BRAZIL STARTS TRADE WAR WITH SOUTH AFRICA
Tip News - 2012/06/19       A+ A-
By Dr Durval de Noronha Goyos Jr

            The Brazilian Foreign Trade Chamber, CAMEX, decided on the 6th of June, 2012, to start formal consultations with the Republic of South Africa (South Africa) within the ambit of the dispute resolution system of the World Trade Organization (WTO), in connection to perceived illegal provisional antidumping duties imposed on Brazilian chicken exports.

            According to the South Africa antidumping administrative proceedings, whole Brazilian chicken exports are charged 62.93% duties, whilst deboned cuts are charged between 6.26% and 46.59%, depending on the exporter. Brazil alleges annual loses of US$ 70 million to its exporters in an administrative proceeding that is accused of inconsistency with the relevant WTO rules.

            The move has bemused many observers of bilateral relations as the value involved is puny compared to the trade surplus that Brazil has had with South Africa over many years. For instance, according to statistics released by the Brazilian government, in 2011 the South American country had a trade surplus of US$2, 6 billion, against a surplus of US$ 2, 1 billion in 2011 with South Africa.

            In addition, since democratization in 1994 and subsequent accession to the WTO, South Africa has been a staunch trade ally of Brazil in the WTO, as well as in other international fora. Both countries integrate the group of developing countries trying to modify the rules of the multilateral system so that they can advance juridicity, balance and social justice.

            It is also worthwhile noting that there are many legal difficulties before Brazil in connection with the dispute in proving significant impact of the measures before an eventual panel. Even if this obstacle is overcome and Brazil prevails in the dispute, specific enforcement of a decision is not guaranteed without the cooperation of the losing party, which often fails to occur. The costs of such a dispute are also disproportionate to the value of the case.

            Conjectures as to the reasons behind this decision of the Brazilian government are many fold and vary from sheer diplomatic incompetence in preempting such a situation, incompetence in avoiding an inconsistency in acting in conformity to a given international strategy, and incompetence in avoiding the relegation of national interest to those of a given private sector.

            It is not in the interests of Brazil to pursue such a puny dispute against a very close ally, much less before an international body that, in all likelihood, will not resolve the litigation in a definitive manner and will thus maintain a bad climate in the bilateral relationship for many years. This is something that Brazil and South Africa should avoid at all costs. It is high time for some good trade diplomacy at work!

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