November 13, 1987

I am today announcing my intention to raise tariffs on Brazilian exports to the United States and to prohibit imports from Brazil of certain computer products in response to the maintenance by Brazil of unfair trade practices in the area of computer products.

Brazil's national informatics policies, in place since the 1970's, severely restrict foreign participation in Brazil's computer and computer-related market. The United States has unsuccessfully raised its concerns with Brazil in bilateral and multilateral consultations since 1983. In September 1985 I initiated an investigation of these practices under section 301 of the Trade Act of 1974 and in October 1986 determined that Brazil's informatics policies were unreasonable and a burden and restriction on U.S. commerce. I suspended parts of this investigation after Brazil made commitments to implement its informatics law in a more flexible, reasonable, and just manner.

Recent developments in Brazil make it clear that these commitments are not being kept. In particular, the Brazilian Government has rejected efforts by an American software company to license its product in Brazil, asserting that a domestic company makes a product that is functionally equivalent. This decision establishes a precedent which effectively bans U.S. companies from the Brazilian software market. It is also likely to increase piracy of foreign software, since demand for the prohibited product will continue.

In response to these developments, I intend to raise tariffs to offset the lost sales opportunities for U.S. companies, estimated at $105 million, and to prohibit imports of Brazilian informatics products covered under Brazil's market reserve policy. Should Brazil reverse its action and live up to its commitments to the United States, I will be prepared to lift these sanctions.

Brazil is a good friend of the United States, and we support the steps it is taking to restore its democratic institutions. But Brazil is also a major beneficiary of the global trading system, the openness of which cannot be maintained if markets are deliberately closed and policies incompatible with a more free and open trading system are established.