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US sanctions over drug patents bring sharp words from Brazil

By Julia MichaelsSpecial to The Christian Science Monitor / October 25, 1988

Sao Paulo, Brazil

``The empire strikes back.'' This is how Veja, the local news weekly, saw Washington's Oct. 20 decision to impose trade sanctions on $38 million of Brazilian exports to the United States. The sanctions, the result of a complaint by the US Pharmaceuticals Manufacturers' Association, are meant to pressure Brazil to respect foreign pharmaceutical patents. Brazil hasn't done this since 1969.

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The ``empire'' is Brazil's biggest trading partner, buying close to one-third of the country's projected $30 billion in exports this year. But Brazilian officials say they plan to hold their ground.

``We'll defend our interests at GATT,'' President Jos'e Sarney told reporters during a trip to the Soviet Union last week, referring to the Geneva-based General Accord on Tariffs and Trade. Also, Foreign Ministry Secretary-General Paulo Tarso Flecha de Lima is discussing the matter with US officials during a previously scheduled visit to Washington this week.

The sanctions, in the form of tariffs on Brazilian pharmaceuticals, paper, and electronic goods, are to go into effect 10 days after publication in the US Federal Register. Washington said it would be ready to suspend the sanctions as soon as Brazil took action to protect foreign pharmaceutical patents.

This is the first time the US has actually imposed sanctions on Brazil. President Reagan threatened tariffs on Brazilian products last year during a disagreement over Brazilian restrictions on software imports, but dropped the threat when Brazil softened those restrictions.

The fact that President Sarney was on an official visit to the Soviet Union when the announcement came last week did bring big-power rivalry to mind. But Brazilian officials were quick to deny that the sanctions have anything to do with Brazil's growing friendship with the Soviet Union.

Instead, they link the US action to Brazil's larger presence in the world economy. ``Our expansion pushes out other countries, and against this there's no such thing as a delicate reaction,'' Mr. Flecha de Lima told O Estado De Sao Paulo, a Sao Paulo daily. His comment referred to the timing of the US decision, which also comes in the middle of the Sarney government's worst political and economic crisis since taking office in 1985.

The sanctions won't put a dent in Brazil's projected $18 billion 1988 trade surplus. But this isn't the point. ``The most important question is political,'' said Lia Vals Pereira, a researcher at the Foundation Center for Foreign Trade Studies, a semiofficial think tank.

Ms. Pereira says the US and other developed countries want a strong international consensus protecting intellectual properties. But developing countries such as Brazil have not wanted to join in. Brazilian manufacturers claim that they produce only ``similar'' pharmaceuticals, and that most of the market (over 35 percent) belongs to the subsidiaries of foreign companies anyway.

Many Brazilians lament the US action and expect more conflicts in the future. For example, they say, some electronic products were included on the list of Brazilian goods to be taxed. Brazil does not now export electronic goods to the US, but at least two companies had plans to enter the US market with products such as record players, microwave ovens, and videocassette recorders.

These companies, feeling the pinch, are likely to put pressure on the Brazilian government to change its policy on pharmaceuticals patents.