In 2005, WTO’s Appellate Body ruled that the
The Appellate Body ruled that the
Accordingly, such measures taken by Brazil not only have a punishing character for the breaching of mutually agreed WTO rules, but especially they are compensatory for the illegal damages caused by the US in violation of WTO rules. Above all, the main goal of the measures is to make the
In November 2009, the WTO arbitrators authorised
To implement the WTO authorisation, on February 11, 2010
Following the WTO’s authorisation and MP No. 482, on March 08, 2010
The list of goods amounts [doc] to retaliation of $591 million. The remaining compensation amount that
This is the so-called cross-retaliation. That is, the case involves subsidies to cotton goods in the
It is important to clarify that at the time of the negotiations that led to the creation of the WTO in the late 1980s and early 1990s, industrialised countries – notably the US, but also the European Union and Japan – supported the cross-retaliation in one direction only: if there were violations to commitments on intellectual property rights, the violating country would be subject to retaliation in other sectors, such as trade in goods, just as occurred in the unilateral (and illegal) measures undertaken by the US before the WTO, including against Brazil.
The head of the delegation of
Accordingly, on March 15, 2010 Brazil issued Camex Resolution 16/2010 [pdf] (in Portuguese) for open public consultation (in Portuguese) on the measures that Brazil may take on intellectual property rights, calling on interested parties to express their views within 20 days. The Brazilian government is being cautious and transparent, and is promoting a democratic participation in the process.
The cross-retaliation may (and should) be put forward where it is determined that the suspension of concessions in the same sector will have no effect or will not be efficient, or when it is more harmful to the country authorised to establish such measures. In practical terms, should the raising of import tax on some goods from the US be harmful to Brazil, the latter is entitled to, for example, refrain from paying royalties for patented and copyrighted goods – a form of suspension of concessions and obligations on intellectual property rights.
In other words, the WTO rules provide that if the
Potential Benefits to Society, Multilateral System
If used wisely, cross-retaliation may be very beneficial to society, the industrial sector and the Brazilian consumers, who will pay less or even will not have to pay anything to buy or use, for instance, a patented product (from a US company). Society will be able to save millions with software licences, expensive books published by US publishers such as medical books, which can be made available for free on the internet, or seeds protected by plant breeders’ rights may be freely used for food production, and so on.
Cross-retaliation is a measure that benefits (i) consumers and Brazilian society, (ii) the local industry (e.g. the generics industry will be allowed to introduce patent-protected medicines), (iii) the domestic private sector harmed by the illegal measures, which will compensate the losses suffered by the illegal US subsidies, (iv) the Brazilian government, which will make sure the international rules are observed by everyone, including and especially the most powerful countries (the main advantage of multilateralism), and (v) the international community, which will benefit from the fact that one of the most powerful countries will be obliged to comply with the rules agreed by all WTO members.
Accordingly, what is more interesting in the cross-retaliation scheme is that the measure serves as an incentive for the US to comply with the WTO rules, as decided by the Appellate Body, in particular by withdrawing its illegal cotton subsidies and ending the harm to Brazilian producers (or to other WTO members).
Yet, it is important to recall that retaliation measures are not (and should not be) permanent, but rather limited in time. It only lasts as long as the
Effective Means for Compliance
How does this incentive for compliance work? The
And precisely because these
It should be reiterated that the idea of retaliation comes from the
Indeed, if there is someone who is not complying with the rules, it is certainly the