Alberto Coutinho/GOVBA
The World Trade Organization found that initiatives such as INOVAR-AUTO, an auto industry incentive, were illegalAlberto Coutinho/GOVBAThe World Trade Organization (WTO) has released a report that considers seven Brazilian industrial policy programs illegal: the IT Law; the INOVAR-AUTO program; PADIS (technology development in the semiconductor industry); two exemption regimes for export companies (Special regime for the purchase of capital goods for exporting enterprises [RECAP] and the Regime for predominantly exporting companies [PEC]); and two programs that have already ended: PATVD (equipment for digital TV) and digital inclusion. The document condemns how Brazil boosted national production in these sectors by granting exemptions or suspending taxes on the end product that were not granted to producers of imported competitors. The Brazilian government announced it would file an appeal with the WTO against the complaint. The European Union and Japan questioned the programs because they consider them subsidies that are inconsistent with international rules. The deadline for filing the appeal is 60 days, and the final decision from the WTO will indicate how much time Brazil will have to suspend or modify the programs if it loses the appeal, says Carlos Márcio Cozendey, undersecretary general for economic and financial affairs at the Ministry of Foreign Affairs during a press conference. In the meantime, the government is discussing what to do if the programs are found illegal after the final decision. The IT Law, for example, could be recast to include policies to internationalize software companies, R&D investments in startups, clear red tape from incentive programs, and eliminate tax exemptions.
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