WT/DS522/6  
 
21 August 2017  
(17-4522) Page: 1/6 
  Original: English  
 
CANADA – MEASURES CONCERNING TRADE IN COMMERCIAL AIRCRAFT  
REQUEST FOR THE ESTA BLISHMENT OF A PANEL  BY BRAZIL  
The following communication, dated 18 August 2017, from the delegation of Brazil to the 
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.  
 
_______________  
 
 
On 8 February 2017, the Government of Brazil ("Brazil") requested consultations with the 
Government of Canada ("Canada") pursuant to Articles 1 and 4 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes ( "DSU"); Articles 4, 7, and 30 of the Agreement 
on Subsidies and Countervailing Measures ( "SCM Agreement "); and Ar ticle XXII of the General 
Agreement on Tariffs and Trade 1994 ( "GATT 1994 ") (to the extent incorporated by Article 30 of 
the SCM Agreement)  in relation to measures affecting trade in commercial aircraft . Consultations 
were held on 10 March 2017 with a view to reaching a mutually satisfactory solution.  
Unfortunately, the consultations failed to settle the dispute.  
  
Accordingly, Brazil respectfully requests that the Dispute Settlement Body ( "DSB") establi sh a 
panel pursuant to Article 6 of the DSU; Articles 4, 7, and 30 of  the SCM Agreement; and 
Article  XXIII:2 of the GATT 1994 (to the extent incorporated by Article 30 of the SCM Agreement).  
 
In Brazil's view, the measures that are the subject of this pane l request are prohibited and 
actionable subsidies provided to Bombardier, Inc. ( "Bombardier ")1 and its suppliers as well as 
legislation, regulations, other instruments, and amendments thereto providing such subsidies to 
these recipients.  Such measures inc lude the following:  
 
Quebec 's Aerospace Strategy  
 
In July 2006, the government of Quebec ("Quebec") announced the Quebec Aeronautical Industry 
Development Strategy.2 The Quebec government 's objectives of the strategy are to "maintain 
Quebec 's position as a  world leader in the aeronautical sector by developing new products and 
enhancing the sector 's competitiveness " and "{s}trengthen Quebec 's largely dominant position in 
the Canadian aeronautical industry. "  Quebec indicated that it would work jointly with t he federal 
government to foster "the development of new products, export assistance and financing of the 
sales of prime contractors, equipment manufacturers and SMEs. "  In May 2016, Quebec stated 
that its contributions under the 2006 Strategy amounted to m ore than C$700 million. The 
initiatives announced under the strategy include, but are not limited to:  
 
 financing of R&D and product development by means of loans repayable through royalties 
on sales;  
 financing of developmental projects in the form of share  capital by the Société générale de 
financement  (which was merged into Investissement Québec  ("IQ") in December 2010);  
                                                
1 "Bombardier, " as referenced in this request, includes Bombardier, Inc.; Bombardier Aerospace; 
Bombardier Transportation (Investment) UK Ltd; the C Series Aircraft Limited Partnership; and all other 
subsidiaries and affiliates of Bombardier, Inc.  
2 "Quebec Aeronautical Industry Development Strategy " (July 2006), 
http://collections.banq.qc.ca/ark:/52327/bs58942.  Brazil referred to this strategy in its request for 
consultations as Quebec’s Aerospace Strategy 2006 -2016.  Canada provided a link to the strategy during 
consul tations.  WT/DS522/6  
 
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   broadening the Quebec content in prime contractors ' projects;  
 participating in the long -term funding of the Consortium de recherche et d 'innovation en 
aérospatiale au Québec  ("CRIAQ "); 
 pursuing Quebec's financial support for the Centre technologique en aérospatiale  ("CTA"); 
 maintaining Quebec's fiscal measures pertaining to precompetitive research;  
 supporting the modernization and purchase of leading -edge equipment (amendment of 
rules governing programs of the Ministère de l 'Économie, Science et Innovation Quebec  
("MESI")); and  
 ensuring that the federal government plays an essential support role in the Quebec 
aeronautical industry by financing product development.  
In 2006, Aéro Montréal  (of which Bombardier and its suppliers are members) was established to 
provide supply chain solutions, knowhow, and industry collaboration services to Bombardier and 
other aerospace companies in Montreal.   Canada's federal government, Quebec, and Communauté 
métropolitaine de Montréal   provided at least C$5 million in funding to Aéro Montréal  to support its 
initiatives and working groups, which included participation in , for example, the Greener Aircraft 
Catalyst Project or SA2GE ( Systèmes aéronautiques d 'avant -garde pour l 'environnement ) and the 
MACH Initiative.  
 
In May 2016, Quebec announced government contributions of C$510 million under Quebec 's 
Aerospace Strategy 20 16-2026.3  Under the 2016 Strategy, Quebec will, among other things, 
bolster industry growth through support for major investment projects, assist SMEs through 
boosting exports, and promote innovation through stimulating the development of new products 
(e.g., Greener Aircraft Catalyst Project).  
   
Brazil considers that the above -referenced measures and initiatives provide subsidies directly or 
indirectly to Bombardier and its suppliers or are used by Canada to adopt and/or implement the 
measures identified below.  
 
"Launch Aid " and Related Financing  
 
 Canada 's provision (through Industry Canada ( "IC"), a Government of Canada department 
(Ministry) now called Innovation, Science and Econom ic Development Canada) of 
C$350  million of financing to Bombardier for commercial aircraft design and development 
(hereinafter "launch aid "4).  Canada and Bombardier initially agreed on the launch aid in 
May 2005.  Brazil understands that the Terms and Conditions were signed in 2008, and  
the contribution agreements were signed in March 2009.  The C$350 million in funding 
had been disbursed to Bombardier as of the end of December 2013.  
 Quebec 's provision (through IQ, Quebec 's economic de velopment corporation) of 
C$117  million of launch aid  to Bombardier.   The launch aid was announced in May 2005.  
Quebec agreed to provide the launch aid in July 2008, and C$117 million was disbursed in 
2009.5 
 Canada 's provision (through Innovation, Science and Economic Development Canada) of 
C$120 million in  additional royalty -based financing for Bombardier 's C-Series aircraft.  
Canada announced the additional contribution on 7 February 2017.  The funds are being 
provided under existing contribution agreements with Bombardier.6 
Subsidies Managed by the Indust rial Technologies Office  
The Industrial Technologies Office ( "ITO") is a Special Operating Agency of Innovation, Science 
and Economic Development Canada.  ITO manages repayable and non -repayable financing 
provided under:  
                                                
3 "Québec Aerospace Strategy Summary, " at 2 (May 2016),  https://www.mrif.gouv.qc.ca/pdf 
/actualites/13326_Sommaire_SQA_En_LR_Final.pdf.  
4 The term "launch aid " in this request includes: "royalty -based financing ", "repayable contributions ", 
"launch investment ", "repayable investment ", "contribution financière remboursable par redevances ", and 
other terms that have been used to describe the financing provided to Bombardier and its suppliers.  The terms 
of such financing may include no interest or in terest at non -commercial rates, and a repayment obligation that 
is tied to future sales . 
5 See Decret 666 -2009 (10 June 2009), Gazette Officielle du Québec, No. 27, at 3123 (8 July 2009).  
6 This contribution is a portion of C$372.5 million in repayable con tributions that Canada announced on 
7 February 2017 to support Bombardier and that Brazil referenced in its request for consultations.  WT/DS522/6  
 
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   Technology Partnerships Canada ( "TPC"), which was launched in March 1996 to support 
technological development in the aerospace sector.  As of November 2016, Canada 
disbursed more than C$1.5 billion to Bombardier and its C -Series suppliers.   
 Strategic Aerospace and Defence Initiative ( "SADI"), which was launched in April 2007.  
During 2008 -2014, Canada agreed to contributions totaling more than C$1 billion for 
Bombardier 's C-Series suppliers.   On 7 February 2017, Canada announced additional 
contributions of C$252.5 million under SADI to Bom bardier purportedly for the 
development of the Global 7000 business aircraft.  Bombardier and Canada reached an 
agreement regarding this additional funding on 24 March 2017.7   
 Technology Demonstration Program ( "TDP"), which was launched in September 2013 to 
provide non -repayable contributions to support large scale projects. In October 2016, 
Canada announced a contribution of up to C$54 million to a consortium led by Bombardier 
to develop state -of-the-art electric systems and advanced aerodynamic systems.  
Other Research and Development Subsidies  
 Quebec 's provision of over C$110 million to Bombardier, its C -Series suppliers, and other 
aerospace companies through SA2GE (i.e., the Greener Aircraft Catalyst Project).  
Quebec 's MESI initially introduced SA2GE in  2010 under the Quebec Research and 
Innovation Strategy and launched the second phase in 2016 under the Quebec Aerospace 
Strategy.   
 Canada 's and Quebec 's provision of funding to CRIAQ (of which Bombardier and its 
suppliers are members) to finance aerospace  research projects conducted by Bombardier, 
its C-Series suppliers, and other aerospace companies.  Since CRIAQ was established in 
2002, it has funded numerous aerospace research projects.  Bombardier has participated 
in at least twenty -five of these proje cts. 
 Canada 's and Quebec 's provision of funding to the Consortium for Aerospace Research 
and Innovation in Canada ( "CARIC ") (of which Bombardier and its suppliers are members) 
to launch research and development projects and provide other support to Bombardier, its 
C-Series suppliers, and other Canadian aerospace companies.  In August 2014, CARIC 
and IC signed an agreement for  C$30 million in funding over five years.  
 Canada 's provision of funding to the Green Aviation Research & Development Network 
("GARDN ") to increase the competitiveness of Bombardier and other companies in 
Canada 's aerospace industry and reduce the environme ntal footprint of Canadian aircraft, 
engines, and avionics systems.  In January 2009, the Government of Canada established 
GARDN as a Business -Led Network of Centres of Excel lence.  GARDN is receiving 
C$25 million for 2009 -2018, and nearly C$18 million has  been disbursed as of fiscal year 
2015.  Bombardier has received funding through at least twelve GARDN research projects, 
and its C -Series suppliers have also received funding through GARDN research projects.  
 Canada 's provision of support through the Canada Economic Development for Quebec 
Regions ( "CEDQ ") (including its Quebec Economic Development Program). Since its 
creation in 2005, CEDQ has provided at least C$20 million in contributions to Bombardier 's 
C-Series suppliers to improve productivity and  production, acquire equipment, and expand 
operations.   
 Canada 's and Quebec 's provision of funding, technology transfer, in -kind goods and 
services, and other support through the CTA,8 the National Research Council ( "NRC"),9 
and the Natural Sciences and E ngineering Research Council of Canada ( "NSERC ").10 
                                                
7 This contribution is a portion of C$372.5 million in repayable contributions that Canada announced on 
7 February 2017 t o support Bombardier and that Brazil referenced in its request for consultations.  
8 "Quebec Aeronautical Industry Development Strategy, " at 21, 32, and 36 (July 2006), 
http://collections.banq.qc.ca/ark:/52327/bs58942 . 
9 "Quebec Aeronautical Industry Develo pment Strategy, " at 15 and 21 (July 2006), 
http://collections.banq.qc.ca/ark:/52327/bs58942 . 
10 Canada’s and Quebec’s support to Bombardier and its C -Series suppliers through these entities 
included participation in SA2GE programs, CEDQ  programs (including establishment of the Aerospace 
Manufacturing Technology Centre ( "AMTC ")), and other collaborative projects (for example, in the areas of 
composite materials and robotics systems for aircraft assembly).  "Assembly of First Flight Test V ehicle for 
Bombardier CSeries Aircraft Underway " (15 October 2012), http://www.marketwired.com/press -
release/assembly -of-first-flight-test-vehicle -for-bombardier -cseries -aircraft -underway -tsx-bbd.a -1713407.htm; WT/DS522/6  
 
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   Canada 's provision of non -repayable contributions of up to C$950 million for 
"superclusters " in the advanced manufacturing, digital technology, clean resources, 
infrastructure, transportation, and other industries through the Innovation Superclusters 
Initiative.11 
 Quebec 's provision to Bombardier of a tax credit under the Tax Credit for Private 
Partnership Pre -Competitive Research, which provides a tax credit to encourage 
corporations in the private sector to form partnerships with two or more corporations to 
carry out pre -competitive research in Quebec12. 
Equity Infusions  
 Quebec 's provision (throug h IQ) of US$1 billion to Bombardier for cash flow purposes of 
the C -Series program in exchange for a 49.5 percent share in a newly -created entity to 
which Bombardier will transfer the assets, liabilities, and obligations of its C -Series 
program.  In Octobe r 2015, IQ and Bombardier entered into a memorandum of 
understanding for the US$1 billion equity infusion.  In June 2016, Bombardier closed the 
investment with IQ and transferred the C -Series assets to a new entity.  IQ paid the first 
installment of US$500  million to Bombardier in June 2016 and the second installment of 
US$500 million to Bombardier in September 2016.  
 Quebec 's provision (through Caisse de Dépôt et Placement du Québec  ("CDPQ "), an entity 
owned and controlled by the government of Quebec) of US $1.5 billion for general 
corporate purposes of Bombardier in exchange for a convertible share investment in 
Bombardier Transportation 's newly -created holding company, Bombardier Transportation 
(Investment) UK Ltd.  The agreement between CDPQ and Bombardier  was announced in 
November 2015.  In February 2016, the sale was closed, and Bombardier received gross 
proceeds of US$1.5 billion from CDPQ.  
Provincial and Local Subsidies Relating to Bombardier 's C-Series Production Facilities  
 Quebec 's agreement with Bombardier to construct, own, lease, finance, operate, and/or 
provide other support for Bombardier 's new C -Series production facility at Mirabel, 
Quebec.  Quebec offered to pay for Bombardier 's new C -Series final assembly plant in 
January 2005 and announce d an "agreement " on the selection of a site in Mirabel, Quebec 
in May 2005.  Bombardier again selected Mirabel, Quebec as the C -Series final assembly 
site in July 2008.  
 The municipality of Mirabel 's (Quebec) tax incentives, exemptions, and other support, 
including exemption of property taxes for Bombardier 's C-Series production facility during 
its first ten years of operations.  These measures include, but are not limited to, 
Règlement  No. 1633 (28 April 2008) and Règlement  No. 1915 (28 November 2012).  In 
November 2008, Mirabel approved a ten -year tax credit for companies in the aircraft 
manufacturing industry that are established at the airport,  including Bombardier and its 
C-Series facility.     
 Provision of support by Aéroports de Montréal  ("ADM") to Bom bardier and C -Series 
suppliers in relation to the selection, construction, lease, and/or operation of the Mirabel 
site of Bombardier 's C-Series final assembly plant and suppliers ' component plants and 
investments in infrastructure for aerospace companies l ocated at the airport.  ADM is the 
                                                                                                                                                  
"The National Research Council of Canada and Bombardier Aerospace Sign R&D Cooperation Agreement, " 
defense -aerospace.com (5 December 2011), http://www.defense -aerospace.com/article -
view/release/130954/bombardier -canada -nrc-sign-r&d-agreement.html . Additional information on these 
measures is available  in the Response of the Government of Canada to the Department’s May 19, 2017 
Questionnaire in 100 - to 150 -Seat Large Civil Aircraft from Canada before the U.S. Department of Commerce 
International Trade Administration (Inv. No.: C -122-860), GOC Volume VII I – Other Assistance, July 25, 2017 
(Public Version).  
11 "Innovation Superclusters Program Guide, " Innovation, Science and Economic Development Canada 
(2017), https://www.ic.gc.ca/eic/site/093.nsf/vwapj/Sprclstr -Prgrm -Gd-EN.pdf/$file/Sprclstr -Prgrm -Gd-
EN.pd f; Aéro Montréal Press Release, "Federal Budget 2017 - Aéro Montréal welcomes measures targeting 
innovation, the supply chain and skills development for our Québec SMEs " (23 March 2017), 
http://www.newswire.ca/news -releases/federal -budget -2017---aero-montr eal-welcomes -measures -targeting -
innovation -the-supply -chain -and-skills-development -for-our-quebec -smes-616968324.html .  
12 Response of the Government of Quebec to the Department’s May 19, 2017 Initial Questionnaire in 
Countervailing Duty Investigation of 10 0- to 150 -Seat Large Civil Aircraft from Canada before the U.S. 
Department of Commerce International Trade Administration (Inv. No.: C -122-860), Other Subsidies, July 24, 
2017, GOQ -128 (Public Version).  WT/DS522/6  
 
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  local airport authority that operates the Mirabel airport and surrounding area under a 
long-term lease from Transport Canada, which closely regulates and continuously reviews 
ADM's activities.  
 Other assistance disclosed b y the Government of Quebec and Bombardier, including the 
PR@M Industry Program administered by the City of Montreal and governed by the Ville 
de Montreal By -Law RCG 07 -029, Hydro -Quebec Energy Efficiency Programs, and the Tax 
Credit for Investment Relating  to Manufacturing and Processing Equipment13. 
Other Quebec Provincial Subsidies  
 Quebec 's provision (through state -owned and controlled CDPQ ) of a line of credit for 
US$195 million to Bombardier (as part of a revolving credit facility in which other 
institutions participated).  CDPQ 's US$195 million line of credit was announced in 
September 2009.  Bombardier has extended the maturity date of t he credit facility 
multiple times, most recently to June 2019.  
 Quebec 's provision of C$4 million to Bombardier – including C$2 million for the C -Series 
program – through Emploi -Québec .  The support was announced in November 2013.  
 Quebec 's provision of loan  guarantees, financial assistance, and other support to 
Bombardier and its C -Series suppliers through the Strategic Support for Investment 
Program (known as "PASI") and other programs ( Projet de Soutien de Progrès 
Économique  ("PSPE"), Programme d 'Attraction et de Retention des Investissements en 
Recherche  ("PARIR "), and Programme d 'Aide aux Employés  ("PAE")) that were 
subsequently consolidated under ESSOR.14  
Brazil 's request also covers any amendments, revisions, implementing measures, or related 
measures to the measures identified above.  
Brazil understands that the above measures are inconsistent with the obligations of Canada under 
the following provisions:  
 
1. Articles 3.1(a) and 3.2 of the SCM Agreement;  
2. Articles 3.1(b) and 3.2 of the SCM Agreemen t; and  
3. Articles 5(c), 6.3(a), 6.3(b), 6.3(c), 6.4, and 6.5 of the SCM Agreement.   
 
The above measures that are the subject of this request appear to be specific subsidies. They are 
financial contributions ( e.g., grants, loans, equity infusions, tax credits, government provision of 
goods or services, etc.) by a government or public body (or through the entrustment or direction 
of a private body) that confer a benefit to Bombardier within the meaning of Article 1. 1(a) and (b) 
of the SCM Agreement. Furthermore, these subsidies are specific to Bombardier or the aerospace 
industry within the meaning of Article 2 of the SCM Agreement.  
 
In Brazil 's view, each and every measure listed above is a subsidy contingent, in law or in fact, 
whether solely or as one of several other conditions, upon export performance in violation of 
Articles 3.1(a) and 3.2 of the SCM Agreement and is contingent, in law or in fact, whether solely or 
as one of several other conditions, upon the use of domestic over imported goods in violation of 
Articles 3.1(b) and 3.2 of the SCM Agreement.  
 
Brazil is also concerned that Canada is causing, through the use of the above -referen ced 
measures, adverse effects to the interests of Brazil in the form of serious prejudice or threat of 
serious prejudice within the meaning of Article 5(c) of the SCM Agreement. In particular:  
 
                                                
13 Response of the Government of Quebec to the Departm ent’s May 19, 2017 Initial Questionnaire in 
Countervailing Duty Investigation of 100 - to 150 -Seat Large Civil Aircraft from Canada before the U.S. 
Department of Commerce International Trade Administration (Inv. No.: C -122-860), Other Subsidies, July 24, 
2017, GOQ -99, GOQ -110, GOQ -129 (Public Version).  See also  Response of Bombardier Inc. and C Series 
Aircraft Limited Partnership to the Remainder of Section III of the Countervailing Duty Questionnaire in 
Countervailing Duty Investigation of 100 - to 150 -Seat Large Civil Aircraft from Canada, Inv. No.: C -122-860), 
Other Subsidies, July 25, 2017, 128, 129, and 144 (Public Version).  
14 "Contrats et engagements financiers, " MESI, https://www.economie.gouv.qc.ca/ministere/le -
ministere/acces -information/contrats -et-engagements -financier s.  WT/DS522/6  
 
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   The effect of the subsidies is to displace or impede or threat en to displace or impede the 
imports of a like product of Brazil into Canada within the meaning of Articles 6.3(a) and 
6.4 of the SCM Agreement.  
 
 The effect of the subsidies is to displace or impede or threaten to displace or impede the 
exports of a like p roduct of Brazil from third country markets within the meaning of 
Articles 6.3(b) and 6.4 of the SCM Agreement.  
 
 The effect of the subsidies is significant lost sales or threat of lost sales by the like product 
of Brazil to the subsidized product in the sa me market within the meaning of Article 6.3(c) 
of the SCM Agreement.  
 
 The effect of the subsidies is significant price suppression or price depression or threat of 
significant price suppression or price depression in the same market within the meaning of 
Article 6.3(c) of the SCM Agreement.  
 
 The effect of the subsidies is significant price undercutting or threat of significant price 
undercutting by the subsidized product as compared to the price of the like product of 
Brazil in the same market within the me aning of Art icles 6.3(c) and 6.5 of the 
SCM Agreement.  
 
Brazil is further concerned that the measures that are the subject of this request have caused and 
continue to cause nullification or impairment of benefits accruing directly or indirectly to Brazil 
under the GATT 1994 within the meaning of Article XXIII:1.  
 
Brazil requests that a Panel be established with standard terms of reference, in accordance with 
Articles 4.4 and 7.4 of the SCM Agreement and Article 7 of the DSU.  
 
Brazil asks that this request for the establishment of a Panel be placed on the agenda for the next 
meeting of the DSB, which is scheduled to take place on 31 August 2017.  
 
Brazil further requests that, upon establishment of a panel for this matter,  the DSB initiate the 
procedures prov ided for in Annex V of the SCM Agreement pursuant to paragraph 2 of that Annex, 
and designate a representative to serve the function of facilitating the information -gathering 
process pursuant to paragraph 4 of that Annex.  Brazil also intends to put forwar d suggestions as 
to the information that should be sought under this procedure once the panel is established.  
 
In order to obtain sufficiently representative data to resolve this dispute while at the same time 
avoiding unnecessary burdens on other WTO Memb ers, Brazil intends to address questions under 
the Annex V procedure to Canada and to the following third -country Members: China, European 
Union, Germany, Ireland, India, Indonesia, Japan, Kingdom of Bahrain, Kingdom of Saudi Arabia, 
Latvia, The Netherland s, Norway, Republic of Korea, Russian Federation, Sweden, Switzerland, 
Tanzania, United Arab Emirates, United Kingdom, and United States.  
 
The entity within the Government of Brazil that is responsible for administering the Annex V 
process is the Ministry of Foreign Affairs, and Brazil requests that all communications under the 
Annex V process be directed to the Brazilian Mission to the WTO in Geneva.  
 
 
__________