WORLD TRADE WT/DS46/2
17September 1996
ORGANIZATION(96-3646)
Original: English
BRAZIL -EXPORT FINANCING PROGRAMME FOR AIRCRAFT
Request fortheEstablishment ofaPanel byCanada
Thefollowing communication, dated andreceived on16September 1996, fromthePermanent
Mission ofCanada totheChairman oftheDispute Settlement Body, iscirculated attherequest ofthat
delegation.
_______________
On18June1996, theGovernment ofCanada requested consultations withtheGovernment
ofBrazilconcerningcertainexportsubsidiesgrantedunderitsProgramadeFinanciamentoàsExportações
("PROEX") toforeign purchasers ofBrazil 'sEmbraer aircraft. Inaccordance withArticle 4ofthe
Understanding onRules andProcedures Governing theSettlement ofDisputes ("DSU"), thatrequest
wasnotifiedtotheDisputeSettlementBody("DSB")andtheCommitteeonSubsidiesandCountervailing
Measures. Therequest wascirculated toMembers oftheWorld Trade Organization on21June1996
(WT/DS46/1).
TheBrazilianmeasuresinquestionincludeBrazilianLaw8.187establishingPROEX,Resolution
2.224/95 oftheCentral BankofBrazil, Order no.15/96 andRegulation 368/95 oftheBrazilian Ministry
ofStateforIndustry, Trade andTourism. These measures provide forthepayment ofexport subsidies
through aninterest rate"equalization" programme. TheGovernment ofCanada requested the
consultationstoaddressitsconcernsthattheseexportsubsidieswereinconsistentwithBrazil'sobligations
undertheAgreementonSubsidiesandCountervailingMeasures(the"SCMAgreement")andtheGeneral
Agreement onTariffs andTrade 1994 ("GATT 1994").
Canada andBrazil heldtheconsultations inGeneva on22July1996 and25July1996 with
aviewtoreaching asatisfactory resolution ofthematter. Unfortunately, theconsultations failed to
settle thedispute andthere arenoindictions tosuggest thatfurther consultations arelikely tobe
productive.
Pursuant toArticle XXIII oftheGATT 1994, Articles 4and30oftheSCM Agreement and
Articles 4and6oftheDSU, Canada requests thataPanel beestablished atthenextmeeting ofthe
DSBscheduled for27September 1996.
Canada requests thatthePanel consider andfindthat:
(a) theInterest RateEqualization component ofPROEX isinconsistent withtheAgreement
onSubsidies andCountervailing Measures, andinparticular Article 3thereof;
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(b) theInterest RateEqualization component ofPROEX isinconsistent withGATT 1994,
andinparticular Article XVIthereof; and
(c) theoperation andapplication oftheInterest RateEqualization component ofPROEX
otherwise nullifies orimpairs thebenefits accruing toCanada pursuant totheAgreement
Establishing theWorld Trade Organization.
IfthePanelfindsthattheInterestRateEqualizationSystemcomponentofPROEXisinconsistent
withArticle 3oftheAgreement onSubsidies andCountervailing Measures, Canada alsorequests that
thePanel recommend thattheInterest RateEqualization System component ofPROEX, andallpayments
scheduledundertheInterestRateEqualizationSystemcomponentofPROEX,beterminatedimmediately
pursuant toArticle 4oftheAgreement onSubsidies andCountervailing Measures.
Canada requests thatthePanel beestablished withthestandard terms ofreference setoutin
Article 7oftheDSU. Canada further requests thatthisrequest fortheestablishment ofaPanel be
inscribed ontheagenda ofthemeeting oftheDSBscheduled for27September 1996.