The Trials of Winning at the WTO: What Lies Behind Brazil's Success Gregory Shaffert Michelle Ratton Sanchez,Tt and Barbara Rosenbergtt
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Cornell International Law Journal Volume 41 Article 5 Issue 2 Summer 2008 The rT ials of Winning at the WTO: What Lies behind Brazil’s Success Gregory Shaffer Michelle Ratton Sanchez Barbara Rosenberg Follow this and additional works at: http://scholarship.law.cornell.edu/cilj Part of the Law Commons Recommended Citation Shaffer, Gregory; Sanchez, Michelle Ratton; and Rosenberg, Barbara (2008) "The rT ials of Winning at the WTO: What Lies behind Brazil’s Success," Cornell International Law Journal: Vol. 41: Iss. 2, Article 5. Available at: http://scholarship.law.cornell.edu/cilj/vol41/iss2/5 This Article is brought to you for free and open access by the Journals at Scholarship@Cornell Law: A Digital Repository. It has been accepted for inclusion in Cornell International Law Journal by an authorized administrator of Scholarship@Cornell Law: A Digital Repository. For more information, please contact [email protected]. The Trials of Winning at the WTO: What Lies Behind Brazil's Success Gregory Shaffert Michelle Ratton Sanchez,tt and Barbara Rosenbergtt Introduction ..................................................... 384 I. Brazil's Change in Trade and Development Policy: The GATT Years .............................................. 394 A. Brazil's Change in Development Policy ................. 394 B. Brazil's Organization for the GATT: Two Key Attributes for the Future ......................................... 399 C. Brazil in GATT Dispute Settlement ..................... 404 II. The Challenges Posed By WTO Dispute Settlement: The Catalyzing Effects of the Embraer Case for Brazil ......... 406 f Gregory Shaffer is the James L. Krusemark Professor of Law, University of Minnesota Law School. At the time of field work for this article, he was Professor of Law at the University of Wisconsin Law School, Director of the UW European Union Center, and Co-Director of the UW Center on World Affairs and the Global Economy, and then the Wing-Tat Lee Chair of International Law, Loyola University Chicago School of Law. tT Michelle Ratton Sanchez is a Professor of Law at the Law School of SAo Paulo, Getfulio Vargas Foundation (Direito GV) and a researcher at the Brazilian Center for Planning and Analysis (CEBRAP). ttt Barbara Rosenberg has a Ph.D. in Law from the University of SAo Paulo, teaches at Direito GV and is a partner at Barbosa, Mussnich & Aragdo Advogados, a law firm based in Sgo Paulo. We would like to thank participants at workshops at Northwestern University and John Marshall Law School, at panels at the annual meeting of the Law and Society Association in Baltimore (2006) and Berlin (2007), and at the conferences, Lawyers and the Construction of Law: National and Transnational Processes at the American Bar Foundation in Chicago (March 2008) and WTO Law: The State of the Discipline at Loyola University Chicago School of Law (February 2008), as well as participants at two workshop-dialogues organized by the International Centre on Trade and Sustainable Development in Sdo Paulo, Brazil (Spring 2006) and Mombassa, Kenya (December 2006). We would also like to thank the following individuals for their comments: Karen Alter, Welber Barral, Chad Bown, Sungjoon Cho, Christina Davis, Kevin Davis, Terry Halliday, Christine Harrington, Jide Nzelibe, Nancy Reichman, Ben Ross Schneider (who was particularly helpful in his comments in light of his expertise in Brazilian business politics and the state), Debra Steger, Vera Thorstensen, Graham Wilson, and Robert Wolfe. Finally, we would like to thank the following institutions for their financial support: the University of Wisconsin (UW) Center on World Affairs and the Global Economy, the UW European Union Center, UW Law School, Loyola University Chicago Law School, Direito GV, and the Law and Society Association for a grant to the International Research Collaborative Transnational Transformations of the State. We thank, in particular, the Brazilian Ministry of Foreign Affairs in Brazil and its mission in Geneva, which were incredibly open and helpful in providing us with documents and information, as well as all of the interviewees who shared with us their time and knowledge. Finally, we thank Matt Bills, Matt Fortin, Kyle Shamberg, and Anna Woodworth for their valuable research assistance. All errors of course are our own. 41 CORNELL INT'L L.J. 383 (2008) Cornell International Law Journal Vol. 41 A. The Challenges of WTO Dispute Settlement ............ 406 B. Brazil's Use of WTO Dispute Settlement: An Overview . 413 IlI. What Lies Behind Brazil's Success: The Building of a Pluralist Trade Law Community .......................... 423 A. Reorganizing Government to Respond to WTO C hallenges ............................................ 424 B. The Brazilian Process for Bringing a WTO Complaint: An O verview .......................................... 429 C. Private Sector Networks: Developments in Information, Academic, Legal, Business, and Civil Society Networks. 432 1. A Diffusion of Knowledge: The Brazilian Media and Information Networks .............................. 432 2. Investment in Trade Law by Brazilian Law Firms; Catalyzing Knowledge Diffusion Through Internship Programs in the Brazilian Government .............. 434 3. Developments in Legal Education and the Creation of Trade Law Study Networks ......................... 440 4. Initiatives of Business Trade Associations, Think Tanks, Consultancies, and Civil Society Organizations Regarding Brazilian Trade Policy .................... 446 IV. The Brazilian Approach Applied: Mechanisms Used in Specific W TO Cases ...................................... 456 A. Brazil as Complainant ................................. 457 B. Brazil as a Respondent ................................ 465 C. Brazil as a Third Party ................................ 469 V. The Limits of the Brazilian Approach ..................... 470 Conclusion: Our Findings ........................................ 477 An n ex ........................................................... 48 5 I. Brazil in the GATT Dispute Settlement System ............ 485 II. Brazil in the WTO Dispute Settlement System (1995-2007) .............................................. 490 A. Brazil as Complainant ................................. 490 B. Brazil as Respondent .................................. 492 C. Brazil as Third Party .................................. 494 III. Brazilian Exports and Imports 1995-2006 ................ 500 IV. List of Connected Cases in Which Brazil Was a Complainant and Third Party (1995-2007) ............... 501 Introduction Calls for greater empirical work in international law have been gaining ground.' This article, building from years of empirical investigation of 1. See, e.g., Jeffrey Dunoff & Joel Trachtman, The Law and Economics of Humanita- rian Law Violations in Internal Conflict, 93 AM. J. INT'L L. 394 (1999) (writing from a law and economics perspective that "[w]hile law and economics is rich in theory, it exalts empiricism (in which it is surprisingly poor)"); Ryan Goodman & Derek Jinks, Interna- tional Law and State Socialization: Conceptual, Empirical, and Normative Challenges, 54 DUKE L.J. 983 (2005) (writing from a sociological "acculturation" perspective that 2008 The Trials of Winning at the WTO international trade dispute settlement and its impact in Brazil, aims to advance our understanding of three sets of interrelated questions: who shapes international trade law through litigation and bargaining, how do they do so, and what broader effects do international trade law and judicialization have within a country?2 The article's point of entry is an examination of what lies behind Brazil's use of the legal regime of the World Trade Organization (WTO), including its use in litigation, negotia- tions, and ad hoc bargaining. We assess how the WTO legal regime has affected Brazil's national administration and Brazilian government-busi- ness-civil society relations regarding international trade policy and dispute settlement. In turn, we depict the strategies that Brazilian public and pri- vate actors have adopted to deploy and shape this very international legal process. We aim to show how these national and international processes 3 are reciprocally and dynamically interrelated. Although earlier work has focused on the impact of the legalization and judicialization of trade relations in the United States and the European Union (EU), 4 this article assesses the responses and strategies of a major "[flurther empirical research is required to illustrate more concretely how states are accultured"); Gregory Shaffer, A New Legal Realism: Method in International Economic Law Research, in INTERNATIONAL ECONOMIC LAW: THE STATE AND FUTURE OF THE DISCIPLINE 29 (Colin B. Picker et al. eds., 2008) (writing from a new legal realist approach and noting that although there has been a growth in quantitative empirical work on the use of the WTO legal system, qualitative empirical studies based on extensive field work are still lacking). 2. By using the term "legalized regime," we refer to the relative precision and bind- ing nature of WTO rules. By the term "judicialized regime," we refer to the use of a third party institution for dispute settlement-WTO panels whose decisions are subject to appeal before the WTO Appellate Body. On the concept of legalization, compare Ken- neth Abbott et al., The Concept of Legalization, 54 INT'L ORG. 401, 401-03 (2000) (defin- ing legalization in terms of a spectrum of three factors: (i) precision of rules, (ii) authority or bindingness