The U.S. and Brazil are on "a path toward a negotiated settlement" of a cotton subsidies dispute, sparing personal-care firms with business in Brazil from a planned doubling of import tariffs.

In an April 6 release from the Office of the U.S. Trade Representative, Ambassador Ron Kirk says, "I am pleased that our teams have been able to make substantial progress toward the goal of a negotiated settlement which would avoid the imposition of countermeasures against U.S. trade."

"We now have a clear path forward, one that is in the best interest of both the United States and Brazil," Kirk asserts.

On March 8, Brazil published a list of U.S. goods that would be subject to elevated import duties - beginning April 7 - under countermeasures imposed in retaliation for "non-compliant" elements of the U.S. cotton program (¹ Also see "Brazil Plans To Double Tariffs On U.S. Personal Care Products" - Pink Sheet, 15 March, 2010.).

U.S. subsidies to cotton producers and exporters were foremost among claimed violations of "multilateral trade disciplines." Brazil received authorization from the World Trade Organization in November 2009 to implement countermeasures against the U.S. to the tune of $829 million in annual tariffs.

Personal care products were included among the targeted goods and were scheduled to incur a 36 percent import tax - twice the rate U.S. manufacturers currently pay.

Deal Includes Annual $147.3 Million Assistance

As part of the negotiated plan, the U.S. "agreed to work with Brazil to establish a fund of approximately $147.3 million per year on a pro rata basis to provide technical assistance and capacity building," USTR notes. The fund will remain in place until passage of the next U.S. farm program subsidy bill, or until a mutually beneficial solution to the cotton dispute is reached, the office says.

The U.S. also consented to "near-term modifications" to the operation of a WTO program that guarantees developing countries, including Brazil, access to U.S. goods on a credit basis.

Further, the U.S. by April 16 will publish a proposed rule recognizing the Brazilian state of Santa Catarina as free of foot-and-mouth disease, rinderpest, classical swine fever, African swine fever and swine vesicular disease, with respect to World Organization for Animal Health Guidelines.

It also pledged to complete a risk evaluation "and identify appropriate risk-mitigation measures to determine whether fresh beef can be imported from Brazil while preventing the introduction of foot-and-mouth disease in the [U.S.]."

U.S. Secretary of Agriculture Tom Vilsack says he is "pleased that our path forward respects the farm bill process and the role of Congress in shaping our commodity programs."

The Personal Care Products Council in March said tariff increases on U.S. goods imported by Brazil would "pose a lot of strain on the ability of our members to serve the Brazilian market."

Brazil is a priority region for many personal-care companies, growing at a rate - roughly 14 percent annually - expected from a developing market rather than the third-largest in the world.

- Ryan Nelson ( ² r.nelson@elsevier.com )

U.S., Brazil Near Deal To Cancel Import Tariff Hikes On Personal Care Products

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