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Brazil's President Luiz Inacio Lula da Silva - Source: Reuters -
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Brazil detailed its planned retaliation against the United States over US cotton subsidies but said Washington still had a chance to settle the trade dispute through negotiations.
The Brazilian government published on Monday a list of US goods subject to import tariffs that will go into effect in 30 days, unless the governments can reach a last-minute accord.
The World Trade Organization gave Brazil the formal go-ahead last year to impose sanctions on US imports after the body ruled the US government spent too much subsidizing cotton farmers and on an export credit guarantee program.
The United States said it was disappointed by the move.
A spokeswoman for the Office of the US Trade Representative (USTR) said: "USTR has worked to reach a solution to the issues in this dispute without Brazil resorting to countermeasures and we continue to prefer a negotiated solution."
US Commerce Secretary Gary Locke may try to resolve the matter when he visits Brazil on Tuesday.
Bilateral trade between the two countries fell to $36 billion in 2009 from $53 billion in 2008.
The trade dispute began in 2002 and is one of the few in which the WTO allowed cross-retaliation - that clears the way for the wronged party to retaliate against a sector not involved in the case.
"Retaliation is not the best way to reach fair international trade but after nearly eight years and no concrete proposals to help solve this dispute, Brazil must insist on its rights," Lytha Spindola, executive secretary of the Brazilian government's Foreign Trade Chamber, told a news conference.
The list of around 100 items includes a tariff increase on cars to 50% from 35%, a rise on wheat tariffs to 30% from 10%, and a 48% levy on milk powder, up from 28%. Cotton and cotton products would be charged a 100% import tariff, the highest on the list.
The estimated annual impact of the retaliation is $591 million, the foreign ministry said in a statement.
Brazil is expected to publish by March 23 a separate list worth an additional $238 million in annual cross-retaliation penalties.
That list would be subject to public hearings for 20 days and focus on intellectual property right and services, ministry officials said. It could break patents and copyright in the pharmaceutical or music industries, analysts said, potentially making US industries more susceptible to farm disputes.
Brazil had intentionally chosen a wide range of products with relatively small tariff increases in order to impact a broad range of producers in the United States.
"The idea was to distribute the retaliation broadly in order to maximize pressure. US farm subsidies are condemned world-wide ... this archaic practice must stop," Carlos Marcio Cozendey, head of economic affairs at Brazil's foreign ministry, told the news conference.
Washington could enact partial changes, but a major overhaul to both programs would require the approval of the US Congress.
The WTO has previously granted two other countries the right to cross-retaliate in trade disputes, but Brazil would be the first nation ever to apply it.
Brazil could accept a US proposal with a pledge to send a reform bill to Congress if it were compensated for damages until its approval. Some Brazilian business leaders have proposed compensation through US investments into cotton research, as well as more U.S. imports of Brazilian beef, orange juice and ethanol.
As one of the world's agriculture powers, Brazil is the leading exporter of beef, orange juice, and coffee.
