GENEVA, (Reuters) – Brazil won part of its appeal at the World Trade Organization yesterday in a dispute over its industrial stimulus programmes, successfully challenging an earlier ruling that had faulted tax breaks for predominantly exporting companies and capital goods.
Most of the earlier ruling, in the case brought by Japan and the European Union, was upheld, with Brazil found to have violated WTO rules with various tax programmes aimed at promoting Brazilian production of high-tech goods and automobiles.
Those programmes provide exemptions, reductions or suspensions of certain federal taxes and contributions that were ruled to unfairly discriminate against foreign producers.
But the WTO Appellate Body ruling, which is final, also withdrew a requirement for Brazil to remove some of the programmes within 90 days, instead saying it must do so without delay.
The Brazilian government welcomed the appeal decision and said the remaining requirements had no practical effects.
“On a scale of 0 to 100, I would say this was 70 to 80 favourable to Brazil,” the Brazilian foreign ministry’s head of trade disputes, Marcus Vinicius Ramalho, said at a news conference.
The WTO has not in this case told Brazil how to correct contentious issues, so it will be up to the government to decide whether to end the stimulus programmes or change their rules, he said.
