Why We Should Retaliate Against the U.S.

Brazil could be the first country to strike back at the United States by breaking patents for medicines or other products in retaliation for continued illegal subsidies to American cotton producers and exporters. If the situation reaches that point, the government will act with the backing of the World Trade Organization. At the moment, Brazilian authorities have no choice. They have been forced to go ahead and apply the authorized sanctions (based on international principles) if they do not receive a serious and reasonable proposal for an agreement from Washington. Last week, Brasilia published a list of 102 American products to be subject to higher tariffs in retaliation. On Monday, it divulged a list of 21 intellectual property rights for possible suspension. So far, the list has been available for public consultation by the sectors concerned.

“We are disappointed that Brazil has taken these measures,” said Nefeterius Akeli McPherson, spokesperson for the Office of the U.S. Trade Representative. The use of the word, “disappointed,” is unjustified. In this case, the U.S. government is the one amiss. The authorities in Washington talk of negotiation, but until now there has been no serious attempt at conversation on the subject. Within one week, three high-ranking American officials were in Brasilia — Secretary of State Hillary Clinton, Commerce Secretary Gary Locke, and the White House’s Deputy National Security Adviser for International Economic Affairs, Michael Froman. When the latter two arrived in Brazil, the list of 201 products had already been published. Brazilian officials showed optimism about the start of negotiations. Nothing happened.

In the following days, no American authority did anything more than talk vaguely about the possibility of an agreement. But the Brazilian government couldn’t postpone its plans indefinitely in order to wait for a demonstration of good faith from Washington.

The next step, the start of consultations about possibly breaking of pharmaceutical patents and suspending other intellectual property rights, was merely the normal progression of this schedule. The American government has behaved as though the condemnation of its policy of subsidies by the WTO (after lengthy proceedings) was not important in the slightest. It refused to take any steps to suspend its subsidies, which are incompatible with international principles. With this attitude, the next stage was inevitable — Brazil’s request for permission to retaliate. The WTO authorized retaliatory measures worth $829 million annually as long as the illegal subsidies persisted. The Brazilian government decided to prepare a list of products worth $591 million and a set of intellectual property rights worth $238 million.

Upon announcing the publication of each list, the Ministry of External Relations underlined the fact that it would be in the Brazilian government’s interest for an alternative solution to be found. In fact, mere retaliation is much less in Brazil’s interests than an understanding that promotes the expansion of trade between our two countries. But it will be tough for the Brazilian authorities to stand down if the American government continues acting as though the U.S. were above all international standards.

President Barack Obama made his protectionist tendencies clear during his campaign for the presidency. He has honored the pledges he made to subsidized farmers and to the unions and industrial sector, which are more hostile to free trade. The consequences of his attitude extend far beyond the borders of his country. Neither does his disdain for international standards affect only Brazil. It violates the very idea of a world economic order governed on rules on which all participants agree. It takes the economic and political weight of each country — that is, its power — for the law of the land.

The result in the short term may well be less bloody than an invasion undertaken without the support of the Security Council of the United Nations. But at the end of the day, it threatens to be disastrous for the world’s system of trade.