ARBITRATION PANEL ALLOWS BRAZIL TO IMPOSE SANCTIONS ON CANADA
A WTO arbitration panel has issued a decision allowing Brazil to impose US$248 million in retaliatory sanctions against Canada in a dispute over aircraft subsidies. However, noting ongoing consultations, the arbitration panel gave the opinion that an agreement addressing the broader context would be the most appropriate solution in the dispute. In a longstanding row, the WTO dispute settlement body (DSB) decided to set up an arbitration panel in June 2002 (see BRIDGES Weekly, 26 June 2002). At that time, Brazil claimed that Canada had failed to implement the findings of an independent WTO team of experts that loans provided to the Quebec-based jet maker, Bombardier Inc., were illegal. The Canadian delegation countered by saying that the amount of damages claimed by Brazil (US$3.36 billion) "was inflated, unjustified and invalid". This dispute is closely tied to two earlier disputes relating to aircraft subsidies: Brazil-Aircraft (WT/DS46/AB/R, available at http://docsonline.wto.org) and the original Canada-Aircraft (WT/DS70/AB) dispute. The arbitration decision, from 23 December 2002, was made publicly available on 17 February (WT/DS222/ARB).
ICSTD Reporting; "Brazil allowed by WTO to impose sanctions on Canada in aviation row," AFX, 17 February 2003.