WT/DS596/1  
G/ADP/D134/1  
G/L/1361  
15 July 2020 
(20-4837) Page: 1/6 
 Original:  Spanish  
 
  
BRAZIL - MEASURES CO NCERNING THE IMPORTA TION OF PET FILM  
FROM PERU AND  IMPORTED PRODUCTS IN  GENERAL  
REQUEST FOR CONSULTATIONS BY PERU  
The following communication, dated 1 0 July 2020, from the delegation of Peru to the delegation of 
Brazil, is circulated to the Dispute Settlement Body in accordance with Article 4.4 of the DSU.  
 
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Pursuant to  Article  4 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes  (DSU),  Article 17 of the Agreement on  Implementation of Article VI of the GATT  1994 
(Anti-Dumping Agreement) and  Article XXII of the General Agreement on Tariffs and Trade 1994  
(GATT 1994), the authorities of Peru  have instructed me to request  consultations  with the Federative 
Republic of Bra zil (Brazil) with respect to specific measures  that affect  the importation  and marketing  
in that country of biaxial ly oriented  polyethylene terephthalate ( PET) film products from Peru and 
imported products in general.  
 
These measures consist of definitive anti -dumping duties on the importation of PET film products , 
including the various stages of the investigation carried out by the Under -Secretariat of Trade 
Defence and Public Interest (SDCOM, the current title of the Department of Trade Defence  at the 
Secretariat of Foreign Trade), which resulted in the imposition  of these measures, as well as the 
differentia l tax treatment granted to imported products in general (including PET film products 
specifically), compared with the treatment  received by  like products of national  origin in the context 
of the tax replacement scheme applicable to the industrial  products tax (IPI).  
 
The grounds for this request  for consultations are set out below . Peru hopes to receive specific  
explanations from Brazil  relating to these  grounds with a view to exploring concrete  alternative 
solutions to this dispute.  
 
I. MEASURES AT ISSUE  
 
The measures at issue  are as follows : 
 
• The d efinitive anti-dumping measures  imposed pursuant to Ord inance  No. 473 of 
28 June 2019 of the Special Secretariat of Foreign Trade and International Affairs at the 
Ministry of Economic  Affairs , publi shed on 1 July 2019 in the Official Gazette of Brazil, 
and also the decision  to initiate  an investigation , cont ained in Circular No. 68 of 
29 December  2017, publi shed on 2 January  2018, of the Secretariat  of Foreign Trade , 
including, but not restricted to , the related supporting documentation , the relevant 
determina tions, the decisions regarding  confidentiality  of informa tion, and other a spects 
of the investiga tion linked to the imposi tion of anti-dumping  measures . 
 WT/DS5 96/1 • G/ADP/D134/1 • G/L/1361  
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  • The practice of the competent  authority of Brazil  not to require , in conjunction  with the 
request  to initiate  the investigation , the presentation  of evidence relating to domest ic 
sales in the country of o rigin or exportation but ra ther to accept at face value the 
information provided by the applicant  (inclu ding at a wider  product level ) regarding  
exports to third countries or the constru ction of normal value without undertaking a 
critical examination or questioning of that information in such a way as to guarantee its 
accuracy and adequacy .1 
 
• The tax treatment of products  imported under the Brazilian IPI legislation , set forth  in 
Article 26 of Decree No. 7.212/2010 ( "IPI Regulations "), Article 35.II and §2 of 
Law No. 4.502/64, which provide  for a general tax replacement  scheme  
("Tax Replacement  Scheme "), and Article 17 of Normativ e Instruction No. 1.081 of 
2010 of the Brazilian Federal Revenue Department , which expressly prohibits the 
application of the special IPI replacement  scheme to customs clearance  – all these 
standards considered  individual ly or in conjunction  – in relation to imported products, 
including  PET film products . 
 
This request is also being made against any other normative and/or administrative act, or practice, 
that complement s, supplement s, amends  or replaces the above -mentioned instruments or practice . 
 
II. LEGAL CLAIMS  
 
Peru holds the view t hat the measures in question appear to be inconsistent  with Articles III and VI 
of the GATT 1994 and with the Anti -Dumping Agreement for the following reasons : 
 
A. ANTI-DUMPING MEASURES AND INVESTIGATION INTO PET FILM PRODUCTS FROM PERU  
 
The anti -dumping measures relating to  imports of PET film products from Peru appear to be 
inconsistent  with Articles 1 and 18.1 of the Anti -Dumping Agreement and Article  VI of the 
GATT 1994, given that : 
 
(i) The measures were based on an investig ation that was allegedly  initiated  in a manner 
inconsistent  with Articles  5.2, 5.3 and 5.8 of the Anti -Dumping Agreement  inasmuch as : 
 
• The competent  authority initiated  the investigation without the application having 
sufficient evidence of the existenc e of dumping, and in particular of the normal value of 
domestic sales in the Peruvian market . It thus accepted without questioning the 
information given by the applicant , without explaining the basis for not requiring 
evidence of domestic sales in Peru – something that was relevant – and for making use 
of the price of exportation to a third country . 
 
• The competent  authority did not adequately justify why Colombia was the "appropriate " 
third country in that context, or why its price was "representativ e", especially when in 
the same initial determina tion (regard ing PET film products from Bahrain and Thailand) 
the "appropriate " nature of the third country was determined on the basis of the 
third country that was the destination of the greatest volume of exports . In the light of 
this criterio n, the export volume from Peru to Colombia was much less , and the e xport 
price significantly higher , than that of exports to other third countries . 
 
 
1 As examples of this practice, the following should be taken into consideration: the investigation into 
alleged dumping in exports of BOPP film to Brazil from Argentina, Chile, China, Ecuador, Peru and the 
United  States (2009); the investigation into alleged dumping in exports of BOPP film to Brazil from Argentina, 
Chile, China, Colombia, India and Peru (2013); and the investigation into alleged dumping in expor ts of 
BOPET  film (2015).  WT/DS5 96/1 • G/ADP/D134/1 • G/L/1361  
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  • Moreover , despite its in -depth knowledge of the p roduct  in question , the competent  
authority did not take into account that the information on normal value contained 
information on a product  of a greater scope tha n the product strictly under investigation, 
but it nevertheless compared that information with the export price , which was limited  
to the product under investigation . The evidence consisted of price information from 
TRADEMAP correspond ing to the six -digit tariff heading 3920.622, and not to the 
headings on the basis of which the investigation was formally initiated  (namely, the 
eight-digit headings 3920.62.19, 3920.62.91 and 3920.62.99).  
 
• Furthermore , even though this was not an ex officio  investigation, the competent 
authority gathered additional information to that submitted by the applicant in order to 
supplement the information on the period selected for the dumping investigation and to 
be able to make the respective calculations on thi s basis . 
 
• Despite these evidentiary shortcomings  and the exp licit questioning of the exporter in 
the context of the investigation procedure, the  competent  authority neither  reject ed the 
application to initiate the investigation nor immediately terminated the investigation . 
 
(ii) The measures were based on a final determination of dumping  that appears  inconsistent  
with Articles 2.1, 2.2, 2.2.2, 2.4, 6.8 and Annex  II of the Anti -Dumping Agreement , for the 
following reasons : 
 
• The competent authority evaluated the sufficiency of domestic sales on the basis of 
codes for subproducts of the product under  investigation, and reached  the conclusion  
that in view of the "insufficiency " of domestic sales in relation to two codes (and also 
the non -existence of domestic sa les in relation to a third code), use should be made of 
the constructed value method for the three indicated codes . The competent authority 
did not consider t he totality  of the "product under investigation " in the analysis of 
sufficiency , which diverges fr om the type of sufficiency analysis provided for in 
Article  2.2 of the Anti -Dumping Agreement . Furthermore, Peru also observes that, in 
constructing  the normal value in relation  to specific  subproducts, the authority made 
incorrect use of this method, which, according to Article 2.2 , is intended to establish 
normal value in relation to the product under investigation in its entirety, and not in 
relation to specific  subproducts or models.  
 
• In carrying out a sufficiency analysis for  domestic  sales that was limited  to certain codes 
and reject ed domestic sales in relation to two codes  on account of "insufficiency ", the 
competent authority rejecte d this information without having observed the guarantees 
and the circumspection required by Article 6.8 an d Annex II of the 
Anti-Dumping  Agreement.  
 
(iii) The measures were based on a final determination of material  injury , which lacked any 
reasoned and adequate  explanation and appears to be inconsistent  with Articles  3.1, 3.2 
and 3.4 of the Anti -Dumping Agreement . In particular, but not exclusively3: 
 
• The competent authority carried out  an undercutting analysis on the bas is of unequal 
tax conditions relating to the IPI, with different impacts  on the prices of domestic  and 
imported products, and this had a  distorting effect on the under cutting  analysis, and 
therefore appears  to be  inconsistent  with Articles 3.1 and 3.2 of the 
Anti-Dumping  Agreement.  
 
2 This wider range includes, for example, printed PET film, which by definition has a significantly higher 
price and product characteristics different from the product strictly under investigation.  
3 Peru reserves the right to rais e other questions concerning the analysis of injury under Articles 3.1, 
3.2 and 3.4 of the Anti -Dumping Agreement in the context of the consultations with Brazil.  WT/DS5 96/1 • G/ADP/D134/1 • G/L/1361  
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• Furthermore, the competent authority established the existence of material  injury to 
the domestic  industry w ithout having taken account of the fact th at most economic 
indicators in this branch showed favourable  performance, even substantial growth . In 
addition , there was no adequate appreciation of the evidence in the construction of 
capacity utilization  indicators, or an adequate appreciation  of cost -benefit indicators . 
This appears  to be inconsistent  with Articles 3.1 and 3.4 of the Anti -Dumping 
Agreement.  
 
• Moreover, the competent authority made a finding of material  injury on the basis of an 
incomplete  and biased  appraisal of the investigation period , compar ing P5 with P1 and 
P4, without consider ing the distorting effect of the imposition of other trade defence 
measures during those periods . This appears to be inconsistent  with Articles  3.1 and 
3.4 of the Anti -Dumping Agreement . 
 
(iv) The measures were based on a final causal link  determination  that appears  to be 
inconsistent with Articles 3.1 and 3.5 of the Anti -Dumping Agreement  because the 
competent authority established  the existence  of a causal link without having  an adequate 
evidentiary basis . Moreover , it did not analyse or objectively quantify the effect of factors 
other than  imports that could have caused injury to the domestic  industry . In particular, 
but not exclusiv ely4: 
 
• To explain the loss of benefits , the competent authority did not attach any importance 
to the effect of the imposition of other trade defence measures on the financial situation 
of the domestic  industry . 
 
• As regard s the explanation of the loss of market  share , the competent authority  did not 
evaluate exhaustively the limita tions on the production capacity of the domestic  industry 
to supply the national market  (in the light of information from the parent company that 
the applicant was operating at "full capacity ") and it did not take account  of the business  
strategy, in which some 40% of production is intended for export . 
 
• The competent authority did not consider  that the under cutting  margin in P5 was barely  
5%, which could not have cause the alleged  loss of market share . Nor did it consider 
the applicant 's decision  to significantly  increase  its prices in P4 contrary to the trends in 
the costs of raw materials, ow ing to the application of anti -dumping duties against other 
origins . Lastly, the competent authority did not consider that Peru has tariff preferences 
obtained through  the Economic  Complementarity Agreement  between MERCOSUR and 
the Government of the Republic of Peru (ACE No. 58), whereby the full 16 % tariff does 
not have to be applied to Peruvian imports of this kind of film.  
 
(v) The investigation that gave rise to the anti -dumping measure appears  to have been 
conducted in a manner  inconsistent with Articles 6 .5 and 6.5.1 of the 
Anti-Dumping  Agreement , in that the competent authority : (a) treated as confidential  the 
information provided  by the applicants  without showing good cause ; (b) failed to require  
the applicants to furnish  a non -confidential summary there of; and/or (c) where such  
summaries were provided, they were not in sufficient detail to permit  a reasonable 
understanding of the substan ce of the information submitted in confiden ce. 
 
(vi) The competen t authority acted in a manner  inconsistent with Article 6.9 of the 
Anti-Dumping Agreement in not duly notifying  certain  key facts that formed  the basis of 
the final determina tion. 
 
4 Peru reserves the right to raise other questions concerning the analysis of injury under Ar ticles 3.1 and 
3.5 of the Anti -Dumping Agreement in the context of the consultations with Brazil.  WT/DS5 96/1 • G/ADP/D134/1 • G/L/1361  
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(vii) The competent authority did not indicate in sufficient detail the finding s and conclusions 
reached on all issues of fact and law considered  material by the investigating  authority , 
and all relevant information on the matters of fact and law  and reasons which have led to 
the imposition of measures, which is  inconsistent with Article 12.2.2 of the 
Anti-Dumping  Agreement . 
 
B. PRACTICE OF THE COMPETENT AUTHORITY TO INITIATE  AN INVESTIGATION WITHOUT 
QUESTIONING THE NORMAL VALUE INFORMATION PROVIDED BY THE APPLICANT TO GUARANTEE 
ITS ACCURACY AND ADEQUACY  
 
The app arent ongoing practice of the competent authority not to require , in connection with the 
request to initiate  an investigation , the submission of evidence relating to domestic sales in the 
country of origin or exportation , and instead to accept information at face value on 
non-representative prices from an inappropriate  third country , despite specific information on the 
product under investigation being available to  the applicant , is contrary to Articles  2.1, 2.4, 5.2 and 
5.3 of the Anti -Dumping Agreement . 
 
C. DIFFERENTIA L TAX TREATMENT OF PRODUCTS IMPORTED IN THE CONTEXT OF THE IPI 
 
The tax treatment established under  the Brazilian  IPI legislation  – set forth in Article 26 of 
Decree  No. 7.212/2010 ( "IPI Regulations "), Article 35.II and §2 of Act No. 4.502/64, and Article 17 
of Normative Instruction  No. 1.081 of 2010 of the Brazilian F ederal Revenue Department  (all these 
standards con sidered individual ly or in conjunction ) – accorded  in the context of IPI taxation to 
imported products in general, inclu ding PET products specifically , appears to be inconsistent  with 
Articles  III:2, first and second sentences , and III:4 of the GATT 1994 on the following grounds : 
 
(i) With regard to Article III:2,  first and second sentences , of the GATT 1994, the prohibition 
of Article 17 of Normative Instruction No. 1.081 of 2010 of the Brazilian Federal Revenue 
Department applicable to the tax replacement  scheme for imports appears  to result in a 
greater  financial burden  for imported products  (inclu ding PET f ilm products ) by 
comparison with like products  of national origin . The purchaser of imported products 
must make the IPI payment at the time of importation . However, the same purchaser  
(if authorized under the special tax replacement scheme ) would not have to make the 
same payment if purchasing a like product  of national  origin . 
 
(ii) With regard to Article III:4 of the GATT 1994, the prohibition of Article 17 of Normative 
Instruction No. 1.081 of 2010 of the Brazilian Federal Revenue Department applicable 
to the tax replacement scheme for imports  appears  to result  in less favourable  treatment 
for imported products (inclu ding PET film products ) by comparison with like products  of 
national origin . This un equal treatment  would affect conditions  of competition  to the 
detriment of imported products.  
 
*****  
 
The Government of Peru  consider s in any case that the measures in question would have eliminated 
or undermined advantages resulting  from the application of the GATT 1994 or would have 
compromised the fulfilment  of the objectives of that Agreement . 
 
It also observ es that these consulta tions might give rise to other matters of fact or having legal 
implications  that are not expressly stated in this request  but relate  to other obligations of Brazil 
under  the WTO Agreement , in particular obligations  relating to the administration in a uniform, 
impar tial and reasonable manner  of measures that affect international trade in goods , as set forth  
in Article X:3(a) of the GATT 1994. W ith a view to facilita ting a wide-ranging exchange of views, it WT/DS5 96/1 • G/ADP/D134/1 • G/L/1361  
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  should be understood that , if such were to be the case,  these matters would also be cover ed by the 
scope of this request for consultations . 
 
The Government of Peru looks forward to receiving a reply to this request for consultations . The 
Peruvian diplomatic mission will in due course contact the P ermanent  Mission  of Brazil  with a view 
to liaising on  the case  in order to hold  the consultations.  
 
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