Protectionism as a means to Free Trade?


altFollowing a WTO ruling in their favour, Brazil proposed tariffs on US goods if American cotton subsidies weren’t repealed. With the proposal provoking little response, Brazil has recently threatened to disregard American intellectual property rights on top of the tariffs. This would include pharmaceutical drugs, movies, food, and much else. American lawmakers aren’t budging on the cotton subsidies.

So the die is cast and a serious trade war looms. I can’t get upset at Brazil for this. The country is trying to trade freely; it has filed suits against America through the WTO and the provisional tariffs do not extend to other countries. Indeed, the very fact that the Brazilian government is able to propose tariffs without implementing them shows both admirable restraint and a degree of autonomy that American leadership seems to lack. Entrenched agricultural interests in the US have the votes to block any legislation repealing the abusive subsidies, and even without their influence, there are always plenty of legislators eager to appropriate money from whomever they can.

Brazil has taken the unusual step of threatening intellectual property rights because they want these sanctions to have real bite. Mere tariffs will hurt Brazilian consumers as much as American exporters, and thus this kind of retaliatory action is self-defeating. However, with the suspension of American intellectual property rights, Brazilian consumers will be gaining something beneficial (albeit at the expense of overseas intellectual property markets). It is a gift of generic medications, of counterfeit DVDs, and of imitated clothing. American copyright holders should be worried, and they should put their energies toward lobbying for the end of American cotton subsidies – and other agricultural subsidies while they’re at it.

The Brazilian government is making these threats on behalf of the private sector. It is trying to tear down, rather than erect, trade barriers. This dispute is a tale of legitimate Brazilian business interests standing up to DC beltway graft. alt