WTO dispute between Brazil and Canada on subsidies to the aeronautical sector – Request for the establishment of a panel

Tomorrow, August 18, the Brazilian Government will present a request for the establishment of a panel to the Dispute Settlement Body of the World Trade Organization (WTO), in the context of a dispute initiated against Canada in March 2017, with respect to subsidies granted by the Canadian Government to the aeronautical sector (in particular the Bombardier C-Series program at the federal, provincial and local levels).

In the request, Brazil will seek the examination of the compatibility with WTO rules of more than 20 subsidies programs granted by the Canadian Government to the aeronautical sector of the country, directly or indirectly related to the development of the new Bombardier family of aircrafts, in the context of the C-Series program. Technical studies elaborated by Brazil estimate that, in the last decade, Bombardier and suppliers of the C-Series received subsidies equivalent to more than US$ 3 billion. In the assessment of the Brazilian government, the high subsidies granted by Canada to Bombardier have resulted in serious losses to the national aeronautical industry. Several programs also involve subsidies prohibited by WTO rules.  

The request for the establishment of a panel follows consultations with the Canadian government which would not lead to the solution of the dispute. The request will be discussed at the next meeting of the WTO Dispute Settlement Body, scheduled for August 31. Under WTO rules, the Canadian government may object to this first request. In such case, the establishment of the panel will automatically occur at the following meeting of the Board, on September 29.

The Brazilian government hopes that the dispute will allow for the fast rebalancing of the conditions of international competitiveness in the aeronautical sector, which has been artificially affected by Canadian subsidies.