Statement by Assistant to the President for Press Relations Fitzwater on United States Trade Sanctions Against Brazil

July 22, 1988

President Reagan has found Brazil's refusal to provide adequate patent protection for U.S. pharmaceuticals and fine chemicals to be unfair under section 301 of the Trade Act of 1974. In response, the President has decided to impose sanctions on certain Brazilian imports. The products upon which sanctions are to be imposed will be drawn from a list of potential items that will soon be published in the Federal Register. The import value of the list will be at least $200 million.

With $2 billion in sales in 1985, Brazil ranks among the top 10 pharmaceutical markets in the world. It eliminated product patent protection for pharmaceuticals in 1945 and process patent protection in 1969. After several years of unsuccessful consultations, the Pharmaceutical Manufacturers Association (PMA) filed a petition in June 1987 under section 301 of the Trade Act of 1974 for an investigation of Brazil's lack of process and product patent protection. The PMA alleged that Brazil's failure to protect intellectual property rights constitutes an unreasonable trade practice that burdens or restricts U.S. commerce. The Office of the United States Trade Representative accepted that petition on July 23, 1987.

Adequate patent protection is the cornerstone of a healthy pharmaceutical industry. By denying this basic commercial right, Brazil permits unauthorized copying of pharmaceutical products and processes that were invented by U.S. firms. This not only deprives American companies of sales, it discourages investment in the research and development of new drugs.

The U.S. pharmaceutical industry and the U.S. Government have attempted for several years to persuade Brazil to enact adequate patent protection. Despite these efforts on the part of the United States, Brazil has yet to provide adequate intellectual property protection for pharmaceutical products. We regret that it is necessary to impose trade sanctions in this matter, but the United States cannot tolerate the piracy of its intellectual property. Over the past 3 years, we have challenged the infringement of U.S. intellectual property rights and denial of rights throughout the world.

This policy has resulted in strengthened patent laws in many foreign countries and a multilateral commitment to address intellectual property issues at the Uruguay round of trade talks. This progress stands in stark contrast to Brazil's lack of action in this area. The President calls upon the Government of Brazil to join the United States and other nations in establishing comprehensive intellectual property protection for pharmaceuticals and other products.