Trade gap

9 March 2010 By James Pethokoukis

Brazil s threat of tariff retaliation over American cotton subsidies is only the latest eruption of protectionism acts around the world. President Obama isn t doing much to quell such sentiment in the United States either. The omission could prove costly.

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Brazil has detailed its planned retaliation against the United States over cotton subsidies but said Washington still had a chance to settle the trade dispute through negotiations. The Brazilian government published a list of U.S. goods subject to import tariffs that will go into effect in 30 days, unless the governments can reach a lastminute accord.

The World Trade Organization gave Brazil the formal goahead last year to impose sanctions on U.S. imports after ruling the U.S. government spent too much subsidizing cotton farmers and on an export credit guarantee program.

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 has allowed the wronged party to retaliate against a sector not involved in the case. The list of around 100 items includes a tariff increase on cars from 35 percent to 50 percent, on nonhard wheat tariffs from 10 percent to 30 percent on milk powder from 28 percent to 48 percent.

Separately, the European Union signaled concerns about U.S. protectionism over a U.S. Air Force contract, following a bid withdrawal by a group led by EADS.

The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract, the commission said in a statement.

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Separately, the European Union signaled concerns about U.S. protectionism over a U.S. Air Force contract, following a bid withdrawal by a group led by EADS.

The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract, the commission said in a statement.

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