Canada – Measures Affecting the Export of Civilian Aircraft Recourse by Brazil to Article 21.5 of the DSU (WT/DS70): Report of the Appellate Body

Summary

INTRODUCTION

Brazil appeals certain issues of law and legal interpretation in the Panel Report, Canada - Measures Affecting the Export of Civilian Aircraft, Recourse by Brazil to Article 21.5 of the DSU (the “Article 21.5 Panel Report”). The Article 21.5 Panel was established to consider a complaint by Brazil that certain measures taken by Canada to comply with the recommendations and rulings of the Dispute Settlement Body (the “DSB”), in Canada - Measures Affecting the Export of Civilian Aircraft (“Canada - Aircraft”), were not consistent with Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”).

The original panel found, inter alia, that “Canada Account debt financing since 1 January 1995 for the export of Canadian regional aircraft” and “[Technology Partnerships Canada] assistance to the Canadian regional aircraft industry [constitute] export subsidies inconsistent with Article[s] 3.1(a) and 3.2 of the SCM Agreement”. The original panel concluded that “Canada shall withdraw [these] subsidies … within 90 days.”

Before the Appellate Body, Canada appealed certain of the original panel's legal interpretations relating to Technology Partnerships Canada (“TPC”) assistance. Canada did not appeal the original panel's findings relating to the Canada Account. The Appellate Body upheld the original panel's finding that TPC assistance to the Canadian regional aircraft industry constitutes export subsidies inconsistent with Articles 3.1(a) and 3.2 of the SCM Agreement.

Canada took steps to implement the recommendations and rulings of the DSB with respect to both the Canada Account and TPC. Taking the view that these measures were not consistent with Article 3.1(a) of the SCM Agreement, Brazil requested that the matter be referred to the original panel, pursuant to Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the “DSU”). On 9 December 1999, in accordance with Article 21.5 of the DSU, the DSB referred the matter to the original panel. The Article 21.5 Panel Report was circulated to the Members of the World Trade Organization (the “WTO”) on 9 May 2000.