Decisions of the Appellate Body of the World Trade Organization

Brazil-Export Financing Programme for Aircraft

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Joel P. Trachtman

WTO Appellate Body Report: Brazil-Export Financing Programme for Aircraft, AB-1999-1, WT/DS46/AB/R (99-3216), adopted by Dispute Settlement Body, 20 August 1999. Brazil, Appellant/Appellee; Canada, Appellant/Appellee; European Communities and United States, Third Participants. Division: Bacchus, Ehlermann and El-Naggar. Major Topics Addressed by Appellate Body: Agreement on Subsidies and Countervailing Measures; Export Subsidies; Illustrative List of Export Subsidies; Export Credit Programs and OECD Arrangement; Special and Differential Treatment of Developing Countries.

1. Abstract

This case was decided at the same time as the appeal in  Canada-- Measures Affecting the Export of Civilian Aircraft ("Canada--Aircraft"). These two cases involved competing export subsidies provided by the governments of Brazil and Canada. Both were evaluated under the Agreement on Subsidies and Countervailing Measures (the "SCM Agreement").

In the present case, Brazil argued that it benefits from the special exception for developing countries under Article 27.4 of the SCM Agreement. However, the panel and Appellate Body found that Brazil did not comply with the conditions for that exception. This was because Canada was able to satisfy the burden of proof that Brazil had increased the amount of its export subsidies. Brazil also argued that its subsidy program is exempted under item (k) of the Illustrative List of Export Subsidies annexed to the SCM Agreement. Without deciding whether the Illustrative List may exempt measures that are subsidies under Article 1 of the SCM Agreement, the Appellate Body found that Brazil's measure did not comply with the conditions of any possible exemption, because it is "used to secure a material advantage in the field of export credit terms" within item (k).

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