FACTBOX-Doha, ethanol top US-Brazil trade issues

President Barack Obama will visit Brazil this weekend to strengthen ties with Latin America's economic powerhouse, where the United States has been displaced by China as number one trading partner.

Washington and Brasilia have sparred frequently on trade issues over the past decade, most notably in the Doha round of world trade talks and the failed effort to forge a Western Hemisphere trade pact.

The major U.S. exports to Brazil include coal, kerosene, aircraft parts, diesel and chemicals. Major U.S. imports from Brazil include oil, steel, coffee, pulp, aircraft and tires.

Here are some current U.S.-Brazil trade issues.

DOHA ROUND - As the 153 members of the World Trade Organization make a renewed push to finish the nine-year-old trade talks this year, the United States and Brazil remain at loggerheads.

Brazil, which has pressed in the talks for deep cuts in rich country farm subsidies and tariffs, is resisting U.S. pressure on big developing countries go beyond a preliminary July 2008 deal by doing more to open its manufacturing and services markets to foreign competition.

Last week, U.S. Trade Representative Ron Kirk highlighted U.S. desire to see Brazil join the WTO's 1996 Information Technology Agreement, which has eliminated tariffs among 73 countries that comprise over 97 percent of world trade in information technology products.

Brazil objects to U.S. insistence that major emerging economies such as itself, China and India participate in various industrial "sectoral" agreements as part of a final Doha pact. It says such decisions should be voluntary.

ETHANOL - Brazil, the world's second largest producer of ethanol behind the United States, remains frustrated by high tariffs that block access to the U.S. ethanol market.

The United States allows duty-free access for sugar-based ethanol from many countries in Latin America and the Caribbean under various trade preference programs. But ethanol from Brazil is currently subject to a 54-cent-per-gallon tax, plus a 2.5 percent tariff.

High sugar prices have recently made it more profitable for Brazilian growers to make sugar, rather than ethanol, from their sugarcane, reducing some tension on that front.

The United States and Brazil also worked together over the past several years to promote development of biofuels.

COTTON - Brazil won a landmark case in the World Trade Organization against U.S. cotton subsidies and as part of a temporary settlement the United States agreed last year to pay Brazil $147 million annually to assist Brazilian cotton farmers with technical assistance, marketing and market research. In exchange, Brazil suspended $829 million in WTO-sanctioned retaliation with the intention of reaching a permanent solution after the U.S. Congress revisits the cotton program in 2012.

INTELLECTUAL PROPERTY RIGHTS - Brazil's willingness to suspend patent rights to ensure its population has access to lifesaving drugs developed by U.S. drug companies has caused strains over the years. Brazil's Ministry of Health has estimated tough negotiations with pharmaceutical companies have saved the country $1.1 billion. U.S. trade officials also complain the triborder region of Paraguay, Argentina and Brazil is a "hotbed of piracy and counterfeiting."

CURRENCY - Brazilian Finance Minister Guido Mantega late last year raised alarm about a "currency war" as countries try to keep their currencies artificially weak to export their way out of the global crisis.

Some of that ire was directed at the United States, which has set a goal to double exports by 2014 and has pursued an expansionary monetary policy that has led to a weaker dollar.

U.S. officials have tried to find common cause with Brazil against China's exchange rate policies, which they say hurts both countries by keeping the yuan artificially undervalued.

With a strong currency that has narrowed its trade surplus and hurt some manufacturers, Brazil has pledged to step up anti-dumping efforts and warned it could apply non-tariff barriers on select goods.

Last year, when two-way trade totaled close to $60 billion, Brazil ran a trade deficit of $11.4 billion with the United States. That was a sharp reversal from 2005 when it had a $9.4 billion trade surplus with the world's largest economy.

source: reuters