RESTRICTED
WORLD TRADE WT/DS22/3
29January 1996
ORGANIZATION(96-0276)
Original: English
BRAZIL -MEASURES AFFECTING DESICCATED COCONUT
Communication from Brazil
Thefollowing communication, dated 24January 1996, fromthePermanent Mission ofBrazil
totheChairman oftheDispute Settlement Body, iscirculated attherequest ofthatDelegation.
_______________
Ihavethehonour toconvey toyouherewith acopy ofdocument SCM/193 ontheissue of
countervailingdutiesimposedbyBrazilonimportsofprocesseddesiccatedcoconutfromthePhilippines.
Thematter wasreferred toduring theTokyo Round Committee heldon31October 1995.
Asyouwilllearn fromthepaper, during thepastfewmonths Brazil andthePhilippines have
faced, besides substantive issues relating totheBrazilian measure, thequestion oftheapplicable law
under which consultations ought toberequested. Brazil understands, forthereasons indicated inthe
position paper, thattheTokyo Round Code onSubsidies andCountervailing Measures should bethe
onlylegalframework applicable tothedispute, whereas thePhilippines espouse theopposite view.
Inorder toclarify thematter andtoseektransparency onthesubject withalltheTokyo Round
Committee Members, theBrazilian Mission requested thatsaidposition paper becirculated, asa
Committee document, among Members oftheCommittee onSubsidies andCountervailing Measures
oftheAgreement onInterpretation andApplication ofArticles VI,XVIandXXIII oftheGeneral
Agreement onTariffs andTrade (theTokyo Round Committee onSubsidies andCountervailing
Measures) before 31January.
Considering that,attherequest ofthePhilippine Mission, theissue hasbeenincluded inthe
agenda forthenextmeeting oftheDispute Settlement Body tobeheldon31January, Ikindly request
thatthepresent letter anditsattached document SCM/193 becirculated asaWTO document under
aDSsymbol, toallWTO Members before theDSBmeeting.
Brazil understands thattheDSBisnottheappropriate forum forthediscussion onthedispute
withthePhilippines andwishes tocirculate document SCM/193 among WTO Members forinformation
purposes onlyandwithout prejudice toitsrights under theTokyo Round Code onSubsidies and
Countervailing Measures andtoitsposition ontheapplicable law.RESTRICTED
GENERAL AGREEMENT SCM/193
26January 1996
ONTARIFFS AND TRADE Special Distribution
(96-0274)
Original: English Committee onSubsidies andCountervailing Measures
BRAZIL -IMPOSITION OFCOUNTERVAILING DUTIES ONIMPORTS
OFPROCESSED DESICCATED COCONUT FROM THE PHILIPPINES
Communication from Brazil
Thefollowing communication, dated 24January 1996, hasbeenreceived fromthePermanent
Mission ofBrazil.
_______________
Ihavethehonour toconvey toyouherewith aposition paper prepared byBrazil ontheissue
ofcountervailing duties imposed byBrazil onimports ofprocessed desiccated coconut from the
Philippines. Thematter wasreferred toduring theTokyo Round Committee heldon31October 1995.
Asyouwilllearn fromthepaper, during thepastfewmonths Brazil andthePhilippines have
faced, besides substantive issues relating totheBrazilian measure, thequestion oftheapplicable law
under which consultations ought toberequested. Brazil understands, forthereasons indicated inthe
position paper, thattheTokyo Round Code onSubsidies andCountervailing Measures should bethe
onlylegalframework applicable tothedispute, whereas thePhilippines espouse theopposite view.
Inorder toclarify thematter andtoseektransparency onthesubject withalltheCommittee
Members, Ikindly request thatthesaidposition paper becirculated, asaCommittee document, among
MembersoftheCommitteeonSubsidiesandCountervailingMeasuresoftheAgreementonInterpretation
andApplication ofArticles VI,XVIandXXIII oftheGeneral Agreement onTariffs andTrade (the
Tokyo Round Committee onSubsidies andCountervailing Measures) before 31January.
_______________
ThePermanent Mission ofBrazil inGeneva hereby submits relevant information concerning
theadoption ofcountervailing duties onimports ofdesiccated coconut from thePhilippines.
I. Summary oftheInvestigation andtheLegal Framework
1. TheBrazilian authorities initiated investigations onsubsidies granted tococonut processors
inthePhilippines andfourother countries through Public Notice SECEX No.40,dated 21July1994.
2. TheinvestigationswerebasedontheAgreementonInterpretationandApplicationofArticlesVI,
XVIandXXIII oftheGeneral Agreement onTariffs andTrade (theTokyo Round Agreement on
Subsidies andCountervailing Measures), towhich thePhilippines andBrazil areparties.SCM/193
Page2
3. After preliminary findings, theBrazilian authorities imposed provisional countervailing duties
onimports ofPhilippine desiccated coconut through Public Notice No.113,dated 23March 1995.
Later, theBrazilian authorities concluded thatsubsidies actually existed andimposed definitive
countervailing measures onimports ofprocessed desiccated coconut fromthePhilippines through Public
Notice No.11,dated 10August 1995.
II. Discussions withthePhilippine Side
4. On10November 1995, thePermanent Representative ofthePhilippines inGeneva addressed
aletter totheChairman oftheCommittee onSubsidies andCountervailing Measures inwhich she
informed thatthe"Government oftheRepublic ofthePhilippines wishes toinitiate procedures under
Article 17oftheTokyo Round Agreement onSubsidies andCountervailing Measures ...". Brazil
replied on14November thatsince formal consultations under theTokyo Round Code hadnotbeen
requested norhadtaken place, itwould beimproper tojump totheconciliation process ofArticle 17.
Brazil alsoindicated thatitwasready tostartformal consultations upon request bythePhilippines.
5. On27November 1995, thePermanent Representative ofthePhilippines addressed aletter
tothePermanent Representative ofBrazil requesting formal consultations under Article XXIII:1 of
GATT 1994. TheBrazilian answer, dated 8December 1995 stated thatthePermanent Mission of
Brazil wasready forconsultations "aslongasitwasmutually understood thatthose consultations will
beundertaken exclusively under theCode onSubsidies andCountervailing Measures [...]resulting
from theTokyo Round, under which auspices coconut subsidies investigations were conducted and
countervailing duties imposed".
6. On13December 1995, thePhilippines replied thattheBrazilian answer constituted arefusal
oftheirrequest forconsultations under Article XXIII:1 ofGATT 1994.
7. On10January 1996, Brazil onceagain reiterated thecontents ofitsprevious letter dated
8December, inwhich itwasinformed thatBrazil was"prepared toenter intoconsultations withthe
Philippines onthematter ofcountervailing duties imposed byBrazil onimports ofdesiccated coconut
from thePhilippines. Since theinvestigation andtheimposition ofdefinitive countervailing duties
were heldunder theTokyo Round Code onthatspecific matter [...]. Brazil considers thatthelegal
framework forconsultations onthesubject isthesameTokyo Round Code, which isstillinplace until
theendofthecurrent yearfordispute settlement purposes".
8. Brazil has,therefore, forthreetimes offered formal consultations tothePhilippines. Noreply
inthesense oftheacceptance ofthose offers everreached theBrazilian mission.
9. Inaletter dated 16January 1996theGovernment ofthePhilippines informed theGovernment
ofBrazil thattheyhaddecided torequest apanel.
III. Brazilian Arguments
10. TheBrazilian position onthismatter isasfollows:
(a) ThePhilippines stand infavour oftheapplication ofArticle VIofGATT 1994tothisdispute
isunacceptable toBrazil andraises relevant systemic issues ofinterest toallMembers ofthe
WTO;
(b) TheBrazilian investigation started in1994, under theTokyo Round Code onSubsidies and
Countervailing Measures;SCM/193
Page3
(c) TheTokyo Round Code isinforce until31December 1996 andmaybeinvoked bythe
Philippines;
(d) Furthermore, thescope ofArticle VIofGATT 1947islegally distinct fromthatofArticle VI
ofGATT 1994. Article VIofGATT 1947, asinterpreted bytheTokyo Round Agreements,
embodied aspecific setofrights andobligations; Article VIofGATT 1994, asinterpreted
bytheAgreement onSubsidies andCountervailing Measures, embodies another specific set
ofrights andobligations. Toinvoke Article VIofGATT 1994 implies theadoption ofthe
specific views oftheWTO agreements asopposed tothoseoftheTokyo agreements. Therefore,
toinvoke nowArticle VIofGATT 1994 toadispute started under theTokyo Round Code
would constitute anattempt toapply aninappropriate legalframework;
(e) Anyattempt toframe thepresent casewithin thescope oftheWTO agreements constitutes
anattempt tocircumvent theapplication oftheappropriate law;
(f) Noformal consultations evertookplace between theBrazilian andthePhilippine Missions
inGeneva, inspiteofreiterated Brazilian offers todoso.
VI. Conclusions
11. Insummary, Brazil reiterates itsdisposition toconsult withthePhilippine Mission onthebasis
oftherelevant provisions oftheTokyo Round Code onSubsidies andCountervailing Measures.
12. Brazil considers thisissue ofparticular interest toallWTO Members because insubstantive
terms itgoeswellbeyond thequestion oftheadoption ofacertain levelofcountervailing duties. In
fact,thecentral issue isthequestion oftheapplication oftheappropriate legalframework.