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United States and Brazil reach tentative deal in trade dispute

by Joan Murphy | April 11, 2010
WASHINGTON - The United States and Brazil struck a tentative deal April 6 over a cotton dispute that threatened to result in millions of dollars of tariffs on U.S. goods, including fruits and nuts.

The long-running dispute over U.S. farm subsidies culminated in August when the World Trade Organization ruled that Brazil could impose $820 million in trade countermeasures against U.S. products for trade violations. On March 8, Brazil announced a list of products that would face higher tariffs, starting April 7. Automobiles, pharmaceuticals, medical equipment, electronics, textiles, wheat, and fruit and nuts, including hazelnuts, walnuts, pears, cherries and plums, were on the hit list and faced 30 percent retaliatory tariffs.

But the day before Brazil was expected to levy the new tariffs, U.S. officials announced that the Brazilian government had agreed upon "a path toward a negotiated settlement." Under the preliminary agreement, the U.S. government would set up a technical assistance fund for cotton farmers in Brazil, change meat export rules and follow up on several other concessions before the issue is resolved.

"As a result of our discussions with Brazil, we have avoided imposition of higher tariffs against hundreds of millions of dollars in U.S. goods exports that were scheduled to go into effect this week," U.S. Trade Representative Ron Kirk said in an April 6 press statement. "I am hopeful that this will enable us to build upon our strong relationship with Brazil, to the benefit of both of our economies."

"It's definitely good news," even though there's still a few hurdles before the deal is final, Jeff Correa, international marketing director for Pear Bureau Northwest, told The Produce News April 7, adding that he is optimistic the two countries will seal the deal since the cotton industry wants the issue resolved and Brazil does not appear to welcome a trade fight.

If the 30 percent tariff were allowed to go into effect on pears, "we'd be looking at retaliatory tariffs on two of our top three export markets," he said. The industry is already absorbing $20 million in lost sales and price reductions since last March when its top export market, Mexico, waged a trade dispute with Congress over a stalled trucking program.