By Mario Osava
RIO DE JANEIRO, Feb 15 2000 (IPS)

Barriers imposed by the United States on imports of steel made protectionism the key focus of US Secretary of Commerce William Daley’s visit to Brazil.

The barriers, also slapped by Washington on imports from South Korea, Japan and the European Union, involve special 10 to 19 percent duties on steel bars, pipes and other products from Brazil.

The latest measures announced last Friday came just 10 days after a US court found that the Brazilian government did not subsidise the local steel industry, said Brazilian Minister of Development, Industry and Commerce Alcides Tapias.

Daley unexpectedly returned home early from his tour of the Southern Cone of the Americas. He flew back Monday from Brasilia, called by President Bill Clinton to attend an emergency conference on how to defend the Internet against hackers, after last week’s incidents which targeted Yahoo and CNN.

The rest of his company, including executives of 19 major US firms, completed the schedule of meetings Tuesday in Sao Paulo.

The visit by Daley, who was in Uruguay over the weekend and planned to continue on to Argentina and Chile after two days of meetings in Brazil, was focused on boosting trade, including e- commerce over the Internet, and on discussions of the creation of a Free Trade Area of the Americas (FTAA) by 2005.

But tension over steel has strained relations between the United States and Brazil, especially since the January 1999 devaluation of Brazil’s local currency, the real, which slashed the cost of exports.

Of 72 US inquiries into supposed cases of dumping – the export of products at prices deemed artificially low – by Brazil from 1996 to 1998, 54 percent have involved steel products.

Other Brazilian products facing stiff barriers in the US market are orange juice, sugar, coffee and tobacco.

With respect to laminated-steel, charged duties of up to 77 percent since 1998, Brazilian companies agreed to limit exports to quotas based on minimum prices as of October 1999. But the agreement has not yet fully gone into effect.

Tapias pointed out that Brazil accounted for a mere 0.5 percent of US imports of steel, which meant it was not likely to inflict severe damage on the US steel industry.

Moreover, the subsidies on which US complaints and investigations were based date back to nearly six years ago, before Brazil’s steel companies were privatised, Brazilian trade negotiators stressed.

Daley promised to study Brazil’s demands for a review of the US barriers, said Tapias, who met with the US official in Brasilia Monday.

The Brazilian government of President Fernando Henrique Cardoso also asked the United States to reduce barriers against farm imports, and to remove subsidies to US farmers, which would allow Brazil to boost its agricultural exports to that market.

Privatisation and intellectual property rights were other issues Daley planned to discuss with Brazilian officials.

But his meetings with local authorities were overshadowed by the latest measures against steel, adopted last Friday, as well as by indignation over his criticism of Brazil’s aim to privatise its power companies by selling shares to the public.

Energy Minister Rodolfo Tourinho complained that Daley’s remarks constituted “meddling” in internal affairs.

The US official also brought up concerns regarding Brazil’s laws on patents, which permit the government to force the pharmaceutical industry to yield ground on patents in case of “national emergency or public interest.”

US firms fear that the clause could be used by the Health Ministry to impose conditions on prices, for example.

The president of the National Confederation of Brazilian Industry, Carlos Moreira Ferreira, at a business meeting with Daley and his committee, lashed out against Washington’s restrictions on Brazilian imports, pointing to the surplus that the United States enjoys in trade with Brazil.

In the past five years, Brazil has accumulated a 13.72 billion dollar trade deficit, according to official statistics. Although trade with the United States grew 51 percent in that period, Brazilian exports increased just 11.9 percent, compared to a 103 percent rise in US exports.

Excerpt: