The Brazilian government argued before the World Trade Organization (WTO) that the tariffs imposed by the United States are “inconsistent” with WTO rules. Brazil submitted the document to the organization last Monday (July 27), but it was not made public until Thursday (Jul. 30).

“The measures in question [taken by the US] appear to be inconsistent with the US’s obligations under the General Agreement on Tariffs and Trade 1994,” Brazil stated. The agreement sets out the rules governing the imposition of tariffs by WTO members.

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Brazil also asserts that it is being treated less favorably by the US in trade relations compared with other WTO members:

“By imposing tariffs on products originating in Brazil under Section 301, while not imposing such tariffs on other WTO members, the US has failed to accord products originating in Brazil the advantages, favors, privileges, or immunities granted to products originating in other WTO members.”

The Brazilian government presented its arguments in a request for consultations with the United States under the WTO dispute settlement system. The document outlines the dispute, including US allegations of discriminatory treatment by Brazil.

The request for consultations represents the first formal stage of the WTO’s dispute settlement system. At this stage, countries seek to negotiate a resolution before a panel may be established to review the case.

According to the Ministry of Foreign Affairs, the initiative seeks to challenge whether US tariff measures comply with multilateral trade rules.

Tariffs

One of the measures challenged at the WTO stems from a specific investigation into Brazil that resulted in the imposition of an additional 25 percent tariff on Brazilian products. In the proceedings, the United States examined issues such as digital trade and electronic payment services, preferential tariffs, the enforcement of anti-corruption legislation, intellectual property protection, access to the ethanol market, and efforts to combat illegal deforestation.

The second measure resulted from an investigation involving 60 countries and imposed an additional 12.5 percent tariff on Brazilian products. In this case, the investigation focused on whether restrictions were in place and enforced on the import of goods produced, in whole or in part, using forced labor.

On Monday (Jul. 27), the Brazilian government filed a request for consultations with the United States through the World Trade Organization’s (WTO) dispute settlement system, challenging two tariff measures adopted under Section 301 of the US Trade Act of 1974.

According to a statement released by the Ministry of Foreign Affairs, Brazil considers the tariffs to be unjustified and inconsistent with the obligations assumed by the United States under the General Agreement on Tariffs and Trade of 1994 (GATT 1994) and the rules governing the WTO’s dispute settlement mechanism.

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• Tariff hike: In Washington Post article, Lula criticizes US stance.
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One of the contested measures stems from a Section 301 investigation into Brazil and imposed an additional 25 percent tariff on Brazilian products. The investigation examined issues such as digital trade and electronic payment services, preferential tariffs, the enforcement of anti-corruption legislation, intellectual property protection, access to the ethanol market, and efforts to combat illegal deforestation.

The second measure resulted from an investigation involving 60 economies and imposed an additional 12.5 percent tariff on Brazilian products. In this case, the investigation focused on the existence and enforcement of restrictions on the importation of goods produced, in whole or in part, with forced labor.

The request for consultations represents the first formal stage of the WTO dispute settlement process. At this stage, the parties seek to negotiate a solution to the dispute before a panel is established to review the case.

According to the Ministry of Foreign Affairs, the initiative seeks to challenge the consistency of the US tariff measures with multilateral trade rules.

Tariff hike

The new tariffs announced by the United States will affect Brazilian products worth USD 6.6 billion exported to the US market, according to the Ministry of Development, Industry, Trade, and Services.

The ministry estimates that the cumulative 37.5 percent surcharge will affect 16.5 percent of Brazilian exports to the US.

The affected products include machinery and equipment, various types of wood, fats and oils, footwear, furniture, and apparel.