Reopening Pandora's box in search of a WTO-compatible industrial policy? : the Brazil–taxation dispute.
World trade review, 2020, Vol. 19, No. 2, pp. 249–266
ORNELAS, Emanuel, PUCCIO, Laura, Reopening Pandora's box in search of a WTO-compatible industrial policy? : the Brazil–taxation dispute., World trade review, 2020, Vol. 19, No. 2, pp. 249–266 - https://hdl.handle.net/1814/70299
Retrieved from Cadmus, EUI Research Repository
We critically assess the Appellate Body (AB) report on the Brazil–Taxation dispute, taken to the World Trade Organisation by the European Union and Japan, and encompassing seven different Brazilian industrial programmes granting tax benefits to different firms and products. The trigger of the dispute was most likely the automotive sector programme, instituted under pressure from the local industry and without much attention to effects on consumers or imports. The resulting WTO case underscores some salient issues related to the WTO compatibility of subsidy programmes, in particular the application of the National Treatment rules to subsidies provided exclusively to domestic producers, and the identification of local content requirements, prohibited under the Agreement on Subsidies and Countervailing Measures (SCM). The AB diverged from the Panel report and its jurisprudence on those issues. The AB tried to reconcile the existence of legitimate eligibility criteria in subsidy programmes and their discriminatory features with WTO rules under the General Agreement on Tariffs and Trade and the SCM. However, the legal test, developed by the AB in this dispute to distinguish prohibited local content requirements from legitimate eligibility criteria, may facilitate circumvention of the SCM prohibition of local content requirements and have important impacts on trade flows.
Published: 02 April 2020
Cadmus permanent link: https://hdl.handle.net/1814/70299
Full-text via DOI: 10.1017/S1474745620000099
ISSN: 1474-7456; 1475-3138
Publisher: Cambridge University Press
Grant number: H2020/770680/EU
Sponsorship and Funder information:
Puccio acknowledges the receipt of funding under the H2020 grant agreement project ‘Realizing Europe's Soft Power in External Cooperation and Trade (RESPECT),’ grant agreement no. 77068.
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