Computing the Damage

President Reagan has imposed some bitter medicine on Brazil, a dose of more than $100 million in tariffs against major exports to the United States. It is not the best way to handle trade disputes. It will complicate Brazil’s efforts to settle its $110-billion foreign debt. But the White House was left with no realistic alternative.

The United States has been tolerant and reasonably understanding of some of the protectionism invoked by Brazil to guard its fledgling computer industry. Most, if not all, of the great industrial powers of the world invoked protectionist measures when they were beginning the process of industrialization. Brazil has long since passed the phase when those broad barriers are defensible, however.

Last year Brazil recognized its new responsibility to compete more fairly in world markets with an agreement for “flexible, reasonable and just” responses to issues of trade with the United States, particularly the challenge in computers and computer software. Nevertheless, the Brazilian government this year vetoed a request of six computer manufacturers to be licensed by Microsoft in Seattle to use its popular MS-DOS software.

“Recent developments in Brazil make it clear that these commitments are not being kept,” the United States responded, ordering tariffs in an amount equal to the estimated loss to U.S. manufacturers.

Brazil’s exports to the United States this year are about $6 billion compared with U.S. exports to Brazil of $2.9 billion. Brazil had substantial total trade surpluses ranging from $8.3 billion to $11.5 billion in the two preceding years while the United States has had monumental trade deficits.

President Reagan cannot be blamed for exasperation. Furthermore, his action will help cool those congressional zealots who hope to convert the omnibus trade bill into an instrument of American protectionism, using as an excuse the unfair trading practices of nations like Brazil.