Canada will not appeal WTO report in aircraft dispute

            International Trade Minister Pierre Pettigrew and Industry Minister Allan Rock announced on February 19 that Canada will not appeal the January 26, 2002 World Trade Organization (WTO) panel report on Canada’s export financing programs.

            “We are committed to a trade system based on clear rules – a priority we hope will be shared by Brazil,” said Minister Pettigrew. “We disagree with certain elements of the decision, but since there are sufficient positive elements for Canada, we have decided that, on balance, it’s better to let the decision stand. We want to turn the page on this trade dispute and find a mutually acceptable solution with Brazil.”

            Canada has won numerous WTO rulings against Brazil since the beginning of the dispute. In December 2000, the WTO granted Canada the authority to apply up to $2.1 billion in counter-measures against Brazil (the award was the largest in WTO history) for Brazil’s failure to withdraw its illegal PROEX subsidies on 1,118 Embraer aircraft delivered after November 18, 1999, the compliance deadline established by the WTO. The current case involves 118 Canadian aircraft, many of which have already been delivered.

            “Canadian aerospace capabilities and products are among the finest in the world,” said Mr. Rock. “We are confident that Bombardier and Embraer can compete successfully in the market for regional jets on the basis of their products.”

            Canadian and Brazilian officials resumed negotiations in New York City on February 8 to end this dispute. They have agreed to meet again in early April.

            In the report, the WTO panel found that Canada Account financing of the Air Wisconsin and Air Nostrum transactions, as well as Corporate Account financing of three Comair transactions, were inconsistent with WTO rules. In the same report, the WTO panel rejected Brazil’s claims against the Government of Canada’s Canada Account and Corporate Account programs, and the Government of Quebec’s Investissement Quebec, as well as on 8 out of 11 Corporate Account transactions and all of the Investissment Quebec transactions. Canadian Ambassador Sergio Marchi today advised the WTO Dispute Settlement Body of Canada’s position.

            On January 10, 2001, Canada announced that it was acting to preserve jobs in Canada by matching the financing terms Brazil was using to support the sale of its Embraer aircraft to Air Wisconsin. Through Export Development Corporation (now Export Development Canada), the Government of Canada offered financing to Air Wisconsin Airlines Corporation on terms comparable to those that Brazil was offering. These terms placed Bombardier Aerospace on an equal footing with Embraer in competition for firm sales of 75 aircraft to Air Wisconsin. The Canadian government remains firm in its commitment to Bombardier’s clients and aerospace employees across the country.