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

Overview of trade remedies

According to the World Bank, Brazil was the 12th largest economy in 2021, with a gross domestic product of US$1.608 million.2 The country has also been a World Trade Organization (WTO) Member since 1995, adopting all its multilateral agreements, including those on trade remedies. In 2021, the country's trade balance had its largest surplus since 1989, of US$61.01 billion, which was an increase of US$10.6 billion compared with 2020.3

The election of right-wing politician Jair Bolsonaro as President in late 2018 brought about significant changes in Brazilian trade policy regarding the promotion of free trade and increasing Brazil's presence in the global economy and value chains. This agenda has been pushed through mainly by the Ministry of Economy, which intends (and has taken concrete action) to open up the Brazilian economy on different fronts, including the rationalisation and streamlining of Brazil's use of trade remedy mechanisms such as anti-dumping and countervailing measures.

The covid-19 pandemic has also presented challenges and demanded changes to adapt to the new reality. With respect to the main measures taken by the Brazilian government in the field of international trade and customs, there were acts to facilitate production and importation of goods necessary to combat covid-19, such as medical supplies and personal protective equipment. The government introduced a waiver for customs duties and allowed temporary exemption of taxes for imported and domestic products used to fight covid-19. Although the Ministry of Health in Brazil declared the end of the Emergency in Public Health of National Importance (ESPIN) – an emergency state due to covid-19 – on 22 April 2022, there are exemptions still in place.

The Subsecretariat of Trade Defence and Public Interest (SDCOM) of the Ministry of Economy is responsible for conducting investigations regarding trade remedies in Brazil. It issues an annual report on the activities, indicating, for example, the number of proceedings initiated and concluded, as well as the number of measures applied, suspended or extended. In its latest annual report, relative to 2021,4 the SDCOM reported that 38 petitions were filed to request the opening of anti-dumping investigations. No petitions were filed in 2021 to request the opening of subsidies or safeguards investigations. Of the 38 anti-dumping investigations, 22 were initiated. Eight were not initiated, and those petitions were rejected. Also eight of the petitions were still under analysis by the end of the year, and none of them were withdrawn.

The annual report also includes information on the proceedings against Brazilian exporters, indicating that, in 2021, the SDCOM monitored and intervened in 51 proceedings and trade defence measures.5

The SDCOM has expressed its commitment to increasing transparency, adopting several measures to give publicity to the rationale behind the decisions, for example by drafting one-page summaries for each final determination. The government body also issued three guidelines between January 2019 and July 2022 on: anti-dumping investigations; public interest in trade defence proceedings; support to Brazilian exporters being investigated in foreign trade defence proceedings, dumping margin calculation, migration of the case records from Decom Digital to SEI (different electronic systems) and the compendium of international trade legislation.6

Five anti-dumping sunset reviews in the past year were concluded with the extension of the dumping duty with the immediate suspension based on Article 109 of Decree No. 8,058/2013 because of doubts about the future evolution of the imports. Also, six anti-dumping sunset reviews were concluded without the extension of the measure. One anti-dumping duty was reduced as a result of the public interest analysis. Finally, six of them were extended with the reduction of the duty as a result of the calculation methodology. These cases have been highlighted because they also demonstrate the government's intention to reduce the use of the trade defence mechanisms, especially it is not typical to use Article 109 to justify the suspension of anti-dumping measures.

Legal framework

The SDCOM is part of the Secretariat of Foreign Trade (SECEX), of the Special Secretariat of Foreign Trade and International Affairs (SECINT) and of the Ministry of Economy. It is responsible for conducting investigations regarding trade remedies in Brazil. After concluding the investigation process, the SDCOM issues its final determination, recommending (or not) the application of trade remedies to the SECINT.

If the SDCOM recommends the application of trade remedies by the Executive Committee of the Foreign Trade Chamber (GECEX), the GECEX is the authority responsible for a decision to impose trade remedies. However, if the recommendation is not to apply trade remedies (negative decision), the final decision is handed down by the SECEX.

Brazilian legislation on trade remedies comprises the following laws and statutes:

  1. Decree No. 1,355/1994 enacts the Final Act that incorporates the results of the Uruguay Round of the Multilateral Trade Negotiations of the General Agreement on Tariffs and Trade (GATT) 1994;7
  2. Law No. 9,019/1995 regulates the application of the measures specified in the Agreement on Implementation of Article VI of GATT 1994 (Anti-Dumping Agreement) and in the Agreement on Subsidies and Countervailing Measures;
  3. Decree No. 1,488/1995 regulates the administrative proceeding concerning the application of safeguards;
  4. SECEX Ordinance No. 21/2010 regulates anti-circumvention proceedings applicable to anti-dumping measures;
  5. Decree No. 8,058/2013 regulates the administrative proceeding concerning the application of anti-dumping duties;8
  6. Decree No. 10,044/2019 regulates the Brazilian Chamber of Foreign Trade;
  7. SECEX Ordinance No.13/2020 regulates administrative proceedings relative to public interest analysis with the objective of potentially suspending or altering anti-dumping duties and countervailing measures for public interest reasons;
  8. Decree No. 10,839/2021 regulates the administrative proceeding concerning the application of countervailing measures, revoking the Decree No. 1,751/1995;
  9. SECEX Ordinance No. 162/2022 consolidates, in a single normative act, the general norms used in trade remedies proceedings, regulating the adoption of the Electronic Information System of the Ministry of Economy (SEI/ME), the optional pre-pleading phase of trade remedies proceedings, on notifications and communications to interested parties in the scope of trade remedies proceedings, on the qualification of national producers of a certain product as a fragmented industry and on the necessary adaptations to the procedures of trade remedies investigations that are under the management of the SDCOM;
  10. SECEX Ordinance No. 169/2022 consolidates, in a single normative act, the specific rules of the administrative proceedings concerning the application of safeguard measures, as provided by Decree No. 1,488/1995;
  11. SECEX Ordinance No. 171/2022 consolidates, in a single normative act, the norms used specifically in anti-dumping proceedings and regulates the final version of the restitution revision rules, as provided by Decree No. 8,058/2013; and
  12. SECEX Ordinance No. 172/2022 regulates the provisions of the Agreement on Subsidies and Countervailing Measures and the Decree No. 10,839/2021, by establishing rules on the preparation of petitions and defining relevant concepts and methodologies for the determination of subsidy amounts and the countervailing duty.

The Ministry of Economy (which incorporates the former Ministry of Industry, Foreign Trade and Services) website provides further details of all the above-mentioned legislation.

The trade defence authorities in Brazil often praise the fact that the country is one of the few that have not been challenged in the WTO, even though, for example, it is ranked as one of the top imposers of anti-dumping measures.9 This is an indication of the compatibility between the Anti-dumping Agreement and domestic legislation.

In accordance with WTO general provisions on trade remedies, to initiate a case in Brazil, the domestic industry must present a written and formal request before the SDCOM. A domestic producer will only be considered a 'domestic industry' if it is responsible for at least 25 per cent of the total production of the similar product and, once consulted by the SDCOM, the domestic producers of the similar product that expressed their support for the claim represent at least 50 per cent of total production in Brazil.

To trigger the initiation of an investigation, the domestic industry must demonstrate, through supporting evidence, the existence of:

  1. subsidised or dumped imports;
  2. alleged injury to the domestic industry; and
  3. a causal link between the subsidised or dumped imports and the injury suffered by the domestic industry during the period of investigation.

As regards the application of safeguards, according to Decree No. 1,488/1995, the authorities will consider:

  1. the volume and rate of increase of imports (in both absolute and relative terms);
  2. the share of the national market captured by imports;
  3. the prices of imports, and especially whether those imports were underpriced in comparison to the similar product produced in Brazil;
  4. the consequent impact of the imports on the domestic industry, including analysis of relevant economic factors (e.g., production level, inventories or sales); and
  5. the impact of other factors not related to the analysed imports on the domestic industry.

In exceptional circumstances, the SECEX may initiate an investigation ex officio, provided that it disposes of significant evidence regarding the existence of the requirements that justify opening the proceeding.

With regard to anti-dumping investigations, Decree No. 8,058/2013 states that the authorities shall examine the petition within 15 days of being filed. Within five days, the SDCOM may request the presentation of additional information, which shall be examined within 10 days. If the SDCOM considers that no further information is required, the decision on whether to initiate the investigation shall be published within 15 days.

Once the SDCOM decides to initiate an investigation, a public notice from the SECEX is published in Brazil's Official Gazette with a summary of all the relevant information of the proceeding, including a list of the known interested parties. All known interested parties involved in the proceeding (including foreign governments, foreign exporters and producers, importers and domestic producers) will receive an official letter informing them that an investigation has been initiated.

The interested parties (except foreign governments) will receive a questionnaire asking them to submit relevant information about the product, the market and internal economic indicators (e.g., sales and costs) to the SDCOM. The time limit to respond to the questionnaire is 30 days from acknowledgement of the issuance of the questionnaire (presumed to be on the next business day after the issuance of the questionnaire), which can be extended by an additional 30 days (in anti-dumping investigations). During the course of the administrative proceeding, the SDCOM may also request additional information or clarifications. The interested parties can represent themselves or delegate to legal representatives with adequate powers of representation.

In respect of anti-dumping investigations, the deadline for the parties to submit new information and evidence (the evidentiary stage) to the case files is 120 days from the date of publication of the preliminary determination by the SDCOM. After that, the parties will have the opportunity to submit their arguments based only on information already available in the case records. Brazilian regulations state that the SDCOM must finish the investigation within 10 months of its initiation, although it allows this time limit to be extended to 18 months, in line with WTO rules. Nevertheless, the final decision on the imposition of commercial remedies lies with the GECEX, after receiving the SDCOM's recommendation.

Treaty framework

Brazil is a Member State of the Latin American Association of Integration (ALADI) and of the Southern Common Market (Mercosur, composed of Brazil, Argentina, Paraguay and Uruguay), which are treaties signed by, respectively, Latin and South American countries, with the aim of promoting economic and social development, harmony and balance throughout the regions.

Historically, the Brazilian government has adopted a defensive stance in multilateral trade negotiations, focusing on regional approaches. In recent years, however, this has begun to change.

As mentioned in Section I, there have been several changes in Brazilian trade policy in the past few years. The Bolsonaro government has repeatedly announced its intentions (and also taken concrete action) to open up the Brazilian economy on different fronts, including: the systematic reduction of tariffs, particularly for capital equipment, technology and telecommunications products; the rationalisation and streamlining of Brazil's use of trade remedies mechanisms, such as anti-dumping and countervailing measures; and the promotion of microeconomic reforms to enhance firms' competitiveness and attract foreign investment.

Brazil has been adopting a set of strategic actions related to the foreign trade agenda to ensure a greater alignment with international standards, such as the adoption of electronic documents related to foreign trade and the simplification and modernisation of the Brazilian customs system.

Although Brazil continues to be an active participant in multilateral discussions, and in the WTO in particular, the government has expressed and intensified its intention to prioritise bilateral trade discussions over multilateral agreements.

Certainly, the most significant development in terms of trade negotiations has been the signing – after almost 20 years of negotiations – of the European Union–Mercosur trade agreement on 28 June 2019, which the parties described as an 'ambitious, balanced and comprehensive trade agreement'. The European Union–Mercosur agreement has multiple chapters spanning customs facilitation, trade barriers, sanitary and phytosanitary measures, government procurement, intellectual property, trade and sustainable development, trade in services and dispute settlement, among other things.

Currently, negotiations to remove tariff barriers between the Mercosur countries and European Union have reached a stalemate due to Brazil's environmental policy. It has been indicated that the European Commission intends to include an Annex of additional environmental commitments as a necessary condition for the European Union to conclude the ratification of the agreement, for instance. Although there is no official information on the development of a legal text to the above-mentioned Annex, it was widely reported that any progress in the process will depend on the assumption of effective environmental protection commitments by Brazil. Thus, the ratification process of the European Union–Mercosur agreement may still take a couple of years.

Mercosur Member States also see as priority the implementation of the trade agreement already signed with the European Free Trade Association (EFTA, comprising Iceland, Liechtenstein, Norway and Switzerland) and the negotiation of trade pacts with Canada, South Korea and Lebanon. The bloc aims to enter into comprehensive trade agreements with these countries, covering market access on goods, services, government procurement, non-tariff barriers, intellectual property rights and other strategic matters. Such agreements are expected to increase the trade flow for Brazil.

Negotiations between Mercosur and Singapore are advanced, and a comprehensive trade agreement may be reached soon. Singapore is the first ASEAN country with which Mercosur is negotiating an agreement of this type. The Agreement is expected to reduce import tariffs to zero on almost all goods traded between the countries and to establish robust commitments on non-tariff matters, such as intellectual property, services and government procurement.10

After the Foreign Trade Chamber (Camex) approved negotiating mandates for potential Mercosur free trade agreements (FTAs) with Indonesia and Vietnam, covering tariffs and other trade-related topics, Brazil articulated with the other Mercosur Member States the strategy of how to move forward in the next steps of trade negotiations. By the end of 2021, negotiations towards a comprehensive economic partnership agreement between Mercosur and Indonesia were launched. Camex also approved the mandate to negotiate Brazil's accession to the World Trade Organization's Agreement on Trade in Civil Aircraft. Brazil is the only relevant aircraft maker that has not yet acceded to the Agreement, which came into force in 1980.

Brazil is in the process of accession negotiations to join the Government Procurement Agreement (GPA). In November 2021, the country presented a revised offer of market access that expands the number of public administration bodies and entities committed to complying with the GPA.11

Finally, in April 2021, the Mercosur Member States signed a region-wide agreement on electronic commerce, to facilitate trade in goods and services through electronic means among the countries of the bloc. The provisions in the agreement deal with cross-border information transfer, personal data protection, tariff-free electronic transfers, electronic signatures, location of computing facilities, online consumer protection and internet access and use, among other matters. This is a modern agreement, in line with the most advanced recommendations from international forums (such as the G20 and the OECD). The agreement is still under the process of internalisation.

Acting on a bilateral basis, during recent years, the Brazilian government sought a general alignment with the US government on trade and other policy areas. Brazil agreed to forego its Least Developed Country status under the WTO framework in exchange for US support of Brazil's accession to the OECD. In May 2017, Brazil formally requested its accession to the OECD, and in June 2022 a roadmap for Brazil to join the OECD was approved. Thereafter, the OECD committees will examine whether Brazil's policies and practices comply with the organisation's guidelines and propose adjustments, if necessary. The definitive entry of the country into the OECD will take at least a couple of years, and it will depend on the consensus of the countries that are members of the organisation. This is seen as a major part of Brazil's trade policy.

At the end of 2020, Brazil and the United States signed a new Protocol on Trade Rules and Transparency (ATEC), which updates the 2011 ATEC with three new Annexes: Trade Facilitation and Customs Administration; Good Regulatory Practices; and Anti-Corruption Efforts. The Protocol was ratified by Brazil's Congress by the end of 2021, and it entered into force in 2022. The Brazilian government expects that this Agreement will pave the way for future trade and tax agreements with the United States.

Although the relations between the countries appear to have cooled under the Biden administration, the bilateral trade relationship reached a record high of US$78.2 billion in 2021.12 The US and Brazilian governments have also maintained a frequent and high-level engagement on various non-economic issues, including efforts to combat Amazon deforestation and to mitigate climate change.

Brazil is also facing a wait-and-see moment within Mercosur. Since Mercosur has been under the purview of ALADI, Brazil has been involved in several trade agreements with ALADI members. Mercosur has FTAs in force with Bolivia (ACE No. 36/1997), Chile (Economic Complementation Agreement (ACE No. 35/1996), Colombia, Ecuador and Venezuela (ACE Nos. 59/2005, 69/2014 and 72/2017), Cuba (ACE No. 62/2007), Egypt (FTA, 2017), India (Preferential Trade Agreement (ACP, 2009), Israel (FTA, 2010), Mexico (ACE Nos. 54/2002 and 55/2002), Peru (ACE No. 58/2005) and South Africa, Namibia, Botswana, Lesotho and Swaziland (ACP, 2016).

Despite the common interest of the bloc's countries in the conclusion of the trade agreements between Mercosur and the EU and EFTA countries, the Brazilian government has been advocating for the adoption of measures that enable Mercosur Member States to individually negotiate trade agreements. Brazil has also engaged in negotiating and adopting other types of international agreements, especially in respect of investment facilitation. Deviating from a traditional bilateral investment agreement, Brazil has entered into agreements on cooperation and facilitation of investments with Angola, Chile, Colombia, Ethiopia, Guyana, India, Malawi, Mercosur (Argentina, Paraguay and Uruguay), Mexico, Mozambique, Peru and Suriname.

An FTA between Brazil and Chile entered into force in January 2022. One of the main benefits of this Agreement concerns government procurement: with its entry into force Brazilian companies will be able to access the Chilean public procurement market on equal terms (and vice versa), which will generate new productive opportunities in several economic sectors, such as pharmaceuticals, automotive, electrical and electronic materials and construction services. The expanded Brazil–Chile Free Trade Agreement is the most modern agreement signed between countries in the region, and the Brazilian government intends to replicate the model with other partners, such as Canada.

With regard to customs cooperation, Brazil concluded a customs mutual assistance agreement (CMAA) with Japan. This CMAA is intended to ensure the proper application of the customs laws of the respective countries, including: (1) the accurate assessment of customs duties and other taxes due on import or export transactions; (2) the enforcement of prohibitions, restrictions and control measures by the customs administrations; and (3) the adoption of measures to prevent, detect and combat criminal offences (such as the trafficking of drugs, weapons and munitions).

Brazil has been trying to promote policies to modernise Mercosur. In recent months, the Brazilian government promoted a reduction of up to 20 per cent on the applicable Common External Tariff (TEC) tariffs, without the approval of Mercosur. The reduction is temporary (lasting until the end of 2023), and it covers approximately 87 per cent of all tariff lines. The measure aimed to reduce inflationary pressures caused by the economic hardship created by the covid-19 pandemic and the war in Ukraine. The reduction brings the Brazilian tariff level closer to the international average and, in particular, to the countries of the OECD.

The Brazilian government is now advocating that these reductions become permanent within Mercosur, with a view to boost the bloc's competitiveness and attract foreign investments. The Argentinian government, which had demonstrated its opposition to Brazil's proposal, agreed on a 10 per cent reduction of the TEC for certain products; on the other hand, Brazil and Uruguay have been pushing for a 20 per cent reduction of the tariffs. The Member States of Mercosur are currently in the process of reviewing the TEC tariffs.