Brazilian president signs decree allowing unilateral retaliation on trade disputes

RIO DE JANEIRO, BRAZIL – The Brazilian document states that the country can take unilateral action if trade dispute hearings at the World Trade Organization stall. The move was made because the U.S. blocked the appointments, and today there are no arbitrators to resolve the cases.

Brazilian President Jair Bolsonaro has signed a decree allowing the country to unilaterally retaliate in trade disputes if hearings at the World Trade Organization (WTO) stall, the Official Journal reported Thursday.

The Brazilian government justified the move, saying the WTO Appellate Body was no longer functioning because the United States was blocking new appointments. There are no arbitrators to decide cases and appeals remain in a legal vacuum.

Countries that have lost trade disputes with Brazil are “indefinitely exempt from the consequences simply because their complaints are not being reviewed,” the government said.

According to a statement from Bolsonaro’s office, the decree will allow Brazil to implement favorable WTO rulings that have not yet been implemented due to problems with the appellate body.

According to the Economy Ministry, the move paves the way for the country to unilaterally retaliate against India and Indonesia in trade disputes related to sugar and poultry, respectively.

Brazil has joined a provisional appellate system with other members, including the European Union and China. Still, countries like India, Indonesia, and the United States have not joined, blocking a deal.

In December, a WTO panel ruled in favor of Brazil, Australia, and Guatemala in their trade dispute with India over sugar subsidies in 2019, asking New Delhi to abide by global rules. Still, the Asian country later said it would appeal the decision.

Brazil also waited for Indonesia to accept a panel’s recommendations on a dispute over the chicken market. Brazil requested WTO consultations with Indonesia back in 2014 over measures blocking its access to that market.

The South American country won the dispute, but Indonesia asked for a “reasonable period of time” to adopt its recommendations and appealed to the WTO’s Appellate Body in December 2020.

“At the moment, these are the only two countries against which we have won trade disputes but ended up before the Appellate Body,” the source said.