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Brazil Launches WTO Case Against Mainland China’s Sugar Measures

Brazil on 22 October filed a request for consultations under the WTO dispute settlement mechanism over certain measures imposed by mainland China on sugar imports, specifically mainland China’s 22 May 2017 safeguard measure on imported sugar, the administration of mainland China’s tariff-rate quota for sugar and the so-called automatic import licencing system for out-of-quota sugar.

Brazil notes that mainland China’s safeguard measure on sugar takes the form of an additional ad valorem duty of 45 percent in the first year of implementation, followed by 40 percent in the second year and 35 percent in the third year. This duty applies to imports outside the existing TRQ for sugar, which was established when mainland China acceded to the WTO in 2001. The TRQ totals 1,945,000 tonnes, with an in-quota rate of 15 percent and an out-of-quota rate of 50 percent. Consequently, out-of-quota sugar imports will be subject to a 90 percent overall tariff through 21 May 2019 and an 85 percent overall tariff from 22 May 2019 through 21 May 2020.

Brazil contends that the safeguard measure appears to be inconsistent with mainland China’s obligations under the GATT 1994 and the Agreement on Safeguards. It also alleges that Beijing appears to administer its sugar TRQ inconsistently with its WTO obligations, including the commitments specified in paragraph 1.2 of part I of its WTO protocol of accession. Moreover, Brazil claims the automatic import licencing system is not automatic as approval is granted only up to the maximum level approved by the Ministry of Commerce (MOFCOM). Mainland China ostensibly makes this restriction effective through import licences, which are granted only if the request presented by the importer does not exceed the amount set by MOFCOM. Moreover, under this system if imports increase too rapidly MOFCOM can reduce or stop the issuance of licences to import sugar at any time.

If a mutually-satisfactory understanding is not reached following a 60-day consultation period, Brazil may formally request the establishment of a WTO panel to examine this matter.

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