Carter administration officials yesterday hailed the decision of the government of Brazil to phase out its export subsidies on all products over the next four years.
Officials here termed it a first and major step toward a new and open trading stance by an important developing nation that had relied heavily on export subsidies and import restraints to protect its own economy.
The step by Brazil -- the world's 10th largest economy, and in some ways the major "advanced developing country" -- is considered an important forward step in U.S.-Brazilian relationships.
By abandoning export subsidies, Brazil will be able to benefit from new rules on subsidies and countervailing duties in a code now being negotiated by 98 nations in the multilateral trade talks in Geneva.
Under the new code, Brazil can drop the export subsidies, which had fueled its export drive, and won't face countervailing duties despite the domestic subsidies it pays, unless they can be shown to cause injury to U.S. industry.
Presently, the existence of export subsidies calls automatically for a countervailing duty regardless of injury, because the U.S. has no injury test.
There have been long negotiations leading to the Brazilian decision, which may pave the way for other, less developed countries to follow suit. The projected code will have a flat ban on primary product subsidies, a practice now almost restricted to developing countries. But the Brazilian announcement, as understood here, goes beyond that to cover all products from shoes and textiles to aricraft.
Brazil has been running a trade surplus of about $1 billion with the United States, and its export subsidies had caused concern in U.S. industrial circles. Officials said yesterday that the example set by Brazil, in large part to get the benefit of the MTN, may encourage Mexico, India, Singapore, and other countries in the "international middle class" to reduce or drop subsidies.
In a speech last month in Sao Paulo, Assistant Secretary of Treasury C. Fred Bergsten suggested suggested that Brazil might "get a better deal for its exports" by offering concessions of its own in the NTN. This appears to be the course Brazil has chosen.