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Executive Summary

BRAZILIAN IMPORT SANCTIONS TOTALING $ 100-$ 150 MIL. URGED by PMA Executive VP Robert Allnutt at a Sept. 8 hearing before the U.S. Trade Representative's Trade Policy Staff Committee. "Sanctions should equal the $ 100-$ 150 mil. in economic losses that PMA has determined, based on actual product studies, its members have been suffering annually due to Brazil's refusal to protect adequately their intellectual property rights," Allnutt asserted. The hearing addressed what U.S. retaliatory actions should be taken in response to Brazil's denial of adequate patient protection for pharmaceuticals and fine chemicals ("The Pink Sheet" July 25, T&G-2). The White House's determination that such actions were justified proceeded from a PMA petition for a section 301 trade investigation against Brazil. Reaffirming the association's position that sanctions should be imposed, PMA's Allnutt pointed out that "if the imposition of trade sanctions is to influence the behavior of the government of Brazil, the choice of products and their import value must be of sufficient magnitude to have a direct and dramatic impact on the Brazilian economy." The USTR has published a broad-ranging list of products imported from Brazil against which sanctions might be imposed, but has not issued a definitive list. According to a July 26 Federal Register notice, products being considered for sanctions include unspecified drugs and fine chemicals, wood and paper items, pesticides, machine tools and household appliances. In a statement on the planned U.S. sanctions, Brazil President Jose Sarney said that "the economic threat now being imposed on us entails a huge economic price for Brazil . . . This is already hurting Brazilian exports to the U.S. in an amount many times over the . . . arbitrary amount announced by the U.S. government." The USTR assigned a value of approximately $ 200 mil. to the Brazilian imports from which it would choose products to sanction. The Brazilian statement maintains that the U.S. action would represent "a violation of the most elementary principles of international law" and of the General Agreement on Tariffs and Trade (GATT). Brazil says it "reserves the right to resort to the GATT's mechanisms to achieve the just compensation for the damages it may incur." Three U.S. companies with drug businesses also appeared individually at the hearing, although the firms discussed non-pharmaceutical issues. For example, American Cyanamid testified in support of trade sanctions, but requested an exemption for certain herbicides and pesticides exported to the U.S. by its subsidiary in Brazil. Dow Chemical and Rohm and Haas also testified. One Brazilian drug company appeared at the hearing to dispute the trade action. Companhia Brasileira de Antibioticos (CIBRAN) maintained that the sanctions were unfair since U.S. multinationals already dominate the pharmaceutical market in Brazil. The company estimated that U.S. companies supply 35.5% of Brazil's $ 2 bil.-plus pharmaceutical market, while Brazilian companies control only 15%. The only drug that CIBRAN exports to the U.S. is erythromycin. The firm estimated the value of the drug exported to the U.S. at approximately $ 2 mil. per year. Abbott Labs is a shareholder of CIBRAN.

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