Reagan Orders Trade Sanctions on Brazil for Violating Patents

President Reagan, decrying “the piracy of our intellectual property,” imposed trade sanctions today on Brazil in retaliation for a lack of patent protection for American pharmaceuticals.

Acting on a complaint lodged in June, 1987, by the American pharmaceutical industry, Reagan set into motion a process that will result in higher tariffs and other import curbs on an unspecified amount of Brazilian imports.

The decision, announced as Reagan vacationed at his mountaintop ranch, came at a time of intense debate between the Administration and Congress over the adequacy of existing trade laws.

‘Discourages Investment’

“Adequate patent protection is a cornerstone of a healthly pharmaceutical industry,” White House spokesman Marlin Fitzwater said in announcing the action. “By denying this basic commercial right, Brazil permits unauthorized copying of pharmaceutical products that were invented by U.S. firms. This not only deprives American companies of sales, t discourages investment in research and development of new drugs.”

Under the process set into motion by Reagan, hearings will be held to determine which Brazilian products will be subjected to sanctions and which will remain in effect in the absence of corrective action by Brazil. His directive said only that the amount of imports to be affected will be drawn from a list bearing a total value of “at least $200 million.”

“We regret that it is necessary to impose trade sanctions in this matter,” Fitzwater said, “but the United States cannot tolerate the piracy of its intellectual property.”

In its original petition, the Pharmaceutical Manufacturers Assn. estimated that its members had lost $160 million between 1979 and 1986 as a result of a lack of patent and process protection. The association later increased the estimate of damages to $100 million to $150 million a year.

Administration’s Estimate

The Administration has estimated that the actual losses may be as low as $36 million annually. The U.S. sanctions most likely will be in the neighborhood of that estimated loss to U.S. firms.

The action by Reagan was taken under Section 301 of the Trade Act of 1974, which the Administration has used with success to force other countries to lower their trade barriers.

It marked the latest in a series of trade disputes with Brazil over trade in goods and services. The Administration backed off a more serious threat of sanctions some time ago after Brazil enacted legislation to ease tensions over efforts by U.S. firms to gain greater access to its multibillion-dollar market for information technology.