WORLD TRADE
ORGANIZATION |
WT/DS70/RW
9 May 2000
(00-1750) |
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Original: English |
CANADA - MEASURES AFFECTING THE EXPORT
OF CIVILIAN AIRCRAFT
Recourse by Brazil to Article 21.5 of the DSU
Report of the Panel
(Continuation)
38.
Canada cannot seriously claim compliance with the DSB's recommendations and
rulings on the basis of amendments made to TPC - a programme judged to be a
prohibited export subsidy - without actually demonstrating that those changes
were made. As demonstrated in paragraph 9.340 of the Panel Report, the devil is
indeed in the details of the TPC programme. Canada's failure to provide the
documents listed in the preceding paragraph - which presumably detail its
efforts at compliance - should lead the Panel to presume that the documents do
not in fact demonstrate compliance.78
III. CANADA'S AMENDMENTS TO THE CANADA ACCOUNT DO NOT MAKE IT CONSISTENT WITH
THE SUBSIDIES AGREEMENT, AND DO NOT CONSTITUTE EFFECTIVE IMPLEMENTATION OF THE DSB'S RECOMMENDATIONS AND RULINGS
39. Although Canada's 19 November 1999 statement to the DSB first claims that
"there will be no deliveries of regional aircraft after 18 November 1999
benefitting from such Canada Account financing," it goes on to say that "any
delivery of regional aircraft after 18 November 1999 which benefits from Canada
Account financing will comply with the [OECD] Arrangement."79 Brazil presumes,
therefore, that Canada intends to retain the discretion to support sales or
deliveries of Canadian regional aircraft with Canada Account financing.
40. Canada Account financing is still, under Article 3.1(a), contingent in law
on export. Canada Account debt financing "takes the form of export credits and,
in Canada's own words, was granted 'for export of goods'."80 Canada Account export
credits are issued, moreover, "'for the purpose of supporting and developing,
directly or indirectly, Canada's export trade.'"81
41. Confirming the Panel's conclusion of de jure export contingency, the
President of the Export Development Corporation, which administers the Canada
Account, has stated that "Canada Account funds are used to support export
transactions which the federal government deems to be in the national interest
but which, for reasons of size or risk, the Export Development Corporation (EDC)
cannot support through regular export credits."82
42. The materials submitted by Canada to the DSB purportedly demonstrating
implementation do not speak to, much less alter, Canada Account's de jure export
contingency. Brazil submits, therefore, that the Panel should maintain its
previous ruling that Canada Account financing is de jure contingent on export,
within the meaning of Article 3.1(a) of the Subsidies Agreement.
43. Regarding the status of Canada Account financing as a "subsidy" under
Article 1 of the Subsidies Agreement, Canada's comments do not suggest that its
implementation strategy removes such financing from the category of "financial contribution[s] by a government," under Article 1.1(a)(1) of the Subsidies
Agreement. The press release announcing Canada's implementation, for example,
states that "the collection risk" for Canada Account transactions "ultimately
rests with the Government of Canada."83 Similarly, Canada's announcements do not
suggest that Canada Account financing is no longer provided in one of the forms
listed in sub-paragraphs (i) through (iv) of Article 1.1(a)(1) to the Subsidies
Agreement.
44. Canada's statements outlining its implementation strategy do not, moreover,
directly address the Panel's finding that Canada Account financing could be at
rates "below the market,"84 and thus on terms constituting a "benefit" under
Article 1.1(b) of the Subsidies Agreement, i.e., terms "more advantageous for
the recipient than those available on the market."85
45. To implement the DSB's recommendations and rulings, Canada simply states
that under a "policy guideline" issued by the Minister for International Trade,
no Canada Account transactions will be authorized unless they "comply with the
OECD Arrangement on Guidelines for Officially Supported Export Credits."86
46. Canada appears to suggest that even if Canada Account financing otherwise
constitutes a prohibited export subsidy, it is exempted by the so-called "safe
harbor" in item (k) of the Illustrative List of Export Subsidies, included as
Annex 1 to the Subsidies Agreement. This rather cryptic suggestion, however, is
not sufficient to satisfy Canada's significant burden of establishing
entitlement to what is an affirmative defence. Had Canada opted for this defence
in the original Panel proceedings, it would have carried the significant burden
of proving entitlement to it; leaving reliance on this defence to the
implementation phase of dispute settlement proceedings does not change Canada's
burden. Mere assertion of the defence, without more, is not enough.
47. For example, the OECD Arrangement on Guidelines for Officially Supported
Export Credits - to which item (k) refers - includes 88 articles covering a wIde
variety of issues, along with an annex dedicated to aircraft. Canada has not
specified which articles of the Arrangement or which portions of the aircraft
annex are relevant under item (k), or precisely how it will maintain compliance
with those provisions. Nor has Canada provided the Minister of International
Trade's "policy guideline," under which future Canada Account financing
allegedly compliant with the terms of the OECD Arrangement will apparently be
issued.87
48. For these reasons, Canada has not brought itself into compliance with either
the recommendations and rulings of the DSB, or the terms of the Subsidies
Agreement, with regard to the Canada Account.
IV. CONCLUSION
49. Canada has not withdrawn the subsidies determined by the Panel and the
Appellate Body to be prohibited export subsidies. The amendments proposed to TPC
are inadequate to implement the recommendations and rulings of the DSB, and are
not otherwise in compliance with Canada's obligations under the Subsidies
Agreement. The cosmetic changes included in Canada's implementation strategy
consist of little more than an effort to strike the word "export" from TPC
documents. This is not sufficient to cure a programme rendered de facto export
contingent, since de facto export contingency "must be inferred from the total
configuration of the facts constituting and surrounding the granting of the
subsidy . . ."88 Under the "facts constituting and surrounding" TPC subsidies,
implementation of the DSB's recommendations and rulings and compliance with the
Subsidies Agreement requires nothing short of complete and total withdrawal of
TPC, as it relates to the regional aircraft industry.
50. With regard to the Canada Account, Canada's cryptic statement that debt
financing under the programme will in future conform to the terms of the OECD
Arrangement is not sufficient to discharge its burden of proving what amounts to
an appeal to an affirmative defence.
51. Accordingly, Brazil requests that the Panel determine that Canada has not
implemented the recommendations and rulings of the DSB or otherwise complied
with its obligations under the Subsidies Agreement.
LIST OF EXHIBITS
Canadian Letter to DSB, 19
November 1999
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Exhibit Bra-1
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Canadian Statement to DSB, 19
November 1999
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Exhibit Bra-2
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Brazilian Letter to DSB, 23
November 1999
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Exhibit Bra-3
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Superceded TPC Charter (in TPC Interim Reference Binder, March 1998)
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Exhibit Bra-4
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TPC Special Operating Agency Framework Document
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Exhibit Bra-5
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TPC Annual Report, 1998-1999 |
Exhibit Bra-6
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Updated Expert Report |
Exhibit Bra-7
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TPC Annual Report, 1996-1997 |
Exhibit Bra-8
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Industry Canada News Release, 10 January 1997 |
Exhibit Bra-9
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Industry Canada News Release, 17 December 1996 |
Exhibit Bra-10
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"Think Canada, Think Bottom Line, Think Aerospace Industry, Think Investment,"
October 1999 |
Exhibit Bra-11
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Industry Canada, "Results of the 1998/99 Survey of the Canadian Aerospace and
Defence Industry," 29 November 1999
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Exhibit Bra-12
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"Canadian Aerospace Suppliers Base Strategy for Change," 25 June 1999
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Exhibit Bra-13
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Aerospace Industries Association of Canada Annual Report, 1999 |
Exhibit Bra-14
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TPC Terms and Conditions |
Exhibit Bra-15
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TPC Investment Application Guide |
Exhibit Bra-16
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TPC Current Statistics, 6 December 1999 |
Exhibit Bra-17
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Industry Canada News Release, 18 November 1999 |
Exhibit Bra-18
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TPC website, "Aerospace and Defence" |
Exhibit Bra-19
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TPC website, "Project Identification and Description," 21 January 1998 |
Exhibit Bra-20
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TPC Business Plan, 1996-1997 |
Exhibit Bra-21
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Superceded TPC Terms and Conditions (in TPC Interim Reference Binder, March
1998)
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Exhibit Bra-22
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Industry Canada, CIBS Overview, "Executive Summary" |
Exhibit Bra-23
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Industry Canada, CIBS Strategic Overview, "International Business Development
Priorities"
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Exhibit Bra-24
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Industry Canada, CIBS Geographic Overview
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Exhibit Bra-25
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Industry Canada, CIBS Aerospace and Defence |
Exhibit Bra-26
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Conference Board of Canada,
Performance and Potential 1999, "Working Smarter,
Not Harder"
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Exhibit Bra-27
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Submission of Appellant Canada, 13 May 1999, paras. 45-46 |
Exhibit Bra-28
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Export Development Corporation,
Chairman and President's Message |
Exhibit Bra-29
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ANNEX 1-2
REBUTTAL SUBMISSION OF BRAZIL
(17 January 2000)
TABLE OF CONTENTS
- INTRODUCTION
- CANADA'S AMENDMENTS TO THE TPC PROGRAMME DO NOT MAKE IT CONSISTENT WITH THE
SUBSIDIES AGREEMENT, AND DO NOT CONSTITUTE EFFECTIVE IMPLEMENTATION OF THE DSB'S
RECOMMENDATIONS AND RULINGS
- A. TPC CONTRIBUTIONS STILL CONSTITUTE SUBSIDIES UNDER ARTICLE 1 OF THE SUBSDIESS
AGREEMENT
- DETERMINING WHETHER CANADA HAS IMPLEMENTED THE RECOMMENDATIONS AND RULINGS OF
THE DSB DOES NOT REQUIRE EVIDENCE OF TPC CONTRIBUTIONS SUBSEQUENT TO 18 NOVEMBER
1999
- Canada Mischaracterizes the Appellate Body's Test for de facto
Export Contingency
- Canada's Argument Reduces Article 21.5 to 'Inutility'
- COSMETIC CHANGES DO NOT CURE TPC OF de facto EXPORT
CONTINGENCY
- TPC Remains Focused on the Aerospace Industry and the
Regional Aircraft Industry, the Export Orientation of Which Has
Been Singled out by the Canadian Government As Significant
- Removing the 'Near to Market' Terminology from TPC Documents
is Irrelevant
- To Qualify for TPC Funds, Applicants Must Demonstrate a Contribution to Goa
1s and Objectives Requiring a Commitment to Export Performance
(a) Export Contingency Need Not Be the Sole Condition for Receipt of a Subsidy
(b) Brazil Has Relied on Valid Evidence
- References to the Term 'Export' Have Not Been Removed from All TPC
Documents
- CANADA'S AMENDMENTS TO THE CANADA ACCOUNT DO NOT MAKE IT CONSISTENT WITH
THE SUBSIDIES AGREEMENT, AND DO NOT CONSTITUTE EFFECTIVE IMPLEMENTATION OF THE DSB'S
RECOMMENDATIONS AND RULINGS
- DETERMINING WHETHER CANADA HAS IMPLEMENTED THE RECOMMENDATIONS AND RULINGS OF
THE DSB DOES NOT REQUIRE EVIDENCE OF CANADA ACCOUNT FINANCING SUBSEQUENT TO 18
NOVEMBER 1999
- CANADA'S CLAIM THAT THE RECOMMENDATIONS AND RULINGS OF THE DSB
REQUIRED NO IMPLEMENTATION BY CANADA IS IN ERROR
- CANADA'S PROPOSAL REGARDING THE
ESTABLISHMENT OF 'VERIFICATION PROCEDURES'
- CONCLUSION
LIST OF EXHIBITS
I. INTRODUCTION
1. In its first submission1 Canada claims to have adopted measures implementing
the recommendations and rulings of the Dispute Settlement Body ("DSB") regarding
the withdrawal of subsidies provided by the Canadian government to the regional
aircraft industry via two programmes - Technology Partnerships Canada ("TPC")
and Canada Account. In Canada - Measures Affecting the Export of Civilian
Aircraft2 these subsidies were determined to constitute prohibited export subsIdies under Article 3.1(a) of the Agreement on Subsidies and Countervailing
Measures ("Subsidies Agreement"), and were accordingly ordered withdrawn,
pursuant to Article 4.7 of that Agreement.
2. Brazil reiterates its claim that the Canadian measures do not adequately
implement the DSB's recommendations and rulings, and that the impugned
programmes remain inconsistent with the Subsidies Agreement. In this submission,
Brazil addresses arguments levied by Canada in its first submission, and
demonstrates that Canada's implementation measures are insufficient to comply
with the recommendations and rulings of the DSB that it "withdraw " TPC and
Canada Account subsidies to the regional aircraft industry.
II. CANADA'S AMENDMENTS TO THE TPC PROGRAMME DO NOT MAKE IT CONSISTENT WITH THE
SUBSIDIES AGREEMENT, AND DO NOT CONSTITUTE EFFECTIVE IMPLEMENTATION OF THE DSB'S
RECOMMENDATIONS AND RULINGS
A. TPC CONTRIBUTIONS STILL CONSTITUTE SUBSIDIES UNDER ARTICLE 1 OF THE SUBSIDIES
AGREEMENT
3. Without repeating the arguments included in paragraphs 8-11 of its first
submission, Brazil simply reiterates that the legal status of TPC contributions
as "subsidies" under Article 1 of the Subsidies Agreement remains unchanged
under the "new" TPC.
4. Canada argues that the question whether TPC contributions will continue to
constitute subsidies is "not the issue in this case.3 With this statement, Canada
effectively concedes that should the Panel determine that contributions under
the "new" TPC will continue to be contingent in fact on export performance under
Article 3 of the Subsidies Agreement, it should also presume that those
contributions will continue to constitute "subsidies" under Article 1 of the
Agreement.
B. DETERMINING WHETHER CANADA HAS IMPLEMENTED THE RECOMMENDATIONS AND RULINGS OF
THE DSB DOES NOT REQUIRE EVIDENCE OF TPC CONTRIBUTIONS SUBSEQUENT TO 18 NOVEMBER
1999
5. In its first submission, Canada contends that in the absence of new
"financial contributions" to the regional aircraft industry made subsequent to
18 November 1999 under the "restructured" TPC, this Panel cannot judge whether
Canada has effectively implemented the recommendations and rulings of the DSB.
Specifically, Canada claims that "in the absence of any such financial
contribution and a full consideration of those facts, there can be no grounds to
support Brazil's allegations of de facto export contingency under the
restructured TPC programme.4
6. Canada appears to draw this conclusion from the first element of the
Appellate Body's test for de facto export contingency, which Canada
characterizes as an inquiry into whether "there is granting of assistance by
Canada.5 Since no new assistance has been granted under the "new" TPC, Canada
asserts that the Panel cannot conclude that Canada has failed to implement the
recommendations and rulings of the DSB. Canada's assertion is in error, for two
reasons.
1. Canada Mischaracterizes the Appellate Body's Test for de facto Export
Contingency
7. First, Canada mischaracterizes and takes wholly out of context the first
element of the Appellate Body's test. What the Appellate Body actually said is
that
the initial inquiry must be on whether the granting authority imposed a
condition based on export performance in providing the subsidy. In the words of
Article 3.2 and footnote 4, the prohibition is on the "granting of a subsidy",
and not on receiving it. The treaty obligation is imposed on the granting
Member, and not on the recipient. Consequently, we do not agree with Canada that
an analysis of "contingent . . . in fact . . . upon export performance" should
focus on the reasonable knowledge of the recipient.6
Brazil has retained the original italicized emphasis employed by the Appellate
Body to demonstrate that the Appellate Body's point with this first element was
to show the error of Canada's assertion that an interpreter should look to a
subsidy recipient's knowledge to determine whether the recipient, rather than
the grantor, understood the subsidy to be conditioned in fact on export
performance.
8. To interpret this first element of the Appellate Body's test otherwise, as
Canada suggests the Panel should, would be to render redundant Article 1.1 of
the Subsidies Agreement - which already requires demonstration of a "financial
contribution by a government." In Brazil - Export Financing Programme for
Aircraft, the Appellate Body held that the Panel erred in importing the notion
of a "benefit," from Article 1.1(b) of the Subsidies Agreement, into the
definition of a "financial contribution" in Article 1.1(a); it termed these two
sub-parts of the same Article "two separate legal elements.7 Since there was no
textual basis to read one provision (regarding "benefit") into another provision
(regarding "financial contribution"), the Appellate Body concluded that it was
not permissible to do so.
9. Similarly, there is no textual basis to import the notion of a "financial
contribution by a government," from Article 1 of the Subsidies Agreement, into
the legal test of "contingen[cy] . . . in fact . . . upon export performance,"
from Article 3 of the Agreement. Nor, when read in context, does the Appellate
Body's exposition of the first element of demonstrating de facto export
contingency create such a requirement.
2. Canada's Argument Reduces Article 21.5 to 'Inutility'
10. Second, Canada's claim confuses a de novo challenge to a financial
contribution not yet judged to be a prohibited export subsidy, with a challenge
to those measures allegedly remedying something already judged to be a
prohibited export subsidy. If accepted, Canada's claim would make measures
allegedly constituting effective implementation impervious to effective
challenge under Article 21.5 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes ("DSU"). This is because a Member
determined by a Panel to have adopted measures constituting subsidies contingent
in fact on export could, under Canada's theory, escape effective Article 21.5
scrutiny by merely refraining from applying any remedial measures until the
20-day time period to seek compensation has passed.8
11. The opportunity to manipulate the system in this way did not escape Canada;
according to TPC's website, Canada waited until 10 January 2000 to award its
first contribution under the "new" TPC.9 Nor should it escape other Members. The
effect, of course, would be to reduce Article 21.5 to "inutility," a result
considered unacceptable by the Appellate Body.10 Members that have successfully
challenged a subsidy contingent in fact on export would be left, effectively,
with little more than a Pyrrhic victory. When it comes to enforcement of the
most egregious of export subsidies - those subsidies determined by a Panel or
the Appellate Body to be levied in a manner designed to circumvent the
prohibition of de jure export contingency - Members would be left without an
effective remedy.11
12. Finally, beyond undermining Article 21.5, accepting Canada's theory would
also undermine any incentive a Member would have to implement the DSB's
recommendations and rulings at all. If implementation measures remedying a
finding of a subsidy programme's de facto export contingency are impervious to
effective challenge, what incentive would a Member have to undertake those
implementation measures? More specifically, if all Canada considers it needed to
do to insulate TPC from challenge was to refrain from making a contribution
under the "new" TPC, why did it bother to undertake any implementation measures
at all?
13. It would not have had to do so, under its own logic, since it could have
defended Brazil's challenge under Article 21.5 strictly on the basis that no new
subsidies to the regional aircraft industry had been granted. Obviously, Canada
undertook the implementation measures detailed in its first submission because
it considered itself compelled to do more than simply not issue TPC subsidies to
the regional aircraft industry for the time being.12 The fact that Canada felt
compelled to do so demonstrates that it does not consider the absence of
subsequent subsidies to immunize it from Brazil's Article 21.5 challenge. For
this and the other reasons expressed above, Canada's argument must be rejected.
C. COSMETIC CHANGES DO NOT CURE TPC OF de facto EXPORT CONTINGENCY
14. "TPC assistance to the Canadian regional aircraft industry" was determined
by the Panel and the Appellate Body to be contingent in fact on export
performance.13 Canada's response, however, as demonstrated by its implementation
strategy and detailed in its first submission, has been to treat TPC as though
it had been judged de jure, rather than de facto, export contingent. Canada
considers that by demonstrating that it made some changes to TPC, such as the
removal of the term "export" from some (although not all) TPC documents, or the
inclusion of self-serving statements regarding its undertaking not to consider
export information, the task of implementing the DSB's recommendations and
rulings is complete.
15. This is not effective implementation of a determination of de facto export
contingency. According to the Appellate Body, while de jure export contingency
is indeed demonstrated (or remedied) "on the basis of the words of the relevant
legislation, regulation or other legal instrument," de facto export contingency
is to be "inferred from the total configuration of the facts constituting and
surrounding the granting of the subsidy . . .14 Brazil demonstrated in its first
submission, at paragraphs 18-38, that the facts surrounding the "new" or the
"restructured" TPC still support an inference of de facto export contingency.
Under the "new" TPC,
- contributions remain targeted to specific industries - in particular, the
aerospace industry, which is to continue, as before, receiving two-thirds of TPC
fund15 - that are overwhelmingly export-oriented and recognized by the Government
of Canada as such (discussed at section 1 below);
- the same types of projects continue to be eligible for "new" TPC funds as were
eligible under the "old" TPC (discussed at section 2 below);
- applicants must demonstrate that they will contribute to goals and objectives
the achievement of which requires a commitment to export performance, according
to the Government of Canada itself (discussed at section 3 below);
- Canada has failed to amend or to provide documents that the Panel previously
considered supported an inference of de facto export contingency (discussed at
section 4 below).
16. Apart from removing references to the word "export" from some TPC documents,
the only thing that the DSB's recommendations and rulings have prompted Canada
to do is to increase, by 396 per cent, what TPC itself projects to be "Total
funds available for new contributions in future years.16 Additionally, over the
period 1998-2003, TPC's "Available contribution funding" is slated to increase
from $203 million to $367 million.17
17. Thus, under the "new" TPC, the same recipient industries will receive even
more government subsidies to undertake the same types of projects. This is not
effective implementation.
18. The facts surrounding TPC, described in paragraphs 18-38 of Brazil's first
submission, lead to the conclusion that funds granted to the regional aircraft
industry under the "new" TPC will continue, unavoidably, to be contingent in
fact on export performance. It is for this reason that Brazil argued, in its
first submission, that "withdrawing the subsidy" in the case of TPC - the very
design, structure, and economic reality of which betrays its de facto export
contingency - cannot be achieved without withdrawal of the programme altogether,
with regard to the regional aircraft industry.18
19. At a minimum, Canada's implementation measures must ensure that prohibited
export subsidies cannot be granted to the regional aircraft industry under the
facts surrounding the operation of TPC, and not merely that they might not be
granted. Since TPC, as it applies to the regional aircraft industry, was judged
de facto export contingent, maintaining funding under the "new" TPC requires
that Canada ensure that the programme will operate in full compliance with the
Subsidies Agreement. It is not sufficient for Canada to simply provide a
framework which, in consideration of the "total configuration of the facts
constituting and surrounding the granting of the subsidy19, could permit it to
maintain operation of TPC as a de facto export contingent programme. To
constitute effective implementation, any amendments made by Canada to TPC should
not focus on making the programme merely de jure compliant (which it may already
have been), but instead on making it de facto compliant, on a consideration of
the "total configuration of the facts.20
20. A review of the "total configuration of the facts" reveals that Canada has
not met this obligation. Brazil recalls that under the "new" TPC, the same
industry recipients are getting even more TPC subsidies to undertake the same
types of projects. This does not suggest effective implementation of a finding
of de facto export contingency.
78 The Panel may, of course, request these documents from
Canada. Any refusal to provIde these documents should lead to the inference and
presumption that the documents reveal something short of Canadian compliance
with the recommendations and rulings of the DSB regarding TPC.
79 Exhibit Bra-2, pg. 2.
80 Panel Report, para. 9.230.
81 Id.
82 Export Development Corporation, Chairman and President's
Message (emphasis added) (Exhibit Bra-29). See also Panel Report, para. 6.149.
83 Industry Canada News Release, 18 November 1999, pg. 2
(Exhibit Bra-18).
84 Panel Report, para. 9.224.
85 Panel Report, para. 9.222.
86 Canadian Statement to the DSB, pg. 2 (Exhibit Bra-2).
See also Canadian Letter to the DSB (Exhibit Bra-1).
87 Id. Should the Panel request this document from Canada,
any refusal to provide it should lead to the inference and presumption that the
document would reveal something short of Canadian compliance with the
recommendations and rulings of the DSB regarding the Canada Account.
88 Appellate Body Report, para. 167 (emphasis in original).
1 First Article 21.5 Submission of Canada, dated 10 January
2000 ["Canadian First Submission"].
2 WT/DS70/R (14 April 1999) (Adopted as modified by the
Appellate Body, 20 August 1999) [ "Panel Report"]; WT/DS70/AB/R (2 August 1999)
(Adopted 20 August 1999) [ "Appellate Body Report"].
3 Canadian First Submission, para. 39.
4 Id. at para. 45.
5 Id. at para. 38.
6
Appellate Body Report, para. 170 (emphasis in original).
7
WT/DS46/AB/R (2 August 1999) (Adopted 20 August 1999) para. 157.
8
See DSU Article 22.2.
9
Moreover, this contribution does not involve the regional aircraft industry. TPC
News Release, 10 January 2000 (Exhibit Bra-30). According to TPC's website, no
other TPC awards had been made since 17 November 1999, one day before expiration
of the "reasonable period of time" for implementation. TPC News Release, 17
November 1999 (Exhibit Bra-31).
10 United States - Standards for Reformulated and Conventional Gasoline,
WT/DS2/AB/R, pg. 23 (29 April 1996) (Adopted 20 May 1996) (An interpreter "is
not free to adopt a reading that would result in reducing whole clauses or
paragraphs of a treaty to redundancy or inutility.").
11
The Panel will recall that the European Communities proposed the express
prohibition of subsidies contingent in fact on export because the de jure
provision is "open to circumvention." Elements of the Negotiating Framework,
Submission of the European Communities, MTN.GNG/NG10/W/31 (27 November 1989).
12
In paragraph 2 of its first submission, Canada confirmed this fact,
characterizing its TPC implementation measures as "new measures to ensure full
and faithful implementation of the DSB rulings and recommendations and
compliance with the SCM Agreement."
13
Panel Report, paras. 10.1(f), 10.3; Appellate Body Report, paras. 220(b), 221.
14
Appellate Body Report, para. 167 (emphasis in original).
15
Canadian First Submission, para. 32. Canada notes at paragraph 32 that "it
cannot be assumed that regional aircraft industry-related projects will receive
the majority of the funds." This may be so, but is utterly irrelevant. If the
regional aircraft industry is able to receive $1 of funds contingent in fact on
export performance, Canada has not implemented the recommendations and rulings
of the DSB.
16
TPC Annual Report, 1998-1999, pg. 28 (row titled "Total funds available for new
contributions in future years," comparing 1999-2000 figure with 2002-2003
figure) (Exhibit Bra-6). Canada complains in Annex A to its first submission
that "[t]his is a distortion of the actual programme funding situation." Brazil
reiterates that these figures are taken directly from the TPC Annual Report.
17
TPC Annual Report, 1998-1999, pg. 28 (row titled "Available contribution
funding").
18
As discussed in paragraph 7 of its first submission, Brazil reiterates that this
result is also supported by Canada itself. In its submissions to the Appellate
Body, Canada argued that the word "subsidy" is used interchangeably with the
term "subsidy programme" in the Subsidies Agreement, and that TPC is just such a
"subsidy programme." See Submission of Appellant Canada, 13 May 1999, paras.
45-46 (Exhibit Bra-28). The requirement that Canada "withdraw the subsidy,"
therefore, must by force of Canada's own logic mean that it is required to
withdraw TPC in its entirety.
19
Appellate Body Report, para. 167 (emphasis in original).
20 Id.
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