WORLD TRADE WT/DS46/3
25September 1996
ORGANIZATION(96-3819)
Original: English
BRAZIL -EXPORT FINANCING PROGRAMME FOR AIRCRAFT
Communication from Brazil
Thefollowing communication, dated 23September 1996, fromthePermanent Mission ofBrazil
totheChairman oftheDispute Settlement Body, iscirculated attherequest ofthatdelegation.
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Inaletter senttoyoubyAmbassador JohnM.Weekes, dated 16September 1996, Canada
requested theinclusion ofanitemontheagenda ofthemeeting oftheDispute Settlement Body scheduled
for27September1996,concerningtheestablishmentofaPanelpursuanttoArticleXXIIIofGATT1994
andArticles 4and6oftheUnderstanding onRules andProcedures Governing theSettlement ofDisputes
(DSU) toexamine certain aspects oftheBrazilian Programa deFinanciamento àsExporta ções(PROEX)
thatrelate totheexport ofaircraft bytheBrazilian company Embraer.
Asstated during thebilateral consultations withtheGovernment ofCanada, Brazil isnotof
theview thattheinterest rateequalization granted under export operations ofEmbraer aircraft is
inconsistentwiththeAgreementonSubsidiesandCountervailingMeasures(SCM),inparticularArticle3
thereof.
Even iftheaspects ofPROEX atissue were tobeconsidered inconsistent withArticle 3of
theAgreement onSCM, Brazil isoftheviewthattheywould bejustified byArticle 27oftheAgreement.
Thisprovision, concerning Special andDifferential Treatment ofDeveloping Country Members, is
ofnecessity invoked whenever anArticle 3question israised concerning adeveloping country.
Otherwise, theArticle 27benefits explicitly negotiated forbydeveloping countries could always be
avoided bythesimple expedient ofnotraising theArticle inthepanel request. Brazil 'srights under
Article 27wererecognized byCanada during theconsultations andindocument WT/DS46/1, butnot
inCanada 'sproposed terms ofreference forthePanel.
Brazil hasnointention ofblocking Canada 'srequest. Nevertheless, inlightoftheabove, and
inaccordance withArticle 7oftheDSU, Brazil reserves itsrights toinvoke Article 27oftheAgreement
onSubsidies andCountervailing Measures before anyPanel isestablished toexamine thematter at
issue, andrequests thattheterms ofreference proposed byCanada explicitly recognize Brazil 'sright
todoso.