Decisions of the Appellate Body of the World Trade Organization

Canada-Measures Affecting the Export of Civilian Aircraft

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Joel P. Trachtman

WTO Appellate Body Report: Canada-Measures Affecting the Export of Civilian Aircraft, AB-1999-2, WT/DS70/AB/R (99-3221), adopted by Dispute Settlement Body, 20 August 1999. Canada, Appellant/Appellee; Brazil, Appellant/Appellee; European Communities and United States, Third Participants. Division: Bacchus, Feliciano and Matsushita. Major Topics Addressed by Appellate Body: Agreement on Subsidies and Countervailing Measures; Confidential Business Information; Duty of States to Provide Evidence; Definition of "Export Subsidy"; Definition of "Benefit."

1. Abstract

This case was decided at the same time as the appeal in Brazil-Export Financing Programme for Aircraft ("Brazil--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"). Importantly, these cases were considered independently, and neither state's export subsidies were considered to counterbalance the other's: two wrongs were not permitted to make a right.

The Appellate Body found that its procedures for protecting business confidential information are sufficient, and that supplementation would be inappropriate. It found that the panel would be entitled to draw adverse inferences from an unreasonable failure of a state to respond to a request for information. It found that the definition of a "subsidy" requires both a contribution by government and a benefit to the recipient, and that the former is irrelevant to the determination of the latter. It further found that in order to determine the existence of a benefit, a reference to market rates for financing is appropriate. Finally, in determining whether an export subsidy existed, the "export orientation" of the recipient is just one of many factors, with the more important factor being the actual contingency, de jure or de facto, on exports of the subsidy.

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