BRAZIL - EXPORT FINANCING PROGRAMME FOR AIRCRAFT
Document: Original: English BRAZIL - EXPORT FINANCING PROGRAMME FOR AIRCRAFT Request for the Establishment of a Panel by Canada
Date: 17 September 1996
Document codes: WT/DS46/2
Complainant: Canada
Respondent: Brazil
Third parties: Australia, EU, South Korea, U.S.
Dispute stage: Retaliation & Arbitration
Agreements cited: Art. XVI  GATT 1994Art. 3, 27  Subsidies and Countervailing Measures (SCM)

BRAZIL - EXPORT FINANCING PROGRAMME FOR AIRCRAFT
Request for the Establishment of a Panel by Canada
The following communication, dated and received on 16 September 1996, from the Permanent
Mission of Canada to the Chairman of the Dispute Settlement Body, is circulated at the request of that
delegation.
On 18 June 1996, the Government of Canada requested consultations with the Government
of Brazil concerning certain export subsidies granted under its Programa de Financiamento às Exportações
("PROEX") to foreign purchasers of Brazil's Embraer aircraft. In accordance with Article 4 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), that request
was notified to the Dispute Settlement Body ("DSB") and the Committee on Subsidies and Countervailing
Measures. The request was circulated to Members of the on 21 June 1996

The Brazilian measures in question include Brazilian Law 8.187 establishing PROEX, Resolution
2.224/95 of the Central Bank of Brazil, Order no. 15/96and Regulation 368/95 of the BrazilianMinistry
of State for Industry, Trade and Tourism. These measures provide for the payment of export subsidies
through an interest rate "equalization" programme. The Government of Canada requested the
consultations to address its concerns that these export subsidies were inconsistent with Brazil's obligations
under the Agreement on Subsidies and Countervailing Measures (the "SCM Agreement") and the General
Agreement on Tariffs and Trade 1994 ("GATT 1994").
Canada and Brazil held the consultations in Geneva on 22 July 1996 and 25 July 1996 with
a view to reaching a satisfactory resolution of the matter. Unfortunately, the consultations failed to
settle the dispute and there are no indictions to suggest that further consultations are likely to be
productive.
Pursuant to Article XXIII of the GATT 1994, Articles 4 and 30 of the SCM Agreement and
Articles 4 and 6 of the DSU, Canada requests that a Panel be established at the next meeting of the
DSB scheduled for 27 September 1996.
Canada requests that the Panel consider and find that:
(a) the Interest Rate Equalizationcomponent of PROEX is inconsistentwiththe Agreement
on Subsidies and Countervailing Measures, and in particular Article 3 thereof;

(b) the Interest Rate Equalization component of PROEX is inconsistent with GATT 1994,
and in particular Article XVI thereof; and
(c) the operation and application of the Interest Rate Equalization component of PROEX
otherwisenullifiesorimpairsthebenefitsaccruingtoCanada pursuanttothe Agreement
Establishing the World Trade Organization.
If the Panel finds that the Interest Rate Equalization System component of PROEX is inconsistent
with Article 3 of the Agreement on Subsidies and Countervailing Measures, Canada also requests that
thePanel recommendthattheInterestRate EqualizationSystemcomponent ofPROEX, andallpayments
scheduled under the Interest Rate Equalization System component of PROEX, be terminated immediately
pursuant to Article 4 of the Agreement on Subsidies and Countervailing Measures.
Canada requests that the Panel be established with the standard terms of reference set out in
Article 7 of the DSU. Canada further requests that this request for the establishment of a Panel be
inscribed on the agenda of the meeting of the DSB scheduled for 27 September 1996.