BRAZIL – EXPORT FINANCING PROGRAMME FOR AIRCRAFT
Document: Recourse by Canada to Article 4.10 of the SCM Agreement and Article 22.2 of the DSU
Date: 11 May 2000
Document codes: WT/DS46/16
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
Recourse by Canada to Article 4.10 of the SCM Agreement
and Article 22.2 of the DSU
The following communication, dated 10 May 2000, from the Permanent Mission of Canada to
the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 4.10 of the SCM
Agreement and Article 22.2 of the DSU.
Canada requests that a special meeting of the Dispute Settlement Body be held on
22 May 2000 to consider the following agenda item:

Recourse by Canada to Article 4.10 of the SCM Agreement and Article 22.2 of the DSU
Both the Panel and the Appellate Body in th is dispute found the Brazilian measures under
review to violate Article 3 of the Agreement on Subsidies and Countervailing Measures (the "SCM
Agreement"). On 20 August 1999, in a special se ssion, the Dispute Settlement Body (the "DSB")
adopted the Appellate Body report and the report of the Panel, as modified by the Appellate Body.
The resulting DSB recommendations and rulings include the recommendation that Brazil bring its
measures found to be inconsistent with the SCM Ag reement into conformity with the provisions of
that agreement, and that Brazil withdraw the e xport subsidies for regional aircraft under PROEX
within 90 days.
The period for compliance expired on 18 November 1999. Canada and Brazil disagreed as to
whether the measures taken by Brazil to comply with the 20 August 1999 recommendations and
rulings of the DSB brought Brazil into conformity with the provisions of the SCM Agreement and
resulted in the withdrawal of the export subsidies to regional aircraft under PROEX. Canada
requested that the matter of Brazil’s non-compliance be referred to the original panel pursuant to
Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the
"DSU"). On 9 May 2000, the Panel circulated its findings. It found: (1) that Brazil’s measures to
comply with the recommendations and rulings of the DSB either do not exist or are not consistent
with the SCM Agreement; and (2) that Brazil had failed to withdraw the export subsidies for regional
aircraft under PROEX.
At the meeting of the DSB on 22 May 2000, Canada will request authorization from the DSB
to take appropriate countermeasures pursuant to Article 4.10 of the SCM Agreement and Article 22.2
of the DSU in the amount of Can$700 million per year.

Canada intends to take countermeasures in the form of some or all of the following:
1) the suspension of the application of the obligation under paragraph 6(a) of Article VI
of GATT 1994 to determine that the effect of subsidization under PROEX is to cause
or threaten material injury to an established domestic industry, or is to retard
materially the establishment of a domestic industry;
2) the suspension of the application of obligations under the Agreement on Textiles and
Clothing relative to quantitative restraints on imports of textiles and clothing imports
from Brazil;
3) the suspension of the application of obligations under the Agreement on Import
Licensing Procedures relative to licensing requirements on imports from Brazil; and
4) the suspension of tariff concessions and related obligations under the GATT 1994 by
imposing a surtax of 100 per cent above existing custom duties on a list of products
imported from Brazil. On 13 May 2000 Canada will publish in the Canada Gazette a
proposed list of products on which concessions could be withdrawn. That list is
attached for ease of reference.
Canada may also suspend Brazil from the list of countries eligible for General Preferential
Tariff treatment, a unilateral tariff preference granted by Canada for most imports from developing
countries.

ANNEX

List of Imports from Brazil
from which Concessions could be Withdrawn
Tariff
Chapter/
Heading/
Sub-heading
Description
1 Live animals
2 Meat and edible meat offal
3 Fish and crustaceans, molluscs and other aquatic invertebrates
4 Dairy produce; bird's eggs; natural honey; edible products of animal origin, not
elsewhere specified or included
5 Products of animal origin, not elsewhere specified or included
6 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental
foliage
7 Edible vegetables and certain roots and tubers
8 Edible fruit and nuts; peel of citrus fruit or melons
9 Coffee, tea, maté and spices
10 Cereals
11 Products of the milling industry; malt; starches; inulin; wheat gluten
12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial
or medicinal plants; straw and fodder
13 Lac; gums, resins and other vegetable saps and extracts
14 Vegetable plaiting materials; vegetable products not elsewhere specified or
included
15 Animal or vegetable fats and oils and their cleavage products; prepared edible
fats; animal or vegetable waxes
16 Preparations of meat, of fish or of crustaceans, molluscs or other aquatic
invertebrates
170191 Refined Sugar
170199 Refined Sugar
18 Cocoa and cocoa preparations
19 Preparations of cereals, flour, starch or milk; pastrycooks' products
2001 Vegetables, fruit, nuts and other edible parts of plants, prepared or preserved by
vinegar or acetic acid
2002 Tomatoes prepared or preserved otherwise than by vinegar or acetic acid
2003 Mushrooms and truffles, prepared or preserved otherwise than by vinegar or
acetic acid
2004 Other vegetables prepared or preserved otherwise than by vinegar or acetic acid,
frozen, other than products of heading No. 20.06
2005 Other vegetables prepared or preserved otherwise than by vinegar or acetic acid,
not frozen, other than products of heading No. 20.06
2006 Vegetables, fruit, nuts, fruit-peel and other parts of plants, preserved by sugar
(drained, glacé or crystallised)

2007 Jams, fruit jellies, marmalades, fruit or nut purée and fruit or nut pastes, being
cooked preparations, whether or not containing added sugar or other sweetening
matter
2008 Fruit, nuts and other edible parts of plants, otherwise prepared or preserved,
whether or not containing added sugar or other sweetening matter or spirit, not
elsewhere specified or included
21 Miscellaneous edible preparations
22 Beverages, spirits and vinegar
23 Residues and waste from the food industries; prepared animal fodder
24 Tobacco and manufactured tobacco substitutes
29 Organic chemicals
30 Pharmaceutical products
31 Fertilizers
32 Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and
other colouring matter; paints and varnishes; putty and other mastics; inks
33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations
34 Soap, organic surface-active agents, washing preparations, lubricating
preparations, artificial waxes, prepared waxes, polishing or scouring
preparations, candles and similar articles, modelling pastes, "dental waxes" and
dental preparations with a basis of plaster
35 Albuminoidal substances; modified starches; glues; enzymes
36 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain
combustible preparations
37 Photographic or cinematographic goods
38 Miscellaneous chemical products
39 Plastics and articles thereof
42 Articles of leather; saddlery and harness; travel goods, handbags and similar
containers; articles of animal gut (other than silk-worm gut)
43 Furskins and artificial fur; manufactures thereof
4401 Fuel wood, in logs, in billets, in twig s, in faggots or in similar forms; wood in
chips or particles; sawdust and wood waste and scrap, whether or not
agglomerated in logs, briquettes, pellets or similar forms
4402 Wood charcoal (including shell or nut charcoal), whether or not agglomerated.
4403 Wood in the rough, whether or not stripped of bark or sapwood, or roughly
squared
4404 Hoopwood; split poles; piles, pickets an d stakes of wood, pointed but not sawn
lengthwise; wooden sticks, roughly trimmed but not turned, bent or otherwise
worked, suitable for the manufacture of walking-sticks, umbrellas, tool handles
or the like; chipwood and the like
4405 Wood wool; wood flour
4406 Railway or tramway sleepers (cross-ties) of wood
4410 Particle board and similar board of wood or other ligneous materials, whether or
not agglomerated with resins or other organic binding substances
4411 Fibreboard of wood or other ligneous materials, whether or not bonded with
resins or other organic substances
4413 Densified wood, in blocks, plates, strips or profile shapes

4414 Wooden frames for paintings, photographs, mirrors or similar objects
4415 Packing cases, boxes, crates, drums and similar packings, of wood; cable-drums
of wood; pallets, box pallets and other load boards, of wood; pallet collars of
wood
4416 Casks, barrels, vats, tubs and other coopers' products and parts thereof, of wood,
including staves
4417 Tools, tool bodies, tool handles, broom or brush bodies and handles, of wood;
boot or shoe lasts and trees, of wood
4418 Builders' joinery and carpentry of wood, including cellular wood panels,
assembled parquet panels, shingles and shakes
4419 Tableware and kitchenware, of wood
4420 Wood marquetry and inlaid wood; caskets and cases for jewellery or cutlery, and
similar articles, of wood; statuettes and other ornaments, of wood; wooden
articles of furniture not falling in Chapter 94
4421 Other articles of wood
45 Cork and articles of cork
46 Manufactures of straw, of esparto or of other plaiting materials; basketware and
wickerwork
4701 Mechanical wood pulp
4702 Chemical wood pulp, dissolving grades
4704 Chemical wood pulp, sulphite, other than dissolving grades
4705 Semi-chemical wood pulp
4706 Pulps of fibres derived from recovered (waste and scrap) paper or paperboard or
of other fibrous cellulosic material
4707 Recovered (waste and scrap) paper or paperboard
48 Paper and paperboard; articles of paper pulp, of paper or of paperboard
50 Silk
51 Wool, fine or coarse animal hair; horsehair yarn and woven fabric
52 Cotton
53 Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn
54 Man-make filaments
55 Man-made staple fibres
57 Carpets and other textile floor coverings
58 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings;
embroidery
59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a
kind suitable for industrial use
60 Knitted or crocheted fabrics
61 Articles of apparel and clothing accessories, knitted or crocheted
62 Articles of apparel and clothing accessories, not knitted or crocheted
6301 Blankets and travelling rugs.
6302 Bed linen, table linen, toilet linen and kitchen linen
6303 Curtains (including drapes) and interior blinds; curtain or bed valances
6304 Other furnishing articles, excluding those of heading No. 94.04

6306 Tarpaulins, awnings and sunblinds; tents; sails for boats, sailboards or landcraft;
camping goods
6307 Other made up articles, including dress patterns
6308 Sets consisting of woven fabric and yarn, whether or not with accessories, for
making up into rugs, tapestries, embroidered table cloths or serviettes, or similar
textile articles, put up in packings for retail sale
6309 Worn clothing and other worn articles
6310 Used or new rags, scrap twine, cordage, rope and cables and worn out articles of
twine, cordage, rope or cables, of textile materials
64 Footwear, gaiters and the like; parts of such articles
65 Headgear and parts thereof
66 Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and
parts thereof
67 Prepared feathers and down and articles made of feathers or of down; artificial
flowers; articles of human hair
68 Articles of stone, plaster, cement, asbestos, mica or similar materials
69 Ceramic products
70 Glass and glassware
71 Natural or cultured pearls, precious or semi-precious stones, precious metals,
metals clad with precious metal, and articles thereof; imitation jewellery; coin
7208 Flat-rolled products of iron or non-allo y steel, of a width of 600 mm or more,
hot-rolled, not clad, plated or coated
7209 Flat-rolled products of iron or non-allo y steel, of a width of 600 mm or more,
cold-rolled (cold-reduced), not clad, plated or coated
7210 Flat-rolled products of iron or non-allo y steel, of a width of 600 mm or more,
clad, plated or coated
7211 Flat-rolled products of iron or non-alloy steel, of a width of less than 600 mm,
not clad, plated or coated
7212 Flat-rolled products of iron or non-alloy steel, of a width of less than 600 mm,
clad, plated or coated
7214 Other bars and rods of iron or non-alloy steel, not further worked than forged,
hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling
7215 Other bars and rods of iron or non-alloy steel
7216 Angles, shapes and sections of iron or non-alloy steel
7217 Wire of iron or non-alloy steel
7219 Flat-rolled products of stainless steel, of a width of 600 mm or more
7220 Flat-rolled products of stainless st eel, of a width of less than 600 mm
7221 Bars and rods, hot-rolled, in irregularly wound coils, of stainless steel
7222 Other bars and rods of stainless steel; angles, shapes and sections of stainless
steel
7223 Wire of stainless steel
7225 Flat-rolled products of other alloy st eel, of a width of 600 mm or more

7226 Flat-rolled products of other alloy steel, of a width of less than 600 mm
7227 Bars and rods, hot-rolled, in irregularly wound coils, of other alloy steel
7228 Other bars and rods of other alloy stee l; angles, shapes and sections, of other
alloy steel; hollow drill bars and rods, of alloy or non-alloy steel
7229 Wire of other alloy steel
7301 Sheet piling of iron or steel, whether or not drilled, punched or made from
assembled elements; welded angles, shapes and sections, of iron or steel
7302 Railway or tramway track construction material of iron or steel, the following:
rails, check-rails and rack rails, switch blades, crossing frogs, point rods and
other crossing pieces, sleepers (cross-ties), fish-plates, chairs, chair wedges, sole
plates (base plates), rail clips, bedplates, ties and other material specialized for
jointing or fixing rails
7303 Tubes, pipes and hollow profiles, of cast iron
7308 Structures (excluding prefabricated buildings of heading No. 94.06) and parts of
structures (for example, bridges and bridge-sections, lock-gates, towers, lattice
masts, roofs, roofing frame-works, doors and windows and their frames and
thresholds for doors, shutters, balustrades, pillars and columns), of iron or steel;
plates, rods, angles, shapes, sections, tubes and the like, prepared for use in
structures, of iron or steel
7309 Reservoirs, tanks, vats and similar containers for any material (other than
compressed or liquefied gas), of iron or steel, of a capacity exceeding 300 litres,
whether or not lined or heat-insulated, but not fitted with mechanical or thermal
equipment
7310 Tanks, casks, drums, cans, boxes and similar containers, for any material (other
than compressed or liquefied gas), of iron or steel, of a capacity not exceeding
300 litres, whether or not lined or heat-insulated, but not fitted with mechanical
or thermal equipment
7311 Containers for compressed or liquefied gas, of iron or steel
7312 Stranded wire, ropes, cables, plaited bands, slings and the like, of iron or steel,
not electrically insulated
7313 Barbed wire of iron or steel; twisted h oop or single flat wire, barbed or not, and
loosely twisted double wire, of a kind used for fencing, of iron or steel
7314 Cloth (including endless bands), grill, ne tting and fencing, of iron or steel wire;
expanded metal of iron or steel
7315 Chain and parts thereof, of iron or steel
7316 Anchors, grapnels and parts thereof, of iron or steel
7317 Nails, tacks, drawing pins, corrugated nails, staples (other than those of heading
No. 83.05) and similar articles, of iron or steel, whether or not with heads of
other material, but excluding such articles with heads of copper
7318 Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter-pins,
washers (including spring washers) and similar articles, of iron or steel
7319 Sewing needles, knitting needles, bodkins, crochet hooks, embroidery stilettos
and similar articles, for use in the hand, of iron or steel; safety pins and other
pins of iron or steel, not elsewhere specified or included
7320 Springs and leaves for springs, of iron or steel
7321 Stoves, ranges, grates, cookers (including those with subsidiary boilers for
central heating), barbecues, braziers, gas-rings, plate warmers and similar non-
electric domestic appliances, and parts thereof, of iron or steel

7322 Radiators for central heating, not electrically heated, and parts thereof, of iron or
steel; air heaters and hot air distributors (including distributors which can also
distribute fresh or conditioned air), not electrically heated, incorporating a
motor-driven fan or blower, and parts thereof, of iron or steel
7323 Table, kitchen or other household articles and parts thereof, of iron or steel; iron
or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of
iron or steel
7324 Sanitary ware and parts thereof, of iron or steel
7325 Other cast articles of iron or steel
7326 Other articles of iron or steel
74 Copper and articles thereof
75 Nickel and articles thereof
76 Aluminum and articles thereof
78 Lead and articles thereof
79 Zinc and articles thereof
80 Tin and articles thereof
81 Other base metals; cermets; articles thereof
82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of
base metal
83 Miscellaneous articles of base metal
86 Railway or tramway locomotives, rolling-stock and parts thereof; railway or
tramway track fixtures and fittings and parts thereof; mechanical (including
electro-mechanical) traffic signalling equipment of all kinds
88 Aircraft, spacecraft and parts thereof
89 Ships, boats and floating structures
91 Clocks and watches and parts thereof
92 Musical instruments; parts and accessories of such articles
93 Arms and ammunition; parts and accessories thereof
94 Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed
furnishings; lamps and lighting fittings, not elsewhere specified or included;
illuminated signs, illuminated name-plates and the like; prefabricated buildings
95 Toys, games and sports requisites; parts and accessories thereof
96 Miscellaneous manufactured articles
97 Works of art, collectors' pieces and antiques