Brazil – Certain Measures Concerning Taxation and
Charges
AB-2017-7
AB-2017-8
Reports of the Appellate Body
Table of Contents
1
Introduction.. 11
2 Arguments of
the Participants. 18
3 Arguments of
the Third Participants. 18
4 Issues
Raised in This Appeal. 18
5 Analysis of
the Appellate Body. 21
5.1 Articles III:2 and III:4 of the
GATT 1994. 21
5.1.1 Whether the Panel erred in finding
that imported finished and intermediate ICT products were taxed in excess
of like domestic finished and intermediate ICT products inconsistently
with Article III:2, first sentence, of the GATT 1994 22
5.1.2 Whether the Panel erred in finding
that the ICT programmes are inconsistent with Article III:4 of the GATT 1994 31
5.1.3 Whether the Panel erred in finding
that the ICT programmes are inconsistent with Article 2.1 of the
TRIMs Agreement 36
5.1.4 Whether the Panel erred in finding
that the accreditation requirements under the INOVAR‑AUTO programme are inconsistent
with Article III:4 of the GATT 1994 because they are more burdensome
for companies seeking accreditation as importers/distributors as opposed to
domestic manufacturers. 37
5.1.5 Whether the Panel erred in finding
that the INOVAR-AUTO programme is inconsistent with Article 2.1 of the
TRIMs Agreement 40
5.2 Article III:8(b) of the
GATT 1994. 41
5.2.1 Introduction. 41
5.2.2 The legal standard under
Article III:8(b) of the GATT 1994. 42
5.2.3 Whether the Panel erred in its
interpretation and application of Article III:8(b) of the GATT 1994 46
5.2.4 Conclusion with respect to
Article III:8(b) 55
5.2.5 Separate opinion of one Appellate
Body Member on Article III:8(b) of the GATT 1994. 56
5.3 Article 3.1(a) of the
SCM Agreement 60
5.3.1 Article 1.1(a)(1)(ii) of the
SCM Agreement: PEC and RECAP programmes. 60
5.4 Article 3.1(b) the
SCM Agreement 70
5.4.1 Article 1.1(a)(1)(ii) of the
SCM Agreement: ICT programmes. 70
5.4.2 Article 3.1(b) the
SCM Agreement – import substitution. 81
5.4.3 The European Union's and Japan's
appeal concerning the in‑house scenario. 102
5.5 Article I:1 of the GATT 1994 and
the Enabling Clause. 111
5.5.1 Whether the Panel erred in finding
that the claims raised by the European Union and Japan under
Article I:1 of the GATT 1994 were within its terms of reference. 111
5.5.2 Whether the Panel erred in its
interpretation of paragraph 2(b) of the Enabling Clause and in
finding that the differential tax treatment under the INOVAR‑AUTO programme was
not justified under that provision 125
5.5.3 Whether the Panel erred in its
interpretation of paragraph 2(c) of the Enabling Clause and in
finding that the differential tax treatment under the INOVAR‑AUTO programme was
not justified under that provision 130
5.5.4 Conclusion with respect to the
Enabling Clause. 133
5.6 Articles 11 and 12.7 of the DSU
and Article 4.7 of the SCM Agreement 135
5.6.1 Introduction. 135
5.6.2 Relevant legal standards under
Articles 11 and 12.7 of the DSU and Article 4.7 of the
SCM Agreement 136
5.6.3 Whether the
Panel acted inconsistently with Articles 11 and 12.7 of the DSU in
recommending that Brazil withdraw the prohibited subsidies within 90 days. 139
6 Findings And
Conclusions. 145
6.1 Articles III:2 and III:4 of the
GATT 1994 and Article 2.1 of the TRIMs Agreement 145
6.1.1 Whether
the Panel erred in finding that imported
finished ICT products were taxed in excess of like domestic finished
ICT products inconsistently with Article III:2, first sentence, of
the GATT 1994. 145
6.1.2 Whether
the Panel erred in finding that imported
intermediate ICT products were taxed in excess of like domestic
intermediate ICT products inconsistently with Article III:2, first
sentence, of the GATT 1994. 146
6.1.3 Whether
the Panel erred in finding that the
accreditation requirements under the ICT programmes accord treatment less
favourable to imported products than that accorded to like domestic products
inconsistently with Article III:4 of the GATT 1994. 146
6.1.4 Whether
the Panel erred in finding that the
ICT programmes are inconsistent with Article III:4 of the
GATT 1994 by virtue of the lower administrative burden on companies
purchasing incentivized domestic intermediate products 147
6.1.5 Whether the Panel erred in finding that the PPBs and
other production-step requirements under the ICT programmes are contingent upon
the use of domestic goods, inconsistently with Article III:4 of the
GATT 1994 147
6.1.6 Whether
the Panel erred in finding that the
ICT programmes are inconsistent with Article 2.1 of the
TRIMs Agreement 147
6.1.7 Whether the Panel erred in finding that the
accreditation requirements under the INOVAR‑AUTO programme are inconsistent
with Article III:4 of the GATT 1994 because they are more burdensome
for companies seeking accreditation as importers/distributors as opposed to
domestic manufacturers. 148
6.1.8 Whether
the Panel erred in finding that the
INOVAR-AUTO programme is inconsistent with Article 2.1 of the
TRIMs Agreement 148
6.2 Article III:8(b) of the
GATT 1994. 149
6.3 Article 3.1(a) of the
SCM Agreement 149
6.4 Article 3.1(b) of the
SCM Agreement 150
6.5 Article I:1 of the GATT 1994
and the Enabling Clause. 151
6.5.1 Whether the Panel erred in finding
that the claims raised by the European Union and Japan under
Article I:1 of the GATT 1994 were within its terms of reference. 151
6.5.2 Whether the Panel erred in its
interpretation of paragraph 2(b) of the Enabling Clause and in
finding that the differential tax treatment under the INOVAR‑AUTO programme was
not justified under that provision 152
6.5.3 Whether the Panel erred in its
interpretation of paragraph 2(c) of the Enabling Clause and in
finding that the differential tax treatment under the INOVAR‑AUTO programme was
not justified under that provision 153
6.6 Article 4.7 of the
SCM Agreement 153
6.7 Recommendation. 154