Brazil to retaliate unilaterally in trade disputes as WTO body stalled

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BRASILIA, Jan 26 (Reuters) - Brazilian President Jair Bolsonaro has signed an executive order allowing the country to retaliate unilaterally in trade disputes if hearings are stalled at the World Trade Organization (WTO), the official gazette showed on Thursday.

Brazil's government said the move was as a result of the WTO's Appellate Body effectively ceasing work because the United States has blocked new appointments - meaning it does not have any adjudicators to rule on cases and appeals are left in a legal void.

Countries that have lost trade disputes to Brazil are "exempted from the consequences for an indefinite time simply because their appeals will not be analyzed", the government said.

According to a statement from Bolsonaro's office, the executive order will allow Brazil to put in place favorable decisions that it got at the WTO but were not yet implemented due to the appellate body's issues.

A source at Brazil's Economy Ministry said the move opens the way for the country to unilaterally retaliate against India and Indonesia in trade disputes regarding sugar and poultry, respectively.

Brazil has signed up to an interim appeals system with a number of other members, including the European Union and China, but countries such as India, Indonesia and the United States have not joined in - effectively blocking any settlements.

In December, a WTO panel ruled in favor of Brazil, Australia and Guatemala in their 2019 trade disputes with India over sugar subsidies and asked New Delhi to conform with global rules, but the Asian country later said it would appeal the decision.

Brazil was also waiting for Indonesia to adopt recommendations made by a panel after a dispute over the chicken market. Brazil requested WTO consultations with Indonesia back in 2014 concerning measures blocking its access to that market.

The South American country won the dispute, but Indonesia requested "a reasonable period of time" to adopt its recommendations and in December 2020 appealed to the WTO's appellate body.

"For now, these are the only two countries against which we have won trade disputes but ended up appealing to the appellate body," the source said. (Reporting by Marcela Ayres in Brasilia; Additional reporting and writing by Gabriel Araujo in Sao Paulo and Philip Blenkinsop in Brussels; Editing by Alison Williams)