CANADA’S REQUEST FOR A DEADLINE FOR THE SUBMISSION OF NEW EVIDENCE

BRAZIL’S REQUEST REGARDING DEADLINE FOR SUBMISSION OF NEW EVIDENCE

1. Arguments of Brazil

   1. 
      At the first meeting of the Panel, Brazil requested that the Panel not permit Canada to introduce evidence in support of any affirmative defences after the first meeting of the parties. In this regard, Brazil notes a suggestion by Canada (para. 6.161) that Canada Account financing and loan guarantees are excluded from the prohibition in Article 3 of the Agreement because they comply with the interest rates provisions of the OECD Arrangement on Guidelines for Officially Supported Export Credits, or are not used to secure a material advantage in the field of export credit terms. This suggests to Brazil that Canada might intend to assert that the provisions of paragraph (k) of Annex I to the Agreement excuse its otherwise prohibited subsides. Brazil notes that a similar but slightly varied suggestion is made with regard to financing activities of the Export Development Corporation (para. 6.64).
      
   2. 
      Brazil argues that if this is Canada’s position, it is an affirmative defense for which Canada bears the burden of proof. Brazil believes that good faith implementation of the Dispute Settlement Understanding requires a party making an affirmative defense to set out the grounds for that defense in its first written submission. Brazil asserts that it did exactly that with regard to its claim under paragraph (k) in the other Panel proceeding.
      
   3. 
      For Brazil, Canada’s allusion to a paragraph (k) defense, combined with the absence of any relevant evidence in its first submission, suggests to Brazil that Canada may be withholding the evidence in this time-constrained proceeding so as to hinder Brazil’s ability to respond. Brazil does not believe there is room in WTO dispute settlement, between parties called upon to act in good faith, for conduct of this kind. Accordingly, Brazil requests that the Panel not accept any evidence or claims of defense in the nature of affirmative defences with regard to the Canada Account, the EDC or any other measure at issue which is not submitted to the Panel and to Brazil prior to the scheduled close of the first meeting of the Panel.
      
   4. 
      For Brazil, this is particularly important in a fast track proceeding, where the time constraints on the Panel could limit, or even preclude, the Panel’s giving Brazil a reasonable time to respond to new information after the date for the final submission, or particularly after the second meeting of the Panel.
      

2. Arguments of Canada

   1. 
      Canada notes a Panel request during the first meeting that the parties consider whether they could provide the Panel with additional information. Canada states that in light of this request, and of Brazil’s concern about being ‘sandbagged’ by new evidence, it would endeavour to provide the Panel with additional contextual evidence in its second written submission.
      
   2. 
      Canada insists that this decision was not made lightly, as Canada continues to believe that Brazil has failed to present a prima facie case and that Canada is under no obligation to produce any evidence in response to a case that has not been made (see paras. 5.5- 5.12). Canada also recalls its statements (see paras. 4.173 - 4.183) that the amended confidentiality procedure does not adequately protect private sector interests and the interests of the Government of Canada in maintaining effective control over the dissemination of business confidential information.
      
   3. 
      Canada emphasizes that the introduction of any additional evidence pursuant to the Panel’s request would be without prejudice to Canada’s position on these two issues, and that the introduction of such evidence would not be done to ‘sandbag’ Brazil, an allegation that Canada rejects.
      

3. Actions of the Panel

   1. 
      In connection with the second meeting of the Panel, held on 12-13 December 1998, the Panel posed a number of questions to both parties, many of which were of a factual nature, and announced a deadline of one week after the meeting for the parties to respond, and one further week for the parties to comment on any new factual evidence or arguments submitted in response to questions. This was in addition to the Panel’s letter to Canada, dated 9 December 1998, in which the Panel stated that it “expects to receive clear and complete answers” to certain of the Panel’s original questions to which Canada had not “replied in full”. Because the one week period to prepare comments on any new factual evidence or arguments submitted in response to the Panel’s questions fell over the Christmas holidays, and because Brazil believed that Canada might submit voluminous new evidence in answer to questions, Brazil expressed concern over the shortness of time for commenting on Canada’s replies, and requested that the Panel withdraw all of the questions to Canada, and rely on the evidence before it at that time. Canada did not agree with Brazil’s suggestion. The Panel, in response, indicated that it could allow one additional week for comments on answers to questions, if the parties would agree to a one-week extension in the timetable for the Panel (in light of footnote 6 to Article 4 of the SCM Agreement that any time periods in that Article may be extended by mutual agreement). In response to this Panel proposal, Brazil responded as follows.
      

4. Response of Brazil

   1. 
      In a letter to the Panel dated 13 December 1998, Brazil argued that with the parties clearly satisfied with the cases they had put forward the panel would have been entitled to decide the case on the record as made to this point; neither party would have grounds to complain that it had not had fair opportunity to present evidence or advance argument.
      
   2. 
      Brazil acknowledges the panel's right to request information from any source at any time, but believes it was not necessary for the Panel to request this particular information at this particular time. More important for Brazil in this accelerated proceeding, the Panel's decisions have placed it in a position in which, depending upon the nature of Canada's response, it might not be able to comment at all on the new information that might be supplied by Canada.
      
   3. 
      Brazil recalls its concerns that Canada might be planning on presenting an affirmative defence to one or more of Brazil's complaints in its second written submission or even at the second meeting of the Panel, and its related request that the Panel not accept any such information after the first meeting of the Panel (paras. 4.119- 4.122)
      
   4. 
      Brazil notes a Panel statement that even before receiving Brazil's request it had decided to ask Canada, in questions to be presented to the parties, whether or not it intended to assert any defence based upon items (j) or (k) of the Illustrative List of Export Subsidies, and its further statement that it expected a clear and complete response to the questions, on which it also gave the other party a period to comment.
      
   5. 
      Brazil notes that Canada did not invoke any affirmative defences in its response to questions from the Panel, nor did Canada supply information that would support such defences. Brazil indicates that the Panel granted Canada an additional opportunity to submit answers responsive to certain of the Panel's original questions, and notified the parties of its intention to present further questions, and stated that except for responses to those questions, it would not accept further submissions from the parties after the deadline for those responses, except for good cause shown. In the same message, Brazil argues, despite the fact that Canada had not responded with affirmative defence information by the deadline for answers to previous questions, the Panel stated that "’Canada shall invoke any positive defences it intends to raise in this case during or before, the second meeting with the Panel on Saturday, 12 December 1988‘".
      
   6. 
      Brazil contends that although by this action the panel gave Canada an additional eight days to provide affirmative defence information, information that, in Brazil's view, properly belonged in its first submission and not in a response provided at the second meeting with the Panel, Canada again declined to submit the information by 12 December, and reaffirmed that it did not intend to use any kind of affirmative defence since, in its view, Brazil had not presented a prima facie case. Brazil states that in fact, the Panel orally confirmed at the second meeting that that meeting would be the last opportunity for Canada to invoke an affirmative line of defence.
      
   7. 
      However, in Brazil’s view, the additional questions provided by the Panel to Canada In connection with the second meeting effectively asked for the kind of information on which such a defence could be based, which could consist of a large quantity of transaction-specific, confidential business information that would take time to produce and time to analyse. The panel's questions therefore in Brazil's view effectively extend Canada's time to provide this kind of information by 17 days. Brazil notes that to analyse and prepare any comment it may wish to make on such response, the Panel has provided Brazil seven days, including the Christmas holiday, and that should Canada concur in a one-week extension of the Panel's deadline, the Panel would extend Brazil's time for comment by an additional week, encompassing the New Year's holiday.
      
   8. 
      Brazil believes this procedure is unnecessary and unfair to Brazil; unnecessary because Canada, as a Member of the WTO, was entitled to have its case decided on the basis on which it chose to present it. This is particularly important, in Brazil's view, in an accelerated procedure under the SCM Agreement.
      
   9. 
      Brazil believes it is unfair because, not only does it permit Canada to supply last-minute information, it effectively denies Brazil a fair opportunity to respond. In Brazil’s view, the occurrence of major religious and secular holidays in the midst of the response period would cause difficulty for any Member, and causes particular difficulty in this case because of Canada’s indication that the information Canada will furnish will include confidential business information that may be dealt with only under strict procedures to ensure its security.
      
   10. 
       Brazil states that as a developing country, it does not have the same resources or personnel as Canada to enable it to prepare and present its argumentation in the manner envisioned by the DSU, noting that in this case, it chose to utilize the services of non-government specialists. Brazil argues that this presents a difficulty because these specialists are resident in neither Geneva nor Brasilia, where the Brazilian officials with whom they are working are located, and it had been learned that airline reservations for them to return to Geneva over this holiday period would be extremely difficult if not impossible to obtain.
       
   11. 
       Brazil argues that it thus was unable to choose between the options provided by the panel, as its needs would depend entirely on what Canada would supply in the way of answers to the Panel's questions.
       

5. Proposal by the Panel

   1. 
      In light of the concerns raised over the proposed schedule for answers to questions and comments thereon, and in light of an absence of consensus among the parties on extending the Panel’s overall timetable, the Panel proposed a new schedule that would allow the parties 17 days to comment on one another’s answers to questions, but would reduce the time for interim review. The Panel noted that 17 days was the same amount of time as between the deadlines for first and second submissions. That is, the parties would have exactly the same amount of time for commenting as if all of the information had been presented in the first submissions.
      

6. Joint letter from Brazil and Canada, and Panel action

   1. 
      In response to the Panel’s proposal, the parties submitted a joint letter to this Panel and to the Panel in the parallel case on Brazil –Export Financing Programme for Aircraft. In this letter, the parties note that the time available under the Panel's proposed new schedule for the review of the interim report and for the travel of delegations to Geneva for a possible additional meeting with that Panel was likely to be insufficient, and requested that the two Panels examine the possibility to readjust their respective timetables as follows:
      
      1. 
         the interim reports of both Panels shall be issued on the same dates, but no later than 17 February;
         
      2. 
         the final reports of the two Panels shall be issued on the same dates;
         
      3. 
         the interim review meetings should be held on dates as close as possible to each other; and
         
      4. 
         adequate time should be allowed for all stages of the interim review, providing sufficient time for internal consultations and travel arrangements.
         
   2. 
      The letter further states that Brazil and Canada realize that such request would call for some flexibility regarding the date of issuance of the final report, and indicate that they therefore would agree to a one-week postponement of the deadline for issuance of the final report.
      
   3. 
      The Panel, taking into consideration this letter, announced its revised timetable.