Plano Brasil Maior

On August 3, 2011, the President of Brazil, Mrs. Dilma Rousseff enacted and issued Decree No. 7540 through which put into operation an ambitious plan to integrate governmental actions of industrial policy, technology and foreign trade, with the central objective of accelerating the growth of productive investment and technological effort, the innovation of domestic enterprises and increase the competitiveness of Brazilian goods and services (the "Plan").

The Plan includes measures aimed to stimulate investment, foreign trade, the defense of Brazilian industry and the domestic market. The launch of the Plan was accompanied by the opening of an Internet site which provides details of the Plan, with frequent updates on the measures falling under the same http://www.brasilmaior.mdic.gov.br/.

It should be noted that the Plan developed by Rousseff administration has its focus on sustainable development, scientific research and the promotion of professional qualification, encouraging entry into engineering and technical professions.

One of the first measures framed within the Plan is the system called Reintegra (Reimbursement). A special regime for the reimbursement of residual tax costs for exporters. This measure was published simultaneously with the launching of the Plan and approved by Provisional Measure No. 540 (equivalent to the Urgency Executive Decrees of the Argentine Constitution).

Regardless of the technical analysis that the Plan must be put to, and the praises that can be paid from the perspective of sustainable development, a big question is emerging in the fields of foreign trade. Is the Plan against the provisions of the World Trade Organization ("WTO")? How this package of measures may affect the other members of the Mercosur, and especially, Argentina?

To answer this question, the measures to be taken by the Brazilian government in the coming months must be analyzed case by case. The Minister of Development, Industry and Foreign Trade of Brazil, Fernando Pimentel said the Plan is not protectionist and does not breach the WTO rules. However, the United States and the European Union have already declared they will monitor the Plan, as they suspect that it may violate the terms and provisions of the Agreement on Subsidies and Countervailing Measures of the WTO ("ASCM").

The ASMC regulates, among other matters, the procedures that may be adopted by countries that feel aggrieved by the use of an specific subsidy, providing the possibility to make use of countervailing measures (extra fee on subsidized imports), or the possibility to make complaints to the Dispute Settlement Body of the WTO.

However, for a country to claim compensation measures or sanctions against Brazil for the implementation of this Plan must also demonstrate that the application of the measures has caused damage to their domestic industry and causal link between the measures and the damage caused. Thus, if the measures taken by the Brazilian government affect the domestic industry of Argentina, causing damage, it may arise the possibility that the Argentine government may present a complaint before the WTO to protect its own industry. It will be necessary to wait the development of the measures that Brazil has already up its sleeve for the coming months.