World Trade Organization condemns Brazilian industrial policy

Folha de S. Paulo and Estadão reported on 11 November 2016, Japanese and EU courts of the World Trade Organization condemned as illegal seven Brazilian industrial policy programs in a 400-page report. The most notable of these programs is Inovar-Auto, which exempts automakers and car parts manufacturers from an industrial products tax given that their products meet a 65 percent national content requirement, and an electronics program in the same vein. The WTO also found illegal export incentives, which exempted exporters from taxes based on their performance. The decision will force the federal government to restructure or dismantle the programs, and could also inhibit investments in the country, as businesses face uncertainty in receiving the tax benefits, which sum to ~US$2 billion per year. A significant part of the measures condemned by the WTO came into implementation under the Dilma Rousseff administration and have been continued by that of current President Michel Temer. Itamaraty, the Foreign Relations Ministry, noted the decision is preliminary and that Brazil will only officially accept the condemnation when the WTO publishes its final report on 14 December 2016. The WTO expects disputes over the ruling may last for years.