TRADE: Conflict Between Brazil, Canada Heats Up in WTO

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Feb 16 2001 (IPS) - The trade relations between Brazil and Canada, which have been strained over the past four years, became even more tense after Ottawa banned imports of Brazilian beef due to a hypothetical risk of “mad cow” disease.

Brazilian ambassador to the World Trade Organisation (WTO) Celso Amorim said “Canada is pushing us towards a spiral of unpredictable consequences.”

Brazil claimed that behind Canada’s ban, justified as a health measure based on a possible risk of “mad cow” disease or Bovine Spongiform Encephalopathy (BSE), lies an ongoing dispute between the two countries, which are in fierce competition over the market for medium-sized jets.

Defending its airplane manufacturer Bombardier, Canada filed a complaint with the WTO that Brazil’s aircraft-maker Embraer received bulky subsidies through the government’s export financing regime, ProEx.

The Canadian government is no stranger to subsiding its national industry, however, as indicated by a study released this week by the United Nations Environment Programme (UNEP) on the effects of subsidies on the depletion of fishing stocks.

The report stated that the subsidies shelled out by Canada to its shipyards for 30 years had substantially contributed to the virtual disappearance of cod in the north Atlantic.

The WTO Dispute Settlement Body found in favour of Canada, which was authorised to impose trade sanctions on Brazil for 233 million dollars a year for six years. Canada has not yet taken formal reprisals, however.

The aircraft dispute was at its hottest point due to appeals filed by Brazil when the Canadian government adopted the ban on Brazilian beef on Feb 2, arguing that the South American nation had failed to provide the necessary paperwork on several thousand cattle imported from Europe.

At a session of the Dispute Settlement Body Thursday, Amorim said that “regardless of what the Brazilian government may or may not believe, public opinion in Brazil has established a firm and clear linkage between the beef ban and the state of affairs in the aircraft dispute between Brazil and Canada.

“We have yet to hear one single voice in Brazil uphold that the ban is just an unfortunate coincidence,” the former Brazilian foreign minister told the other 139 member countries of the WTO.

“Canadian health officials themselves have denounced the lack of scientific basis for the measure and the ill-disguised link between the ban and the aircraft dispute,” he added.

Amorim told the WTO that Canada’s decision had caused “extensive injury and damage to the Brazilian economy in general, and to Brazilian meat exporters in particular.” When Canada adopted the ban on beef imports, its partners in the North American Free Trade Association (NAFTA), Mexico and the United States, had to automatically follow suit.

The Brazilian delegation warned that their country reserved the right to act under WTO accords, especially the Agreement on Sanitary and Phytosanitary Measures.

Canadian Ambassador to the WTO Sergio Marchi responded that the ban on Brazilian beef “was taken exclusively to protect the health of Canadians from the risk of BSE,” which has affected herds and claimed human lives – in the variant form of Creutzfeld- Jakob Disease – in a number of European countries.

No case of BSE has ever been reported in Brazil, however.

If a fact-finding mission of Canadian, U.S. and Mexican experts sent to Brazil finds that the country “meets Canada’s requirements to be assessed as free of BSE, the temporary suspension of imports will be lifted,” said Marchi.

Brian Evans of the Canadian Food Inspection Agency, the head of the mission, said in Brazil Thursday that the ban could possibly be lifted next week.

Marchi, meanwhile, said “we have been disturbed by suggestions made by senior Brazilian officials in the media that the measures we took are related to the Canada-Brazil aircraft dispute, and that they were a form of unofficial, unauthorised ‘retaliation’.”

With respect to the aircraft dispute, the Dispute Settlement Body decided Thursday to set up a special panel, as requested by Canada, to determine whether Brazil’s recent reforms of ProEx brought the programme into line with WTO regulations.