CANADA - MEASURES AFFECTING THE EXPORT OF CIVILIAN AIRCRAFT
Document: Request for Consultations by Brazil
Date: 14 March 1997
Document codes: WT/DS70/1; G/SCM/D11/1
Complainant: Brazil
Respondent: Canada
Third parties: Australia, EU, U.S.
Dispute stage: Implementation & Compliance
Agreements cited: Art. 3.2, 3.1(a)  Subsidies and Countervailing Measures (SCM)

CANADA - MEASURES AFFECTING THE EXPORT
OF CIVILIAN AIRCRAFT
Request for Consultations by Brazil
The following communication, dated 10 March 1997, from the Permanent Mission of Brazil
to the Permanent Mission of Canada and to the Dispute Settlement Body is circulated in accordance
with Article 4.4 of the DSU, at the request of the Permanent Mission of Brazil.
The Government of Brazil hereby requests consultations with the Government of Canada pursuant
to Article 4 of the Agreement on Subsidies and Countervailing Measures ("the Agreement") regarding
certain subsidies grantedbythe Government of Canada oritsprovincesthatsupportthe exportof civilian
aircraft from Canada. Article 3 of the Agreement prohibits subsidies contingent in law or in fact upon
export performance. Information available to the Government of Brazil suggests that the following
programmes may be inconsistent with the requirements of Article 3:
1. ExportDevelopmentCorporation(EDC)equityinfusionsintocorporationsspeciallyestablished
to facilitate the export of aircraft;
2. EDC loan guarantees for exported aircraft;
3. Support from the Canada Account to Canadair and de Havilland, both Canadian aircraft
manufacturers, owned in whole or in part by another Canadian aircraft manufacturer,
Bombardier;
4. An $87 million interest free loan from the Government of Canada to the Canadian aircraft
manufacturer Bombardier which is repayable only out of any profits that may be made from
the sale of aircraft;
5. A December 1996 subsidy of $57 million from the Government of Canada to Bombardier to
develop a 70-passenger version of the firm's Dash 8 regional aircraft;
6. The impending sale to Bombardier, by the Government of Ontario, of its investment in de
Havilland, on other than commercial terms;
7. A $147 million subsidy announced in January 1997 to Pratt & Whitney of Canada to develop
engines for commuter jet aircraft produced by Bombardier and affiliated companies;

8. Benefits conferred on Bombardier under the Canada-Quebec Subsidiary Agreement on Industrial
Development;
9. Benefits conferred on Bombardier by the Government of Quebec under the Société de
Développement Industriel du Québec, including its "PREP" programme ("programme d'appui
à la reprise") which is available only for export activities.
In accordance with Article 4 of the Agreement, the Government of Brazil requests consultations
with the Government of Canada to discuss this matter with the intention of reaching a mutually
satisfactory result within the 30 days contemplated by Article 4.4.
In a separate communication, Brazil is also requesting consultations with Canada concerning
these programmes pursuant to Article 7 of the Agreement. This separate request is being made because
the Agreement provides separate procedures for consultations and dispute settlement for subsidies covered
by Parts II and III. The Government of Brazil desires that Article 4 consultations take place within
the time contemplated by that Article, and would welcome from the Government of Canada any
suggestions it may wish to make concerning dates. It is the hope of Brazil that the two governments
later could agree whether the Article 3 consultations could also serve as Article 7 consultations, or
whether it would be advisable to hold one or more additional sessions for that purpose.