry about loss of investment due to the threats of cross-retaliation, but against this, it has to balance out the interests of their own people, (considered in the backdrop of US’s cotton subsidies) as well as its position on the international stage. This kind of heavy pressure is a definite way of balancing out the inequity in bargaining power between states, such as can be evidenced by the long time ignorance by US of the issue, despite its international obligations. As per Reuters, U.S. Trade Representative Ron Kirk said last week the United States still hoped to strike a deal with Brazil to avoid the sanctions. If it cannot, it will have to try to persuade Congress to change the U.S. cotton program to satisfy Brazil’s concerns.
A minister has also clarified that these measures do not indicate that a change in approach by Brazil towards Intellectual Property, but rather should be viewed as what they are – temporary measures meant to put pressure on the US. It is likely that this is sufficient to cause a big enough stir amongst industries within the US for their infamous lobbyists to get into action, however we will have to wait and see how this plays out.
In the mean time however, this step in itself, is one which other developing countries like India, could learn from.
(I would like to thank Ms. Manuela Correia for pointing me towards this development)
