Spicy IP Tidbit: Cross Retaliation by Brazil succeeds

In what surely represents a big victory for Brazil, after its long standing dispute with USA over their illegal cotton subsidies, Brazil and US have reached a preliminary agreement just 1 day before Brazil was to start enforcing sanctions of $830 million against US. The sanctions were to include $591 million in the form of higher tariffs on a wide range of goods, as well as $239 million in the form of cross-retaliatory measures against American intellectual property. Brazil would’ve been the first country to have implemented these cross-retaliatory measures and it would’ve been interesting to see how exactly Brazil would’ve implemented these rights, since valuating such measures surely would’ve proved to be difficult.

However, this is important because it has proved the effectiveness of cross retaliation, and hopefully will give confidence to other countries considering taking similar measures when required. After 8 years of litigation and 4 years of non-compliance, it seems that it was the scare of sanctions, and with it, the pressure of the affected industries, finally seems to have worked. Brazil has therefore successfully induced compliance of a scofflaw state through effective implementation of this TRIPS flexibility in their domestic regime, even though they didn’t actually need to enforce it. It is hoped that India, as well as other developing countries too, bring in such a law in their domestic regime to allow for cross-retaliation if and when it is required to bring some balance to the negotiating tables.

For more details on the settlement, see the NYT’s article here.