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U.S. TRADE SANCTIONS AGAINST BRAZILIAN FINE CHEMICALS AND DRUGS

Executive Summary

U.S. TRADE SANCTIONS AGAINST BRAZILIAN FINE CHEMICALS AND DRUGS imported by the U.S. will be imposed, according to a July 22 announcement by the White House. A list of "potential items" -- with an import value of "at least $ 200 mil." -- which will be subject to sanctions will be published in the Federal Register shortly. The administration action comes in response to a PMA petition seeking 301 trade action against Brazil. "President Reagan has found Brazil's refusal to provide adequate protection for U.S. pharmaceuticals and fine chemicals to be unfair under section 301 of the Trade Act of 1974," the announcement states. The U.S. drug industry and the U.S. government "have attempted for several years to persuade Brazil to enact adequate patent protection," the White House statement notes. "Despite these efforts on the part of the U.S., Brazil has yet to provide adequate intellectual property protection for pharmaceutical products." PMA filed a petition in June 1987 under section 301 of the Trade Act for an investigation of Brazil's lack of patent protection for pharmaceuticals. Brazil eliminated product patent protection for pharmaceuticals in 1945, and process patent protection in 1969. In a July 22 release applauding the White House decision, PMA estimates that U.S. company revenue losses have ranged between $ 100-$ 150 mil. a year since 1969. The PMA estimate is based on the International Trade Commission's 1988 Report to the U.S. Trade Representative which calculates that the pharmaceutical industry had suffered worldwide losses amounting to $ 1.9 bil. in 1986. Commenting on the sanctions, PMA President Gerald Mossinghoff stated: "Brazil is the global leader of the anti-patent countries. Only the impositions of meaningful penalty will impress upon Brazil the seriousness with which the United States views the unauthorized appropriation of its citizens' intellectual property." PMA also believes, Mossinghoff continued, that the action will "reinforce the usefulness of the 301 process and the progress made by the Administration in improving intellectual property protection in Asia and Latin America, as well as its efforts to add intellectual property protection in the General Agreement on Trade and Taxes (GATT)." Brazil ranks among the top 10 pharmaceutical market in the world, with the $ 2 bil. in sales in 1985, according to the White House statement. PMA member companies have direct investments of $ 700 mil. in Brazil, according to PMA. U.S. affiliates employ 18,000 Brazilians, and their sales represent about 36% of Brazil's total pharmaceutical market, PMA has said. The association's petition was filed on half of 18 member companies.

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