Termination of Section 302 Investigation: Practices of the Government of Brazil Regarding Trade and Investment in the Auto Sector

Irving A. Williamson
Federal Register
March 20, 1998

[Federal Register: March 20, 1998 (Volume 63, Number 54)]
[Notices]               
[Page 13718-13719]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20mr98-171]

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-110]

 
Termination of Section 302 Investigation: Practices of the 
Government of Brazil Regarding Trade and Investment in the Auto Sector

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of termination and monitoring.

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SUMMARY: On October 11, 1996, the Acting United States Trade 
Representative (USTR) initiated an investigation under section 
302(b)(1) of the Trade Act of 1974, as amended (the Trade Act), with 
respect to certain acts, policies and practices of the Government of 
Brazil concerning the grant of tariff-reduction benefits contingent on 
satisfying certain export performance and domestic content 
requirements. Following consultations with the United States under the 
auspices of the World Trade Organization (WTO), Brazil has agreed that 
it will not extend its automotive trade-related investment measures 
beyond December 31, 1999. Having reached a satisfactory resolution of 
the issues under investigation, the USTR has determined to terminate 
this section 302 investigation and monitor implementation of the 
agreement under section 306 of the Trade Act.

DATES: This investigation was terminated on March 16, 1998.

ADDRESSES: Office of the United States Trade Representative, 600 17th 
Street, N.W., Washington, D.C. 20508.

FOR FURTHER INFORMATION CONTACT: Bennett Harman, Deputy Assistant U.S. 
Trade Representative for the Western Hemisphere, (202) 395-5190, or 
Amelia Porges, Senior Counsel for Dispute Settlement, (202) 395-7305.

SUPPLEMENTARY INFORMATION: On October 11, 1996, the USTR initiated an 
investigation under Section 302(b)(1) of the Trade Act (19 U.S.C. 
2412(b)(1)) with respect to whether certain acts, policies or practices 
of Brazil concerning trade and investment in the auto sector are 
inconsistent with certain provisions of the General Agreement on 
Tariffs and Trade 1994 (GATT 1994), the Agreement on Trade-Related 
Investment Measures (TRIMS Agreement), and the Agreement on Subsidies 
and Countervailing Measures (SCM Agreement), each administered by the 
World Trade Organization (WTO) (61 FR 54485 of October 11, 1996). In 
particular, Brazil has adopted since December 1995 a series of decrees, 
including Law 9449, that provide that manufacturers of automobiles may 
get reductions in duties on imports of inputs and assembled vehicles if 
they maintain a specified level of local content, export an offsetting 
amount of finished vehicles and parts, and maintain specified ratios of 
imported to domestic capital goods and imported to domestic inputs. As 
Brazil agreed to enter into intensive talks with the United States, the 
USTR pursuant to section 303(b)(1)(A) of the Trade Act decided, pending 
the outcome of these talks, to delay for up to 90 days requesting the 
consultations required under section 303(a) of the Trade Act for the 
purpose of ensuring an adequate basis for such consultations. Pursuant 
to section 303(b)(1)(B) of the Trade Act the time limitations for 
making the determinations required by section 304 of the Trade Act were 
extended for the period of the delay. When the talks were not 
successful, pursuant to section 303(a) of the Trade Act, the USTR 
requested on January 10, 1997 consultations with the Government of 
Brazil under the procedures of the WTO Understanding on Rules and 
Procedures Governing the Settlement of Disputes (DSU).

Resolution of Dispute

    Following extensive consultations, the Government of Brazil and the 
Government of the United States reached an agreement on March 16, 1998, 
concerning trade measures in the automotive sector. In that agreement 
the Government of Brazil committed not to extend its automotive trade-
related investment measures beyond December 31, 1999--the date by which 
all notified performance requirements were to be eliminated under the 
WTO Agreement on Trade Related Investment Measures. In addition, in 
order to further limit the impact of the measures, the Government

[[Page 13719]]

of Brazil agreed to accelerate the deadline for the filing of new 
applications under the regime, moving up the deadline for auto 
assemblers by eighteen months and for parts manufacturers by one year. 
It also agreed to make adjustments to certain of the calculations made 
under the regime.
    On the basis of the agreement Brazil has agreed to enter into in 
order to provide a satisfactory resolution to the matter under 
investigation, the USTR has decided to terminate this section 302 
investigation. Pursuant to section 306 of the Trade Act, the USTR will 
monitor Brazil's implementation of the agreement concerning trade 
measures in the automotive sector.
Irving A. Williamson,
Chairman, Section 301 Committee.
[FR Doc. 98-7357 Filed 3-19-98; 8:45 am]
BILLING CODE 3190-01-M