An excerpt from The International Trade Law Review, 8th Edition

Recent Plan Changes

Decree No. 10,044/2019 of October 7, 2019 restructured Camex, the body responsible within the federal government for taking decisions on commercial matters at the international level. The decree brought significant changes to the structure and distribution of powers of Camex, restoring some of the powers that had previously been transferred to other government bodies. The roles of Camex had been significantly reduced in a previous restructuring, also in 2019, which transferred much of the competences of the Chamber to SECINT.

Under the regulations, the Business Strategy Council replaced the Council of Ministers, the highest decision-making body chaired by the President of the Republic and composed of ministers of state. The Council of Ministers has reserved jurisdiction over strategic matters relating to the orientations of Brazil’s trade and customs policy. GECEX continues to be the executive arm of Camex and has important powers, such as setting trade defense (anti-dumping countervailing measures) and safeguard measures, and setting import duty rates. The GECEX is composed of the Minister of Economy and nine other members from different ministries and areas within the federal government.

Important legal and practical developments

In terms of trade defence, following transparency efforts in 2020, the SDCOM launched in April 2020 public consultations on four new orders. The purpose of these was to regulate: (1) the suspension of anti-dumping measures when there is significant doubt about the development of the imports under investigation; (2) determination of the likely export price in cases where import volumes were not significant; (3) reduction of anti-dumping duties in review proceedings; and (4) the anti-dumping pleading pre-filing procedure, in which the domestic industry submits a potential pleading before submitting its formal request.

Following these public consultations, SECEX issued SECEX Orders Nos. 162/2022 and 171/2022.

SECEX Order No. 162/2022 issued on January 6, 2022 consolidated the general standards used in trade remedy proceedings and included a specific chapter to regulate the optional pre-litigation phase of trade remedy proceedings. In addition, SECEX Ordinance No. 162/2022 also regulated the adoption of the Electronic Information System of the Ministry of Economy (SEI/ME), notifications and communications to interested parties in appeal proceedings. trade remedies, the qualification of domestic producers of a certain product as a fragmented industry and the necessary adaptations to the trade remedy investigation procedures which are under the direction of SDCOM.

SECEX Order No. 171/2022, published on February 10, 2022, aimed at revising and consolidating, in a single normative act, all the rules specific to anti-dumping proceedings, excluding decrees, with the aim of simplifying the rules and to reinforce legal certainty, with potential positive effects for the reduction of Brazilian costs. In this regard, the Ordinance provides specific chapters to deal with the suspension of the application of anti-dumping measures, as provided for in Article 109 of Decree No. 8,058/2013, of the likely export price in cases where the import volumes were not significant, and the review procedure for the reimbursement of the payment of the anti-dumping measures.

In 2021, SDCOM also opened Trade Defense Public Consultations on Subsidies and Countervailing Investigations and held events with the public and private sectors to discuss these public consultations. The authority’s intention was to engage with the sectors and present proposals to update the Brazilian regulatory framework for subsidy investigations and countervailing measures. In total, the public consultations received more than 500 contributions.

In February 2022, SECEX Ordinance No. 172/2022 was published, which together with Decree No. 10,139/2019 updated Brazilian regulations and defined relevant concepts – such as the definition of an organism public or the types of instruction and recourse to actions by governments to private entities – and the methods required for determining the amounts of subsidies and defining the countervailing duty to offset the actionable effects of subsidies.

SECEX Order 172/2022 also covered issues that were previously unregulated, such as the treatment of upstream subsidies – granted to product inputs exported to Brazil that cause damage to Brazilian domestic industry – and transnational subsidies – which occur when foreign governments act jointly to subsidize productive activity.

Following these public consultations, no news has yet been opened. Nevertheless, the authorities continue to express their desire to ensure greater legal certainty, transparency and procedural efficiency thanks to regulatory developments.

With regard to trade negotiations, Brazil has strengthened its position in the world market in recent years thanks to its considerable and vigorous efforts to promote an open trade policy. Several FTAs, investment agreements and treaties aimed at avoiding double taxation are currently being negotiated by Brazil – individually or as a LAIA or Mercosur member state – to ensure the country’s widest possible participation in the ‘Mondial economy.

However, Brazil faces some difficulties in aligning the interests of Mercosur members in international trade negotiations. As mentioned in point III (i.e. the framework treaty), Brazil is trying to make changes to Mercosur to modernize the economic bloc and ensure greater trade openness, but it is encountering resistance from other Member States, notably Argentina.

One of the main points of discussion is the reduction of TEC tariffs: while Brazil and Uruguay intend to reduce tariffs by 20% for all goods, Argentina advocates that only part of the products be affected by the measure and the tariff the reduction coefficient must not exceed 10 per cent. Disagreements also include how decisions are made within the bloc; as it stands, decisions depend on the unanimous consent of the four member states and on the fact that trade agreements with other countries must be negotiated with the whole bloc, even if the member states do not share a policy common external commercial.

Any differences between Members could lead to a break-up of the bloc, which would weaken the competitive position of the whole. Thus, it is important to seek flexibility in certain rules to accelerate progress in ongoing trade negotiations.

Moreover, in line with the measures adopted by the federal government to facilitate international trade, it is essential to tackle excessive bureaucracy in the internalization of trade agreements. Currently, there are about 15 trade agreements that have already been negotiated and signed between Brazil and other countries, which are still not in force due to bureaucratic problems regarding their internalization.13 Nevertheless, it is important that the Brazilian government continues this process of promoting an open trade policy and seizes this opportunity to seek better access to innovation and technologies in global production chains. Opening new markets will be essential to overcome the severe effects of the economic difficulties created by the covid-19 pandemic.

Trade disputes

Brazil participates actively in the Dispute Settlement Body of the WTO. To date, it has participated as a plaintiff in 34 disputes, as a defendant in 17 and as a third party in 164.

The last case in which Brazil participated as a respondent was DS596: Brazil – Measures concerning the importation of PET film from Peru and imported products in general concerning the import and marketing of biaxially oriented polyethylene terephthalate (PET) films from Peru and imported products in general. The case is still being analyzed; the latest development, in July 2020, included a request to join the consultations made by Bahrain.14

As a complainant, on November 11, 2021, Brazil requested consultations on the EU’s application of salmonella-related food safety criteria to fresh poultry meat and certain poultry meat preparations, and on the appropriate level of sanitary protection needed to address human health risks resulting from Salmonella contamination in products under these food categories in DS607.

Finally, as a third party, Brazil participated in six disputes initiated between 2021 and 2022. This last case is DS604: Russia – Domestic and Foreign Products and Services regarding the consultation that the European Union has requested from Russia regarding various measures favoring domestic products and services provided by domestic entities over foreign products and services provided by foreign entities.15 The consultations were unsuccessful and a panel was constituted on February 24, 2022. The other third parties involved are Australia, Canada, China, Colombia, India, Japan, Moldova, South Korea, Switzerland, Ukraine, the United Kingdom and the United States. .

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