CANADA – MEASURES AFFECTING THE EXPORT OF CIVILIAN AIRCRAFT
Document: Recourse by Brazil to Article 21.5 of the DSU
Date: 23 November 1999
Document codes: WT/DS70/9
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
Recourse by Brazil to Article 21.5 of the DSU
The following communication, dated 23 November 1999, from the Permanent Mission of
Brazil to the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 21.5 of the
DSU.
On 20 August 1999, the Dispute Settlement Body (DSB) adopted the reports of the Appellate
Body and the Panel, as modified by the Appellate Body, in "" (WT/DS70). The Panel report concluded that Canada Account debt financing
since 1 January 1995 and Technology Partnerships Canada (TPC) assistance constitute prohibited
export subsidies in violation of Article 3.1(a) and 3.2 of the Agreement on Subsidies and
Countervailing Measures (SCM Agreement). The Panel report recommended, and the Appellate
Body affirmed, that Canada must withdraw the subsidies within 90 days.
The 90 day period for implementation of the DSB recommendations expired on
18 November 1999. On 19 November, with respect to Canada Account, the Canadian government
announced before the DSB that it had implemented the Panel's recommendation by approving a new
policy guideline. With respect to TPC, the Canadian government announced before the DSB that it
had implemented the Panel's recommendation by amending TPC's Contribution Agreements and by
restructuring TPC and revising its Terms and Conditions and Framework Document.
Brazil believes that these measures taken by Canada to comply with the recommendations and
rulings of the DSB are not consistent with the SCM Agreement and the Understanding on Rules and
Procedures Governing the Settlement of Disputes (DSU). In particular, regarding the Canada
Account, Brazil recalls that there are a large num ber of provisions in the OECD Arrangement that
allow for derogations from its general rules. Therefore, Canada's vague statement that this new policy
guideline complies with the OECD Arrangement is inconsistent with the recommendations and
rulings of the DSB and Article 3 of the SCM Agreement. In addition, Brazil has not received any
documentation with the revised policy guidelines of Canada Account.
Regarding TPC, Canada's statement in the 19 November DSB meeting maintained that new
terms and conditions and a new administrative framework for the program were approved. Brazil has
no information on such framework and since TPC payments were contingent in fact upon export
performance, compliance by Canada with Article 3 of the SCM Agreement requires more than a mere
reformulation of some of the TPC rules and regulations.
In conclusion, Brazil believes that Canada has not implemented the recommendations of the
DSB concerning neither Canada Account nor TPC. Accordingly, because "there is a disagreement as

to the existence or consistency with a covered ag reement of measures taken to comply with the
recommendations and rulings of the DSB" between Brazil and Canada, within the terms of
Article 21.5 of the DSU, Brazil seeks recourse to Article 21.5 in this matter and requests that the DSB
refer the disagreement to the original panel, if possible, pursuant to Article 21.5.
Attached to this communication are the terms of an agreement reached by Brazil and Canada
concerning the procedures to be followed pursuant to Articles 21 and 22 of the DSU. Brazil stresses
that such agreement does not prejudge its rights concerning an appeal of the review panel report.

ANNEX

The Panel and Appellate Body reports in this dispute were adopted by the Dispute Settlement
Body on 20 August 1999.
The DSB recommendations and rulings included the recommendation that Canada bring its
measures found to be inconsistent with the Agreement on Subsidies and Countervailing Measures (the
SCM Agreement) into conformity with the provisions of that Agreement and that Canada shall
withdraw the subsidies identified in sub-paragraphs (b) and (f) of paragraph 10.1 of the Panel report
within 90 days, or by 18 November 1999.
There is disagreement between Canada and Brazil as to the existence or consistency with a
covered agreement of measures taken to comply with the recommendations and rulings of the DSB,
within the meaning of Article 21.5 of the Unders tanding on Rules and Procedures Governing the
Settlement of Disputes (the DSU).
Canada and Brazil have reached an agreement concerning the procedures to be applicable for
proceedings in this case pursuant to Articles 21 and 22 of the DSU and Article 4 of the SCM
Agreement, as follows:
1. On 23 November 1999, Brazil will request that this matter be referred to the original panel
pursuant to Article 21.5 of the DSU. Brazil will also request the convening of a DSB meeting
on 3 December 1999 and Canada will not object to the holding of such a meeting.
2. At the DSB meeting convened in response to the request by Brazil, Canada will accept the
establishment of a review panel under Article 21.5 of the DSU and will not pose any
procedural objection to the establishment of such a panel.
3. Brazil and Canada shall cooperate to ensure that the review panel convened under
Article 21.5 of the DSU will be able to circulate its report within 60 days of its establishment.
Brazil will not request authorization to suspend concessions until after circulation of the
Article 21.5 report.
4. Neither Brazil nor Canada will object to a request that the DSB be convened to consider the
report that may be submitted to it under Article 21.5 for adoption. In the event that such
report finds that Canada has not complied with the recommendations or rulings of the DSB,
neither party will object to DSB consideration of a request by Brazil for authorization to
suspend concessions pursuant to Article 22.2 of the DSU and/or Article 4.10 of the SCM
Agreement; provided, however, that Canada may request that the matter be referred to
arbitration pursuant to Article 22.6 of the DSU.
5. Pursuant to footnote 6 to Article 4 of the SC M Agreement, Brazil and Canada agree that the
deadline for DSB action under the first sentence of Article 22.6 of the DSU shall be 15 days
after the circulation of the report under Article 21.5 of the DSU, and that the deadline
specified in the third sentence of Article 22.6 of the DSU for completion of arbitration shall
be 30 days after that matter is referred to arbitration.
6. This agreement shall be forwarded immediately to the Chair of the DSB for circulation to all
WTO Members.

AGREED TO in Geneva this 23rd day of November, 1999.
(Signed) (Signed)
H.E. Mr. Celso Amorim H.E. Mr. Sergio Marchi
Ambassador Ambassador
Permanent Representative of Brazil Permanent Representative of Canada
to the World Trade Organization to the World Trade Organization