The Measure seems to have originated from the frustration of countries acting in the World Trade Organization (WTO) and its Dispute Settlement Body (DSB), such as Brazil and the European Union, which have seen claims confirmed, in at least one instance, not being concluded.

Respondent countries that have their policies found to be in violation of multilateral rules have strategically used the suspension of the Appellate Body (AB) to prevent the conclusion of cases by filing appeals that cannot be reviewed until the AB is restored (appeal in blank).

This was the strategy that recently prevented the conclusion of disputes initiated by Brazil, which had already had a favorable decision from the DSB. In January 2022, India announced its intention to appeal (in blank) against the panel report that confirmed the claims made by Brazil in a sugar dispute. In December 2020, Indonesia, who had requested additional time to adopt a WTO ruling (from November 2017),  appealed against a report, which found that the country had not yet properly adjusted its measures related to the importation of poultry meat from Brazil, so that WTO rules were not violated.

Moreover, such cases can happen again if the Appellate Body is not reestablished. According to a survey carried out by the Portal da Indústria at the end of 2021, Brazil is the fifth largest user of the WTO dispute settlement mechanism, the fourth country that most complains  among all members, and the first among emerging countries. Still, Brazil is proportionally the most offensive member in its use of the DSB, being the claimant in 67% of the cases in which it is involved.

The Provisional Measure published by Brazil, regarding this, authorizes the government to suspend concessions or other obligations to other member countries (retaliation) in the following circumsstances:

• Brazil is authorized by the DSB to suspend the application of concessions or other obligations to a particular Member under WTO agreements, or
• The WTO panel report confirms, in whole or in part, the allegations made by Brazil, as a complaining party, provided that
  • There is an appeal by the WTO member, as the respondent party,
  • The appeal cannot be heard by the Appellate Body or the Appellate Body’s report cannot be adopted by the DSB, or
  • The period of sixty days has expired after Brazil’s notification to the respondent WTO Member of its intention to suspend concessions or other obligations.

Therefore, the Brazilian Government’s orientation is within WTO rules. This is to seek consultations and negotiation with eventual member countries that are the object of retaliation, but to ensure greater strength to Brazil in these discussions, in view of the possibility of suspension of concessions given to the importation of goods and services from these countries, or even suspension of intellectual property rights.

The conduct and steps to be adopted by Brazil, however, will be known as the discussions with India and Indonesia move forward.

The full text of the Provisional Measure can be found here.

O conteúdo Provisional Measure providing for punishment of WTO members while its appellate body is inoperative is published aparece primeiro em Grinberg Cordovil Advogados.

Among the main changes proposed in the draft of the Ordinance is the update of legislation according to technological advances. Following the implementation of the SISCOMEX Single Portal, it has been confirmed that licensing can take place through the new module (LPCO Importation) or through the old one (SISCOMEX Importation), due to the recognition that not all licensing governmental bodies are able to use the most recent module. The definition of the usage of each module will be up to the licensing governmental body, combined with the compatible customs modality.

Moreover, the Ordinance eliminates the possibility of creating licensing requirements, without a due published act of the competent authority, by only including the product in SISCOMEX. This proposal redeems the current government’s discussion against the changes in administrative treatment, which allowed the establishment of a minimum prices policy for the importation of certain products – a practice deemed not in line with WTO rules.

Also, considering the provisions of the Agreement on Trade Facilitation of the World Trade Organization, the draft simplifies the licensing modalities, so that imports are only subject to automatic licensing or non-automatic licensing (eliminating the current modality of imports exempt from licensing).

The draft of the Ordinance proposal was made available by SECEX on its website, and any interested parties from the private sector can submit their comments and suggestions until March 14, 2022.

O conteúdo Public Consultation for Draft of New Law on Import Licensing aparece primeiro em Grinberg Cordovil Advogados.

Faced with the paralysis of the WTO’s appellate body since 2019, due to a US boycott against appointing new arbitrators and the absence of expectations in the solution of this impasse, countries interested in maintaining the functioning of a multilateral dispute settlement system have been facing difficulties to settle disputes and execute decisions.

One of the alternatives found was the implementation of the multi-party interim appeal arbitration arrangement (MPIA), which is a temporary arbitration court that operates under WTO rules and has been guaranteeing a double degree of jurisdiction to certain members, while the appellate body does not return to work. The MPIA emerged out of a proposal from the European Union and already has 25[1] adhering member countries, including Brazil.

The recognition of the MPIA’s competence to resolve a specific case depends on the express acceptance of the countries involved in the dispute. Countries with protectionist policies have been taking advantage of this void created in the WTO dispute settlement system to appeal to the paralyzed appellate body – an “empty” appeal – when they lose a WTO panel dispute, since it can only be evaluated after the body is recomposed.

This was precisely the case in two of Brazil’s disputes in the WTO. The country has recently received favorable rulings from panels in lawsuits filed against India (DS579 – sugar) and Indonesia (DS484 – chicken), but the represented countries submitted empty appeals to the appellate body.

Thus, Brazil intends to implement legislation that allows the application of unilateral retaliation[2] against the member country that loses a dispute in the panel seat and does not accept to participate in a parallel arbitration mechanism.

The details and systematics of the unilateral retaliation that may be applied by Brazil are still unknown, but it is expected that India and Indonesia will be the first ones affected, being a test.

[1] Until June 30, 2021.

[2] Retaliation is a mechanism provided for in WTO agreements and provides that, if the country represented loses the dispute, the policies or decisions considered as in disagreement with WTO rules will not be altered, though the winning country of the dispute may suspend concessions or obligations granted to that member through the imposition of surcharges on products and services or even the suspension of intellectual property rights. The total amount and the application of retaliation is traditionally carried out after the end of the dispute and must be authorized by the dispute settlement body (“Dispute Settlement Body” – DSB). Information and statements from representatives of the Brazilian government indicate that proposed unilateral retaliation will apply regardless of DSB approval.

O conteúdo Brazil to apply unilateral retaliation in trade disputes aparece primeiro em Grinberg Cordovil Advogados.

Below, we highlight some of the main changes brought forth by the new Decree:

• Introduction of additional procedures: specific rules were established for the conduct of particular procedures related to the countervailing measures already in force: anticircumvention review, refund review, scope review, and redetermination.  The possibility of conducting a “so-called” accelerated review was also regulated; this review will allow the determination of individual subsidy amounts for foreign producers or exporters that have not been individually investigated on the previous investigation/sunset review.

• Greater clarification on the definition of elements: the Decree brings a non-exhaustive list of the elements that will be considered for the analysis of the occurrence of injury, threat of injury, and causal link, among others. Additionally, in relation to the definition of domestic industry, criteria were defined that make it easier to identify the existence or not of a relationship between the Brazilian producer and the foreign producer under investigation.

• Greater procedural and deadline clarity: while the old decree granted greater discretion for the definition of applicable deadlines, the new regulation establishes and changes the deadlines for various points of investigations and reviews, such as those applicable for the supplementation of the initial claim, manifestation of foreign governments, response to questionnaires, and for on-the-spot verifications.  Moreover, the new Decree also determines that the period of investigation of material injury will be 60 months (previously established as never less than three years).

• Qualification of the domestic industry: the new Decree brings new rules for the qualification of the domestic industry to subsidy investigations; these are similar to those adopted by the Antidumping Decree, yet also establish rules for the case of fragmented industry.

• End of the final hearing: according to the new Decree, the essential facts under trial will now be disclosed by means of a technical note and no longer through a hearing.

• Statistical monitoring of imports: the new Decree further provides that the imported product will be subject to detailed statistical monitoring, in order to ensure the effectiveness of the countervailing measures in place.

The new Decree will come into effect on February 16, 2022, and it will only apply to investigations and reviews whose petitions have been filed as of this date forward.

The complete Portuguese version of the Decree can be accessed by clicking here.

O conteúdo New Decree regulating subsidy investigations and the application of countervailing measures published aparece primeiro em Grinberg Cordovil Advogados.

Bidding cartels are coordinated practices between bidders that seek to artificially alter market conditions related to the bidding proceeding. In this sense, participants can set prices, combine results, among other practices that lead to prices increasing to be paid by the Public Administration, with a consequent waste of public resources.

Thus, the document prepared by Cade and the OECD intends to present itself as a checklist of attention points to be observed during public contracts, helping public agents to identify potential illegal coordinated practices.

In a didactic way, the document draws attention to suspicious behavior in the bid proposal and result stages. For example, the document indicates that warning signals should be turned on when bids are presented with identical prices but different from the notice’s reference value, when presenting bids with remote conditions to win, or even when there is a sudden and unjustified decrease in the number of participants in the bidding.

Once warning signs are identified, both other bidders and public agents can, in a confidential way, submit a complaint through Cade’s Denouncement Channel. Both the checklist and the Denouncement Channel  can be easily found on Cade’s website.

O conteúdo Cade publishes a working document with a checklist for identifying cartels in public biddings aparece primeiro em Grinberg Cordovil Advogados.

The Decree foresees the possibility of granting exceptional authorization for exports of these items, under certain circumstances, upon the consultation of other Ministries. Exceptions to the prohibition described in the decree should be granted when the items cannot be used in the health area, for in-flight supplies, certification and approval processes, or outward processing.

The Decree’s rules come into force immediately upon publication.

O conteúdo Government of Brazil regulates prohibition of medical, hospital and hygiene items exportation aparece primeiro em Grinberg Cordovil Advogados.

Regarding the powers to guide and intervene in trade policy, CAMEX gains back its leading role by reabsorbing legal competencies that, in the new institutional arrangement, had been attributed to the Special Secretariat for Foreign Trade and to the International Affairs of the Ministry of Economy.

The Conselho de Estratégia Comercial (the Commercial Strategy Council ), composed of by the President of Brazil and five ministers, will be responsible for proposing the strategies and guidelines, granting a trade negotiation mandate, and other broad competencies on trade policy.

The Comitê-Executivo de Gestão – GECEX (the Executive Management Committee), composed of by the Minister of Economy and nine second-level, governmental officials, will be responsible for setting the rates of import and export taxes and for deciding how trade remedies will be applied (aanti-dumping and countervailing duties, as well as  safeguards), among other assignments.

Within GECEX, the division of power and influence has undergone  very significant changes. In the previous structure, there was greater division and isonomy of power among the various Ministries, and in the new organization, the Ministry of Economy will hold the Presidency and have the right to half of the votes.

In addition to GECEX’s permanent members, Brazil’s Administrative Council of Economic Defense (CADE) and APEX will now have the right to two permanent guest chairs, without voting rights.

Lastly, the Decree established that CAMEX’s new bylaws should be drafted and posteriorly approved by GECEX, within the next 90 days.

O conteúdo The Federal Government defines the structure of the new CAMEX aparece primeiro em Grinberg Cordovil Advogados.

The terms of the negotiated agreement were kept confidential in the past years, but the expectations are that includes a comprehensive schedule for preferential tariff concessions and that, on a general manner, should be shorter for the European Union.

The negotiation was launched in 1999, but interrupted in 2004 after the parties disagreed with the offers proposed. In 2010, the negotiations were retaken, yet on a slower pace, with its priority being increased only in 2016. According to the negotiators, historically sensitive items for the trade between the blocs became a hindrance, especially the agricultural sector.

This is possibly the greatest free trade deal signed by Brazil, and with an enormous potential to expand the relation between the countries involved and their commercial relations.

According to official statistics, in 2018, the European Union was the second greatest destination of the Brazilian exports (only behind China). The total traded value between the blocs reached US$ 76.87 billion, with a balance of US$ 7.34 billion for Brazil.

O conteúdo Mercosur and the EU conclude a free trade agreement aparece primeiro em Grinberg Cordovil Advogados.