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World Trade

Organization







WT/DS70/R

14 April 1999







(99-1398)










Original: English


canada – measures affecting the

export of civilian aircraft

report of the panel

The report of the Panel on Canada – Measures Affecting the Export of Civilian Aircraft is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 14 April 1999 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body.


Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 30 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.

TABLE OF CONTENTS

Page


II. Introduction 1

III. Factual Aspects 2

IV. Findings and Recommendations requested by the parties 2

V. REQUESTS FOR PRELIMINARY RULINGS 4

A. CANADA’S REQUEST REGARDING THE PANEL’S JURISDICTION 4

B. request of canada for preliminary finding on jurisdiction: The SCM Agreement does not apply to contributions and transactions that took place before the entry into force of the WTO Agreement 19

C. BRAZIL’S REQUEST REGARDING ADDITIONAL FACT FINDING 20

D. CANADA’S REQUEST FOR A DEADLINE FOR THE SUBMISSION OF NEW EVIDENCE 27

E. BRAZIL’S REQUEST REGARDING DEADLINE FOR SUBMISSION OF NEW EVIDENCE 28

F. Arguments concerning the submission of evidence in response to panel questions posed in connection with the second meeting 31

G. PROCEDURES FOR PROTECTION OF BUSINESS CONFIDENTIAL INFORMATION 33



VI. ARGUMENTS OF THE PARTIES REGARDING LEGAL issues concerning SCM ARTICLES 1 AND 3 39

A. GENERAL 39

B. “SUBSIDY” PER SCM ARTICLE 1 44

C. “CONTINGENT, IN LAW OR IN FACT, … ON EXPORT PERFORMANCE” 48



VII. Arguments of parties regarding Canadian measures alleged by Brazil to be prohibited export subsidies in the sense of SCM Articles 1 and 3 62

A. Export Development Corporation (“EDC”) 62

B. Technology Partnerships Canada (“TPC”) and Predecessor Defence Industry Productivity Programme (“DIPP”) 97

C. Sale by Ontario of ownership share in de Havilland 116

D. Canada-Québec Subsidiary Agreement on Industrial Development 122

E. Société de Dévéloppement Industriel du Québec (“SDI”) 127

F. Arguments regarding the finan report submitted by brazil 130

G. arguments regarding the clark report 134



VIII. Arguments of Third Parties 140

A. european communities 140

B. submission of the united states 144

IX. interim review 149

X. FINDINGS 151

A. INTRODUCTION 151

B. PRELIMINARY ISSUES 152

C. DEFINITION OF "SUBSIDY" WITHIN THE MEANING OF ARTICLE 1 OF THE SCM AGREEMENT 171

D. EXPORT DEVELOPMENT CORPORATION 175

E. CANADA ACCOUNT 190

F. SALE TO BOMBARDIER BY THE ONTARIO AEROSPACE CORPORATION OF A 49 PERCENT INTEREST IN DE HAVILLAND INC. 195

G. BENEFITS PROVIDED UNDER THE CANADA-QUEBEC SUBSIDIARY AGREEMENTS ON INDUSTRIAL DEVELOPMENT 199

H. SOCIETE DE DEVELOPPEMENT INDUSTRIEL DU QUEBEC 203

I. TECHNOLOGY PARTNERSHIPS CANADA AND DIPP 206



XI. CONCLUSIONS AND RECOMMENDATION 224

I. BASIC PRINCIPLE 226

II. DEFINITIONS 226

III. SCOPE 228

IV. OBLIGATION ON PARTIES 228

V. SUBMISSION BY A PARTY 228

VI. STORAGE 229

VII. OBLIGATION NOT TO DISCLOSE 229

VIII. DISCLOSURE 230

IX. DISCLOSURE AT A PANEL MEETING 230



XI. TAPES AND TRANSCRIPTS 230

XII. RETURN AND DESTRUCTION 230

ANNEX I 229

ANNEX II 235

  1. Introduction





            1. On 10 March 1997, Brazil requested consultations with the Government of Canada pursuant to Article 4 of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”) regarding certain alleged subsidies granted by the Government of Canada or its provinces that support the export of civilian aircraft from Canada.

            2. Brazil and Canada held consultations on 30 April 1997, but failed to reach a mutually satisfactory solution.

            3. On 10 July 1998, pursuant to Article 4.4 of the SCM Agreement and Article 6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”), Brazil requested the immediate establishment of a panel with standard terms of reference.

            4. At its meeting on 23 July 1998, the DSB established a panel pursuant to the request by Brazil (WT/DS70/2).

            5. At that DSB meeting, parties agreed that the Panel should have standard terms of reference. The terms of reference of the Panel are the following:

"To examine, in the light of the relevant provisions of the covered agreements cited by Brazil in document WT/DS70/2, the matter referred to the DSB by Brazil in that document and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements".

            1. On 16 October 1998, Brazil requested the Director-General to determine the composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU. This paragraph provides:
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