June 6, 2014

Strange Bedfellows: Cotton and IP Tangled Up in Brazil Trade Dispute

© FernandoPodolski / iStock

By Kelly Anderson

Is there any better feeling than coming home after a long day and putting on your favorite soft cotton tee or snuggling up under your cotton covers? We here at IP Delivers certainly know and love many a cotton product both in our wardrobes and home decor. But what could those cotton sheets or your favorite pajamas possibly have to do with intellectual property?

Well, it turns out, quite a bit. If you’re familiar with IP Delivers, you know that the fitted bed sheet is likely patented and your favorite tee shirt trademarked. But you may not be aware that cotton producers in Brazil are involved in a decade-old dispute with the U.S. government over cotton subsidies for U.S. farmers, or that the innocent bystander in the dispute is the intellectual property of U.S. innovators.

In 2009, ruling on a complaint brought by Brazil, a World Trade Organization dispute settlement panel found that certain subsidies provided by the U.S. government to cotton farmers were inconsistent with U.S. commitments on market-distorting subsidies. The WTO panel authorized $820 million in sanctions by Brazil against the United States, including an unprecedented authorization to cross-retaliate against American intellectual property rights in Brazil.

After Brazil released a list of proposed retaliation targets in early 2010, the U.S. and Brazil entered into a temporary settlement agreement which suspended the sanctions. In exchange, the U.S. committed to make key changes to its cotton and other farm programs through the next Farm Bill and also agreed to compensate Brazilian cotton growers for their damages in the case through interim payments into a cotton fund for technical assistance and capacity building.

Two recent developments have thrown the debate back into high gear: First, last Fall, the U.S. prematurely halted payments to the Brazil cotton fund; second, the January 2014 Farm Bill addressed some, but not all, of Brazil’s demands under the WTO case. Consequently, cotton growers and IP rights holders alike now teeter between the potential for a final resolution of the dispute on the one hand and a move back to sanctions on the other. Government-to-government negotiations now underway will determine the outcome.

On June 23, the WTO Dispute Settlement Body meets in Geneva, bringing these conversations to a head. Meanwhile, U.S. officials head to Brazil for the kick-off of the World Cup, and high-level conversations with the Brazilian government. U.S. IP rights and a damaging precedent for global trade hang in the balance. The IP Delivers team and the Global Intellectual Property Center, in partnership with the Brazil-U.S. Business Council, are pushing hard for a final resolution that avoids sanctions. Look for more on the cotton situation in our future newsletters!


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