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Flying Over Uncharted Territory: The Brazil–Canada Regional Aircraft Disputes in the WTO

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Abstract

The disputes between Brazil and Canada over government support for the sale of regional aircraft marked Brazil’s initiation as a major player in WTO dispute settlement. After providing some historical background and a summary of the findings by the panels and the Appellate Body, this chapter focuses on three issues of significant systemic importance that were addressed for the first time in those disputes, all of them under the WTO Subsidies Agreement: the question of the “benefit,” de facto export contingency, and the “safe haven” provided by the OECD Arrangement on export credits. The issues are approached from the perspective of Brazil, particularly in light of how differences between developed and developing countries affect the ability of their companies to compete in a market like civil aircraft. The chapter concludes by indicating how the original disputes were resolved in practice and by noting a new dispute that, 20 years after the first case was brought by Canada, may bring both countries into a new cycle of litigation over trade in aircraft.

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Notes

  1. 1.

    See in this regard World Trade Organization (2000d), paragraphs 2.1 and 2.2.

  2. 2.

    The “Embraer-Bombardier” disputes have been well covered in the specialized literature. See for example Goldstein and McGuire (2004) and Sullivan (2003).

  3. 3.

    See for instance Tyson and Chin (1992). The particular economic features of the civil aircraft industry have also been addressed in two ongoing WTO disputes between the European Union and the United States (the “Boeing-Airbus” disputes). See for example World Trade Organization (2010), paragraph 7.1623.

  4. 4.

    Andrade (1976). The “São Paulo” was designed and built by an inventor of French descent, Dimitri Sensaud de Lavaud. This flight, made on 7 January 1910, became news in the Brazilian press on the following day—see O Estado de S. Paulo (2017).

  5. 5.

    Andrade (1976).

  6. 6.

    United States International Trade Commission (1982). After the Bandeirante was introduced in the United States in 1979, imports grew rapidly from 5 aircraft in 1979, to 20 and 37 in 1980 and 1981, respectively. When Embraer ceased production of the model in 1990, a total of around 500 units had been delivered to operators worldwide.

  7. 7.

    See for example Airfleets (2017).

  8. 8.

    Goldstein (2002).

  9. 9.

    Losses in 1992, 1993 and 1994 had totaled USD 258 million, USD 116 million and USD 310 million, respectively. See Goldstein (2002), Table 1.

  10. 10.

    Flight International (1996).

  11. 11.

    That dispute was named Brazil-Export Financing Programme for Aircraft. Following the WTO dispute settlement numbering system, it was numbered “DS46”. Further references to that dispute in this article will be made by using the shorthand “DS46”. The same convention will be used when referring to other WTO disputes in this text.

  12. 12.

    The title of the dispute brought by Brazil was Canada-Measures Affecting the Export of Civilian Aircraft. It was numbered DS70.

  13. 13.

    See the panel and Appellate Body reports in World Trade Organization (1999c, d). Those reports—with the panel report as modified by the Appellate Body report—were adopted by the DSB on 20 August 1999.

  14. 14.

    World Trade Organization (2000c).

  15. 15.

    World Trade Organization (2001).

  16. 16.

    World Trade Organization (2000a, b).

  17. 17.

    That dispute was titled Canada-Export Credits and Loan Guarantees for Regional Aircraft, and received the number DS222. The panel was established on 12 March 2001, and its report was adopted by the DSB on 19 February 2002. For the panel report, see World Trade Organization (2002).

  18. 18.

    World Trade Organization (2000d).

  19. 19.

    World Trade Organization (2003).

  20. 20.

    The Tokyo Round Subsidies Code did include an illustrative list of export subsidies, most of which was carried over into the SCM Agreement. The list, of course, could not exhaust the possibilities of subsidization in general.

  21. 21.

    World Trade Organization (1999a), paragraph 9.98.

  22. 22.

    World Trade Organization (1999b), paragraph 149, quoting the panel report at paragraph 9.112.

  23. 23.

    World Trade Organization (1999b), paragraph 154, emphasis in the original.

  24. 24.

    World Trade Organization (1999b), paragraph 157.

  25. 25.

    World Trade Organization (1999a), paragraphs 9.175–9.179. It must be noted that, at the request of Canada, the panel had adopted specific procedures to protect business confidential information in that dispute.

  26. 26.

    World Trade Organization (1999b), paragraphs 185–197.

  27. 27.

    World Trade Organization (1999b), paragraphs 203–205.

  28. 28.

    World Trade Organization (1999b), paragraph 206.

  29. 29.

    See footnote 17.

  30. 30.

    World Trade Organization (2000e), paragraph 100.

  31. 31.

    World Trade Organization (1999b), paragraph 169.

  32. 32.

    World Trade Organization (2000b), paragraphs 48–49.

  33. 33.

    World Trade Organization (1999b), paragraph 171, emphasis in the original.

  34. 34.

    World Trade Organization (2011a), paragraph 1064, emphasis added.

  35. 35.

    World Trade Organization (2011a), paragraph 1086, emphasis added.

  36. 36.

    World Trade Organization (2011a), paragraphs 1047–1048.

  37. 37.

    World Trade Organization (2011b), paragraphs 15–19.

  38. 38.

    World Trade Organization (2000a), paragraphs 5.82–5.127; World Trade Organization (2001), paragraphs 5.92–5.118.

  39. 39.

    World Trade Organization (2000a), paragraphs 5.120–5.125; World Trade Organization (2002), paragraphs 7.158–7.181.

  40. 40.

    World Trade Organization (2001), paragraph 5.69.

  41. 41.

    World Trade Organization (2001), paragraph 5.84.

  42. 42.

    World Trade Organization (2000a), paragraph 5.132, emphasis in the original.

  43. 43.

    World Trade Organization (2001), paragraph 5.87 and footnote 86, emphasis in the original.

  44. 44.

    World Trade Organization (2000a), footnote 85.

  45. 45.

    World Trade Organization (2005).

  46. 46.

    For an account of the process from the viewpoint of the outstanding lead negotiator for Canada, see Cameron (2011).

  47. 47.

    The aircraft in question are in the 100–130 seat range.

  48. 48.

    One of the “Boeing-Airbus” disputes—see footnote 3 above.

  49. 49.

    World Trade Organization (2011b), paragraph 21.

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Authors and Affiliations

  1. Ministry of Foreign Affairs of Brazil, Trade Disputes Division, Brasilia, Brazil

    Marcus Vinicius da Costa Ramalho

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  1. Marcus Vinicius da Costa Ramalho
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Correspondence to Marcus Vinicius da Costa Ramalho .

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Editors and Affiliations

  1. International and Compared Law, University of São Paulo Law School, São Paulo, Brazil

    Alberto do Amaral Júnior

  2. University of São Paulo Law School, São Paulo, Brazil

    Luciana Maria de Oliveira Sá Pires

  3. International Relations Institute, University of São Paulo, São Paulo, Brazil

    Cristiane Lucena Carneiro

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da Costa Ramalho, M.V. (2019). Flying Over Uncharted Territory: The Brazil–Canada Regional Aircraft Disputes in the WTO. In: do Amaral Júnior, A., de Oliveira Sá Pires, L.M., Lucena Carneiro, C. (eds) The WTO Dispute Settlement Mechanism. Springer, Cham. https://doi.org/10.1007/978-3-030-03263-0_23

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  • DOI: https://doi.org/10.1007/978-3-030-03263-0_23

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