INTRODUCTION

Canada and Brazil both appeal from certain issues of law and legal interpretations developed in the Panel Report, Canada - Measures Affecting the Export of Civilian Aircraft (the “Panel Report”). The Panel was established by the Dispute Settlement Body (the “DSB”), pursuant to Article 4.4 of the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”) and Article 6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the “DSU”), to examine certain alleged subsidies that Brazil contended Canada or its provinces had granted, inconsistently with its obligations under paragraphs 1(a) and 2 of Article 3 of the SCM Agreement, to support the export of civilian aircraft. A brief outline of the factual aspects of the dispute is given at paragraphs 2.1 and 2.2 of the Panel Report.

The Panel considered claims made by Brazil relating to the activities of the Export Development Corporation (the “EDC”); the operation of Canada Account; the Canada-Quebec Subsidiary Agreements on Industrial Development; Société de Développement Industriel du Quebec; Technology Partnerships Canada (“TPC”) and the Defence Industry Productivity Programme, as well as the sale to Bombardier Inc. (“Bombardier”), a Canadian corporation, by the Government of Ontario (through the Ontario Aerospace Corporation) of a 49 per cent interest in de Havilland Holdings Inc. The Panel Report was circulated to the Members of the World Trade Organization (the “WTO”) on 14 April 1999. The Panel found “that Canada Account debt financing since 1 January 1995 for the export of Canadian regional aircraft” and “TPC assistance to the Canadian regional aircraft industry” constitute prohibited export subsidies inconsistent with Articles 3.1(a) and 3.2 of the SCM Agreement. The Panel rejected all of Brazil's other claims. The Panel recommended that Canada withdraw the prohibited export subsidies “without delay” and, in any event, “within 90 days”.

On 3 May 1999, Canada notified the DSB of its intention to appeal legal interpretations developed by the Panel, and certain issues of law covered in the Panel Report, pursuant to paragraph 4 of Article 16 of the DSU, and filed a Notice of Appeal with the Appellate Body, pursuant to Rule 20 of the Working Procedures for Appellate Review (the “Working Procedures”).