1st March 2010

Today (March 1st) Brazil’s Trade Ministry is expected to publish a targeted list of retaliatory tariffs against US goods after it has so far proved to be unwilling to drop its subsidies on American cotton.

More than five years ago, the World Trade Organisation (WTO) said America's subsidies to domestic cotton producers flew in the face of multilateral trade rules and allowed Brazil to retaliate against the US.

Brazil took a more lenient stance, giving Uncle Sam time to reform his cotton program in line with international trade rules. However, the US has refused to budge and the Brazilians have finally run out of patience.

Last year, the WTO said Brazil could impose around $300 million in trade sanctions against US goods and services - and these look set to be applied over the next few weeks. Crucially they could include breaking pharmaceutical patents, as the WTO has cleared the path for levies on intellectual property rights of US businesses.

As a champion of free trade, the US is not doing itself any favours with its cotton program, while relations with South America are strained as it is. A lot is riding on US Secretary of State Hillary Clinton’s upcoming damage-limitation tour of Brazil and its Latin American relations, which starts on March 3rd. Watch this space.