Trade Remedies in the Era of FTA:

1
2006 Seoul Forum on Trade Remedies Seminar
Trade Remedies in the Era of FTA The Brazilian
experience in
Ministry of Development, Industry and Foreign
Trade
2

• MERCOSUR A short overview

3

• MERCOSUR A short overview

• In 1991, Argentina, Brazil, Paraguay and Uruguay
  signed the Treaty of Assuncion, creating the
  Common Market of the South MERCOSUR
• Article 1 Member States hereby decide to
  constitute a Common Market, which shall be
  established on 31 of December of 1994 and shall
  be named MERCOSUR.

4
1. MERCOSUR A short overview

• In the same Treaty of Assunción, Annex III -
  known as The Brasilia Protocol - established
  the basis for the settlement of disputes over
  regional law by an Ad Hoc Tribunal
• In December 1994, the Ouro Preto Protocol set
  down MERCOSURs institutional framework
  (Secretariat in Montevideo) and recognized its
  legal existence under international law.

a
5
1. MERCOSUR A short overview
a
6
1. MERCOSUR A short overview

• 2002 - Olivos Protocol in force since February
  2004, improves the dispute settlement mechanism
  creating a Permanent Review Court, located in
  Assunción.
• At the present moment, Brazil still has 100 items
  on its exception list of the CET. This number
  will be reduced to 50 by the end of 2006

7
2. MERCOSUR Trade Remedies System
8
2. MERCOSUR Trade Remedies System

• Present Practices

• Since 1994, the use of safeguards among the
  member states is prohibited
• Decision nº 17/96 contains the Regulation
  Regarding the Application of Safeguard Measures
  to Imports from Non-Members of the MERCOSUR, but
  it is not yet in force
• Normal application (WTO Legislation) of other
  trade remedies (anti-dumping and countervailing
  measures) among Members

9
2. MERCOSUR Trade Remedies System

• Present Practices

• The conduction of investigations and the
  application of trade remedies follows national
  legislations, and each Member has its own
  investigating and decision making authorities
• Decision n 22/02 disciplines the application of
  anti-dumping and countervailing measures among
  Members, but it is not yet in force.

10
2. MERCOSUR Trade Remedies System

• Decision n 22/02 disciplines

• Obligatory notification of the exporting country
  
• Authorities have to offer consultations to the
  exporting country Government before initiation
• Obligatory sending of the non-confidential
  application before the initiation of the
  investigation
• Duties can be applied to the exports from a
  MERCOSUR partner for a maximum period of 3 years

11
3. MERCOSUR Negotiations on Trade Remedies
Disciplines

• Definitive Measures applied by Brazil since 1991

12
3. MERCOSUR Negotiations on Trade Remedies
Disciplines

• Definitive Measures applied against Brazil
  since 1991

13
3. MERCOSUR Negotiations on Trade Remedies
disciplines
14
3. MERCOSUR Negotiations on Trade Remedies
Disciplines

• Main Objectives

• Common Regulation for anti-dumping and
  countervailing disciplines to be applied to
  external bloc trade
• Creation of Intergovernmental Trade Remedies
  authorities
• Elimination of anti-dumping and countervailing
  measures on internal bloc trade.

15
3. MERCOSUR Negotiations on Trade Remedies
Disciplines

• Main Obstacles

• Existence of sectors not yet covered by the FTA
  and the CET
• Inexistence of a MERCOSUR Intergovernmental
  Authority on Trade Remedies
• Difficulties of less competitive members.

16
4. Illustrative Cases
17
4. Illustrative Cases
Simultaneous force of MERCOSUR
Regulation Argentina - Definitive anti-dumping
Measures on Poultry from Brazil (IV MERCOSUR
AWARD, WT/DS241/R)
18
4. Illustrative Cases

• In July 2000, Argentina imposed definitive
  anti-dumping measures on exports of poultry from
  Brazil for a period of three years, violating
  several provisions of the ADA.
• In August 2000, Brazil requested the initiation
  of direct negotiations with Argentina, under
  Protocol of Brasilia.
• Argentina refused to engage on negotiations
  pointing out that anti-dumping measures among
  MERCOSUR Member States were to be conducted
  according to national legislation, that is not on
  the scope of the PB.

19
4. Illustrative Cases

• Although there were MERCOSUL Decisions ruling on
  the application of anti-dumping measures among
  Member States, none of them fulfilled the
  conditions of incorporation into the domestic law
  and notification to MERCOSUR Secretariat to enter
  in force.
• Therefore, in May 2001, MERCOSUR Ad Hoc Tribunal
  made its IV Award pronouncing that there were no
  specific rules on MERCOSUR regarding the
  investigating proceedings and the application of
  anti-dumping measures between Member States to
  which the Protocol of Brasilia would apply.

20
4. Illustrative Cases

• Nevertheless, the Tribunal considered that the
  anti-dumping measures imposed by Argentina where
  not inconsistent with Mercosur prohibition of
  restrictions of any kind to trade among Member
  States.
• On February 2002, Brazil requested a Panel in WTO
  - DSB.
• On May 2003, the Panel Report rejected
  Argentina's request that the Panel refrain from
  ruling on the claims raised by Brazil in light of
  the MERCOSUR tribunal ruling on the matter, as
  well as declined Argentina's alternative request
  that the Panel consider itself "bound" by the
  Tribunal's ruling.

21
4. Illustrative Cases
MERCOSUR and Parallelism Argentina Footwear
Safeguards (WT/DSU/121/AB/R)
22
4. Illustrative Cases

• In 1997, Argentina imposed provisional and
  definitive safeguards on footwear imports.
• Although imports originated in MERCOSUR were
  included on the examination of increased imports,
  MERCOSUR countries were excluded from the
  imposition of the measure at issue.
• On June 1998, the EC challenged Argentina's
  safeguard measure under GATT Article XIX and the
  Safeguard Agreement

23
4. Illustrative Cases

• On December 1999, the Appellate Body Report,
  although by different reasoning, upheld Panel's
  ultimate conclusion that Argentina's safeguard
  was inconsistent with Safeguards Agreement
  Article 2.
• This decision inaugurated the concept of
  Parallelism, according to which a safeguard
  measure must be applied to all sources from which
  imports were considered in the underlying
  investigation.

24
4. Illustrative Cases

• In all cases, Brazilian safeguard measures were
  imposed without considering MERCOSUR imports on
  the analysis of increased imports. Consequently,
  MERCOSUR partners are excluded from the measures
  imposed.
• In some cases, the existence of significant
  volume of imports from MERCOSUR members may even
  hamper the imposition of safeguards, as this fact
  compromises the causal link between increased
  imports considered and serious prejudice to
  domestic industry.

25
Thank you very much for your attention.
26
2006 Seoul Forum on Trade Remedies Seminar
Trade Remedies in the Era of FTA The Brazilian
experience in
Ministry of Development, Industry and Foreign
Trade