Statement by Principal Deputy Press Secretary Speakes on Trade With the European Community and Brazil

December 30, 1986

The President today is taking trade policy actions on two cases involving the unfair practices of our trading partners. The first case involves agricultural trade with the European Community (EC). The President announced today that he is increasing import duties on U.S. imports of certain European agricultural products in direct response to the failure of the European Community to offer adequate compensation for lost U.S. feed grain exports to Spain. He has directed U.S. Trade Representative Clayton Yeutter to prepare a proclamation imposing 200 percent duties on some $400 million of EC exports by no later than January 30, 1987.

The President's action follows the expiration of an interim agreement concluded last July with the EC, intended to allow time until the end of 1986 to reach a permanent compensation arrangement for U.S. exports of feedgrains to Spain. However, the EC failed to offer acceptable compensation in the negotiations. The President expressed regret that the European negotiators had not shown sufficient flexibility to reach a satisfactory settlement, despite the additional 6 months the United States had allowed for the negotiations. He indicated that the time had come to respond in kind to the European measures, in accordance with U.S. rights under international rules of the General Agreement on Tariff and Trade (GATT). Therefore, U.S. duties on certain agricultural products will be set at 200 percent. The U.S. Trade Representative has been directed to monitor the effects of the U.S. action to ensure that they match the damage caused by the EC restrictions.

The President reaffirmed that the United States would prefer a negotiated solution rather than having to resort to trade restrictive actions to resolve disputes and hopes that a settlement can be reached prior to the imposition of duties. He further indicated that the United States is prepared to restore the preexisting tariff rates at any time that there is agreement with the European Community to provide adequate compensation for U.S. feed grain losses.

The second case involves the pending section 301 case against the Government of Brazil for acts, policies, and practices involving restrictions on informatics trade and investment and denial of adequate and effective intellectual property protection. Brazil has recently announced measures to improve the administration of its informatics law and narrow the scope of its market reserve. Specifically, Brazil has agreed to establish an ad hoc group to review specific U.S. company complaints, has promulgated some administrative reforms, and has liberalized the importation of some previously restricted informatics products, subject to periodic revision. As a result of these positive undertakings, the President has decided to suspend the procedural and administrative reforms parts of the section 301 case and to monitor Brazil's implementation of those reforms.

The President has also determined that while Brazil's investment environment is improved, it is not yet fully open to U.S. investment opportunities. In addition, the Government of Brazil has recently submitted legislation which provides some intellectual property protection for computer software, but the legislation has numerous features inconsistent with international standards. The President has, therefore, decided to delay further U.S. remedial action for 6 months to monitor Brazilian progress in making necessary improvements in the investment climate and to secure passage of intellectual property legislation consistent with international standards. Thus, action on both the investment and intellectual property portions of the section 301 case will be postponed until July 1, 1987.

In addition the President has instructed United States Trade Representative Clayton Yeutter to conduct a series of public hearings on Brazil's informatics policy and to solicit private sector recommendations as to what further action could or should be taken to foster the opening of the Brazilian informatics market. The scheduled dates of the hearings will be published in the Federal Register 30 days prior to event.

Note: Larry M. Speakes read the statement to reporters at 10:30 a.m. in the White House Press Filing Center at the Gene Autry Hotel in Palm Springs, CA, prior to a briefing by U.S. Trade Representative Clayton Yeutter.