Brazil emerges as second leading nation raising concerns over other countries’ or blocs’ practices
12/30/2024
Trade frictions centered around environmental and national security issues are on the rise at the World Trade Organization (WTO), highlighting Brazil’s increasing challenges in the global trade arena. A WTO study reveals that Brazil ranked second in raising trade concerns in the environmental sector, challenging measures from other countries that could potentially obstruct Brazilian imports.
According to the report, 630 concerns were raised from 2016 to 2023, including 171 related to these specific topics.
The article “Canary in a Coal Mine: How Trade Concerns at the Goods Council Reflect the Changing Landscape of Trade Frictions at the WTO,” authored by Roy Santana and Adeed Dobhal from the WTO’s Market Access Division, indicates that the total interventions by member countries on these issues discussed at the Council for Trade in Goods (CTG) surged, peaking at 235 during the November 2023 meeting—the last month analyzed.
During that meeting, the number of interventions reached 83, accounting for 35% of the total 235. Combined, concerns involving environmental and national security issues were responsible for 56% of the interventions made by members at the gathering.
These interventions pertain to trade concerns, which may encompass measures such as non-tariff barriers, environmental policies, import or export restrictions, national security, subsidy programs, export controls, and sanitary and phytosanitary measures. The authors account for concerns arising from measures introduced by a WTO member for environmental objectives and political or national security tensions, topics seen as emerging trends according to CTG meetings.
Concerns involving national security increased from one in 2016 to 11 in 2018, and 14 in 2019, escalating to 30 by 2022 and reaching 25 in 2023. Those related to the environment rose from two in 2018 to three in 2019, and 16 in 2022, reaching 22 in 2023.
Analyzing member countries that raised trade concerns in at least one CTG meeting between 1995 and 2023, Brazil ranks second in raising trade concerns related to environmental issues, following Indonesia.
Brazil raised five trade concerns, questioning the Carbon Border Adjustment Mechanism (CBAM) tax imposed by the European Union on imports and the European Deforestation Regulation banning the entry of commodities linked to deforestation. Indonesia registered six complaints. China was a complainant in four cases, and Russia in three. The United States and the EU each raised one concern.
Regarding national security concerns, China was responsible for 15, and the U.S. for two. The EU also raised two concerns, and Brazil raised one.
The majority of concerns involving political and national security issues pertain to measures taken by the U.S., which were the subject of 13 complaints, mostly raised by China.
The increase is due to more members joining the WTO over the years, but mainly to the trend of greater protectionism by countries, according to Juan Antonio Dorantes, former economic advisor to Mexico’s Permanent Mission to the WTO and managing partner of Dorantes Advisors, a firm specializing in international trade.
“WTO member countries are increasingly proficient in utilizing the tools provided by trade agreements to defend their market interests,” he notes, observing that as trade expands, so does the number of concerns. “However, we have also seen a growing trend toward protectionism in certain sectors, posing a problem for all exporting countries.”
Mr. Dorantes believes trade concerns impact large commodity exporters equally, as well as industrial goods exporters in general. He argues that in all areas, there may be less technical and more political reasons behind these concerns.
Marina Carvalho, an international trade specialist who was a consultant for the World Bank and chairs the Women Inside Trade program, notes that trade concerns have always existed and have been brought to the WTO. However, the increased use of tools like the CGT relates to the difficulty in other bodies functioning, such as the Dispute Settlement Body.
“The popularity of tools like raising trade concerns at the CGT and other committees grows as members seek alternatives to address these issues, which ultimately yield results,” she said.
For her, the ability to raise such trade concerns at the WTO is advantageous for exporting countries such as Brazil. “This can be a tool Brazil can leverage further if it identifies a measure aimed at environmental protection introducing unfair trade bias, sometimes protectionist and unjustified,” she argued.
Being a commodity exporter, she says, could make more WTO members concerned about Brazil’s environmental protection measures. “That has already been happening, and it’s up to Brazil to demonstrate the extent of its environmental protection policies while ensuring fair trade for its commodities,” she added.
Larissa Wachholz, a partner at Vallya Participações and senior associate at the Brazilian Center for International Relations (CEBRI), observes that the post-pandemic international scenario remains complex, fostering the emergence of trade barriers and complaints involving environmental and national security issues.
“We are experiencing a very difficult global economic moment, combined with China’s economic slowdown, with many countries facing inflationary challenges and complicated geopolitical issues,” she said. “These times encourage the emergence of supposedly technical criteria, although with protectionism elements.”
Looking ahead, Mr. Dorantes anticipates an increase in trade concerns, but also a weakening of WTO. “Donald Trump’s actions could undermine international institutions and dispute resolution mechanisms. If he unilaterally imposes a 5% tariff on imports, for example, it would be a total violation of WTO rules,” he said. The possibility of Mr. Trump launching unilateral actions and that other countries decide to follow suit outside WTO rules, could weaken the entire WTO structure. The paralysis of bodies such as the Appellate Body, with the U.S. blocking the appointment of new judges since 2019, he argues, contributes to raising doubts about not only the functioning but also the very existence of the WTO.
*By Marsílea Gombata — São Paulo
Source: Valor International