Brazil May Resort to the WTO Against the U.S. on Steel Investigations

The Brazilian Government considers resorting to the World Trade Organization (WTO) against the United States of America. Recently, the North-American Government concluded that there was dumping in the Brazilian exports of cold-rolled steel to the US and that such practice were injuring the American industry. The result will likely imply in the application of surcharges on exports of two of the biggest Brazilian steel producers: Usiminas and CSN.

In its assessment, the US Department of Commerce (DOC) not only concluded that CSN and Usiminas were dumping their exports to the US, but it also affirmed that the Brazilian Government was indirectly subsidising the sector through seven official programs, such as the ex-tariff system, the drawback system and Reintegra, a program that returns to exporters a portion of the taxes charged during the production process. For that reason, the United States may impose a surcharge of 11.31% on CSN exports of cold-rolled steel and of 11.09% on Usiminas’.

The Brazilian Foreign Trade Secretary, Mr. Daniel Godinho, stated that Brazilian authorities strongly disagree with the conclusions of the American authorities. According to him, the Brazilian Government will act towards reverting the situation, including taking the subject to the WTO. Brazilian authorities made all possible efforts to avoid this result by effectively participating in the investigating as well explaining its official programs before the WTO Subsidies Committee. Nevertheless, the conclusion of the investigation was not favorable to Brazilian companies. Based on the current setting, Brazil is considering resorting to the WTO in order to solve the controversy on the concept of indirect subsidies and to avoid the application of duties on imports of one of the most important products on its trade flow with the US.

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