TWN Info Service on WTO and Trade Issues (Aug25/12)
21 August 2025
Third World Network

Brazil slams US Section 301 investigation as WTO-inconsistent, defends digital policies

Geneva, 20 August (D. Ravi Kanth): Brazil has inveighed against Section 301 of the United States Trade Act of 1974 on grounds that it is “unjustifiable, unreasonable, or discriminatory”, reiterating Brasilia’s “long-standing position that Section 301 is a unilateral instrument inconsistent with the principles and rules of the multilateral trading system.”

On 18 August, Brazil’s foreign minister, Mr Mauro Vieira, appeared to have comprehensively rebutted all the allegations made by the Office of the United States Trade Representative (USTR) in its proposed Section 301 investigation that will commence early next month.

Brazil said somewhat categorically that it “does not recognize the legitimacy of investigations, determinations, or potential retaliatory actions taken outside the legal framework of the WTO (World Trade Organization), which is the sole and appropriate forum for the settlement of trade disputes among its Members.”

The 91-page response of Brasilia covered each issue raised in the Section 301 complaint.

Brazil reminded USTR that it ought to have launched a trade dispute against Brasilia at the WTO to resolve its specific concerns about the Brazilian trade policies. “Under Section 303(a)(2) of the Trade Act of 1974, where the matter under investigation involves a trade agreement (as is the case here, given that both Brazil and the United States are parties to the WTO Agreements), USTR is required to promptly request proceedings under the formal dispute settlement procedures provided by that agreement if consultations fail to produce a mutually acceptable resolution within the specified period,” Brazil argued.

The Brazilian foreign minister said it “reserves all of its rights under the multilateral trading system.”

Given the “strategic partnership” and principles that Brazil attaches to the US, Mr Vieira said, it is ready to “engage constructively in this (investigation) process.” Further, Brazil said it is ready to participate in consultation and “provide clarifications on the matters at hand.”

However, it cautioned the US that its willingness to provide clarifications should “not be construed as an acknowledgement of the jurisdiction or validity of this unilateral proceeding.”

While rejecting the “allegations made by the United States,” Brazil said “its policies and practices do not meet the threshold for an affirmative finding under Section 301.”

Brazil maintained that “its policies and practices are justifiable, reasonable, fair, equitable, non-discriminatory, and consistent with the rules and norms of the multilateral trading system.”

Further, Brazil said emphatically that its measures “neither unjustifiably nor unreasonably burden or restrict US commerce, nor are they inconsistent with any trade agreement to which both Brazil and the United States are parties.”

Since the Brazilian measures cited by USTR “do not nullify or impair benefits accruing to the United States,” it asserted that “none of the alleged actions cited in this (Section 301) investigation satisfy the criteria for the imposition of remedies.”

Brazil said even if the US’ investigations under Section 301 satisfy “the threshold conditions,” action by USTR “would be inappropriate and inconsistent with the United States’ obligations under the multilateral trade agreements governed by the WTO.”

Brasilia cited the WTO dispute settlement panel report issued on 22 December 1999 in which it had comprehensively argued that “there is an irreconcilable conflict between the parts of Section 301 which mandate or authorize actions that are illegal under the WTO and Article 23 of the DSU (the WTO’s Dispute Settlement Understanding) and Article XVI:4 of the WTO Agreement.”

As a third party in that dispute launched by the European Union against Section 301, Brazil had said the dispute settlement panel “should affirm that Members (like the US) have an unqualified obligation to bring their legislation into conformity with WTO provisions.”

It is against this backdrop, Brazil cautioned, that the Section 301 investigations “would undermine the deep, strategic relationship between the United States and Brazil, and result in greater burdens or restrictions to US commerce than those otherwise caused by the alleged actions at issue.”

In the face of wide-ranging legal, regulatory, and institutional reforms undertaken by Brazil across the various sectors under review over the past few years, the Brazilian foreign minister said, “this Section 301 investigation, and any actions by the United States that might result therefrom, threaten to undermine the progress made through such Brazilian initiatives, and therefore impede USTR’s supposed objectives in initiating this investigation.”

Brazil’s digital trade policies

USTR has alleged that Brazil’s digital trade policies have adversely affected the American digital trade and big data companies. Brazil said its Electronic Payment Services do not disadvantage or undermine the competitiveness of US companies.

Brazil said it “does not engage in any act, policy, or practice that undermines the competitiveness of US companies engaged in digital trade and electronic payment services.”

It argued that “Brazilian laws, policies and practices, including judicial decisions, related to digital trade and payment services are designed and implemented to promote consumer protection, financial stability, and cybersecurity.”

Further, “all such measures and determinations are crafted with careful consideration of balancing a variety of fundamental freedoms, and in pursuit of Brazil’s sovereign right to balance its own system and scales of values,” Brazil said.

Brazil said its policies “as such and as applied” are justifiable, reasonable, fair, and equitable.

Despite these facts, Brazil said, “USTR has alleged that certain acts, policies, and practices may undermine the competitiveness of US companies engaged in digital trade and electronic payment services.”

Commenting on the investigations sought by USTR on the Brazilian Supreme Federal Court decisions in two cases—which held that social media companies may be liable for user-generated content related to certain crimes or illicit acts without a judicial order—as well as USTR’s complaint on fines imposed on US and US-headquartered companies in specific cases, Brazil said “the defendant had failed to comply with Brazilian judicial orders.”

Brazil emphasized that its “digital technology policies seek to strike a balance between the protection of freedom of speech and the protection of other fundamental rights and values, including the need to prevent online criminal activity.”

It reminded USTR that “each country, including the United States, faces the challenge of striking the necessary balance, according to their own systems and scales of values.” It said “several other democratic countries have undertaken similar efforts as Brazil to strike this balance. These include Australia, Canada, the United Kingdom, and the United States.”

According to Brazil, “Australia has codified the Australia Online Safety Act of 2021, which aims to protect against online harm including abusive behavior and toxic content.”

Brazil pointed out that “Canada has indirectly used copyright law and defamation claims as ways to impose liability to protect against online harm.” Brazil said “Canada is also considering new legislation to regulate child sexual exploitation content, terrorist content, content that incites violence, hate speech, and non-consensual sharing of intimate images.”