EU takes Brazil to WTO over 'protectionist' car taxes

Hundreds of Fiat's cars stand at a airport in the Oliveira city, state of Minas Gerais, November 29, 2008. [Photo/Agencies]

The EU launched a case against Brazil at the World Trade Organization on Thursday over the South American nation's taxes on imports from cars to computers, but insisted the dispute should have no bearing on delicate free-trade talks.

The European Union is Brazil's biggest trading partner - accounting for a fifth of its total exports. Brazil would be a major beneficiary of a far-reaching trade accord the EU is negotiating with Mercosur, a group of Latin American countries.

But after 10 rounds of talks and several meetings in Geneva, home to the WTO, the two sides have failed to resolve a long-running row over Brazilian import taxes that Europe says are unfair and break global trade rules.

EU car exports to Brazil fell by more than 11 percent this year partly because of the taxes, according to an influential German lawmaker in the European Parliament, Daniel Caspary. He called the taxes "discriminatory and protectionist."

Brazilian Foreign Minister Luiz Alberto Figueiredo told reporters that levying the taxes was within the country's rights. "We have solid arguments to show that we are complying with international trade rules," he said in Brasilia.

The European Commission, which handles trade issues for the EU's 28 members, and the Brazilian government now have 60 days to try to end the dispute or face a legal process that could allow Brussels to impose sanctions, although that is years off.