Trade tensions increased between Brazil and the United States on Monday when the Brazilian government unveiled plans to retaliate against U.S. cotton subsidies by increasing tariffs on select U.S. imports, including dairy. The plan, which will likely take effect within a month unless the governments reach an agreement, strategically targets more than 50 U.S. products, including milk powder with less than 1.5 percent fat, whey powder and protein concentrates.
Without a compromise, tariffs for milk and whey powder would raise to 48 percent, a 45-percent increase over current levels. Tariffs for protein concentrates would increase to 34 percent, marking a 41-percent increase.
IDFA and other industry groups have formed the Brazil Trade Action Coalition in an effort to encourage U.S. officials to solve the dispute without harming third-party industries. The coalition has sent letters to Congressional leadership asking for a swift compromise.
The dispute began in 2002, when Brazil initiated a World Trade Organization case against provisions in the U.S. cotton program. The United States made changes to comply with the WTO findings, but Brazil continued to challenge U.S. actions. Last August, the WTO authorized Brazil to suspend trade concessions for the United States or impose trade sanctions equivalent to the damage caused by cotton subsidies. Brazil threatened in November to retaliate with excessive tariffs, but waited until this week to set an implementation deadline.
Dairy exports to Brazil have grown exponentially since 2004, reaching more than $24 million in 2008. The proposed retaliatory tariffs would affect more than $5 million worth of U.S. milk proteins exported to Brazil, according to U.S. Department of Agriculture figures for 2009.
For more information, contact Katie Sparrow, IDFA manager of international affairs, at email@example.com or (202) 220-3507.