4.65 Brazil recalls its view (see paras. 4.61, 4.73) that it would be contrary to the purposes of Article 6.2 of the DSU and Article 4.4 of the SCM Agreement for the Panel to reward Canada for its failure to participate meaningfully in the type of disclosure required by the consultation process, as discussed by the Appellate Body in India - Patent Protection for Pharmaceutical and Agricultural Chemical Products.⁴⁹ Brazil argues that Canada maintains a veil of secrecy around EDC and the other export subsidy programmes provided to the civilian aircraft industry which makes it impossible for Brazil to perceive what Canada contends are clear "legal[] and factual[]" distinctions between the various forms of EDC financing (para. 4.22), and that this should not stand in the way of Brazil's right to pursue its claim. Brazil maintains that "EDC's financing activities (direct lending)" ( para. 4.21) were discussed in consultations, and Canada was therefore on notice of Brazil's claim.

4.66 Brazil also notes that Canada purports to know precisely what Brazil means in its use in its panel request of the term "financing" by the EDC; Canada defined this term to mean "EDC's financing activities (direct lending)." For Brazil, this indicates that Canada appears to understand fully the meaning of the term "financing," calling into question how the use of that term in its panel request prejudices Canada's "due process right to know the case against it."⁵⁰

(ii) Definition of "civil aircraft industry"

4.67 Regarding the definition of "civil aircraft industry", Brazil contends that this term is more specific than "aircraft," the term used by Canada in its panel request concerning Brazil's export credit programme.⁵¹ Brazil views as implausible Canada's contention that it does not have notice of the meaning of that term, one of the primary purposes behind the requirement of specificity in Article 6.2, as Canada provides the definition of "aircraft industry" proposed by Brazil during bilateral negotiations preceding the establishment of this Panel (para. 4.48). In Brazil's view, Canada therefore had notice of the meaning of that term in its panel request, and cannot now claim that its "due process right to know the case against it" is somehow prejudiced (para. 4.39).

4.68 Regarding Canada's apparent contention that this working definition is "over-broad" and therefore fails to meet the specificity requirement of Article 6.2 of the DSU, (para. 4.49) Brazil recalls an Appellate Body statement in European Communities - Customs Classification of Certain Computer Equipment, that an infringement of Article 6.2 is not created because of a "lack of precision of the terms . . . in the request for the establishment of a panel . . ."⁵² For Brazil, there is no requirement in Article 6.2 that a complaining party somehow circumscribe a narrow category of products to which the challenged measures apply, particularly in the context of export subsidies, which are considered de facto specific within the meaning of Article 2.3 of the SCM Agreement. Rather, if the products subject to the defending party's export subsidies fall within a broad category, then it is a complaining party's right to challenge the full effect of those export subsidies, as long as the due process or notification purpose underlying Article 6.2 is met. In Brazil's view, if it were otherwise, Article 6.2 would serve as an incentive for Members to structure export subsidies to benefit as broad a range of products as possible, in order to escape a panel's jurisdiction.

4.69 Brazil objects to Canada's citation of the Panel in Korea - Taxes on Alcoholic Beverages as support for Canada's argument that Brazil's failure to identify the tariff headings relevant to the "civil aircraft industry" suggests that Brazil has failed to meet the specificity requirement of Article 6.2 (para. 4.50). In Brazil's view, Canada neglects to note that Panel's citation to European Communities - Customs Classification of Certain Computer Equipment, in which the Appellate Body found that "a panel request based on a broader grouping of products [than those included in an identified tariff heading] was sufficiently specific for the purposes of Article 6.2."⁵³

4.70 Brazil also argues that here, as in Korea - Taxes on Alcoholic Beverages, "[t]he issue of the appropriate categories of products to compare is important to this case,"⁵⁴ and that determining the scope of the definition of "civil aircraft industry" is an issue "that requires a weighing of evidence" and that is therefore "not an issue appropriate for a preliminary ruling . . ."⁵⁵

(iii) TPC "predecessor programmes"

4.71 Regarding Canada's argument that the reference in Brazil's panel request to TPC's "predecessor programme" does not meet the specificity requirement of Article 6.2, Brazil asserts that Canada is well aware that there is one and only one predecessor programme to TPC, i.e., the Defence Industry Productivity Programme ("DIPP"), as evidenced in numerous statements concerning the launching of TPC in 1996. Brazil refers to a response to a March 1996 Parliamentary inquiry⁵⁶ in which Industry Canada (the Canadian government agency overseeing TPC) announced that "no new commitments are being made under DIPP," and that "[a]ny future funding will be considered under the auspices of the new programme, Technology Partnerships Canada." Brazil argues that Canada's professions of ignorance concerning TPC's predecessor programme must therefore be rejected. In response to a question from the Panel, Brazil indicates that its claims with respect to "funds provided to the civil aircraft industry by TPC and its predecessor programmes" is restricted to funds provided by TPC and DIPP.

(iv) Benefits provided under the Subsidiary Agreements and SDI

4.72 Regarding Canada's argument that Brazil's panel request with regard to "benefits provided" to the civil aircraft industry under the Subsidiary Agreements and SDI does not meet the specificity requirement of Article 6.2, Brazil notes that these programmes were explicitly included in its request for consultations and were on the table for discussion during consultations. Brazil argues that Canada was therefore on notice of these matters, and their inclusion in Brazil's panel request therefore satisfies the requirements of Article 6.2 of the DSU.

4.73 In Brazil's view, the Panel should not reward Canada for its failure to uphold its duty, as identified by the Appellate Body in India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, to be "fully forthcoming" in consultations. Brazil contends that the facts of Canada's provision of export subsidies under the Subsidiary Agreements and SDI are within Canada's exclusive control, and that it would be contrary to the letter and spirit of both the consultation provisions and Article 6.2 of the DSU to reward Canada's failure to "disclose[] freely" the facts of those programmes by limiting the scope of the Panel's jurisdiction.

B. Request of Canada for Preliminary Finding on Jurisdiction: the SCM Agreement does not Apply to Contributions and Transactions that Took Place Before the Entry into Force of the WTO Agreement

1. Request of Canada

4.74 Canada argues that claims by Brazil concerning certain 1989 funding by the Defense Industry Productivity Programme "(DIPP") and the Société de Développement Industriel ("SDI") for development of the 50-seat regional jet are outside the Panel's jurisdiction because they were provided prior to 1 January 1995, the date of entry into force of the WTO Agreement. Canada asks the Panel to so rule.

4.75 According to Canada, pursuant to Article 28 of the Vienna Convention, the SCM Agreement is not applicable to these contributions, as it provides that a treaty shall not be applied retroactively 'unless a different intention appears from the treaty or is otherwise established'.⁵⁷

4.76 Canada maintains that there is no contrary intention expressed in either the SCM Agreement or the WTO Agreement that demonstrates the SCM Agreement would apply to an event that took place in 1989. Therefore, according to Canada, this claim lies outside the jurisdiction of the Panel and should be dismissed.

2. Response of Brazil

4.77 Brazil agrees that, with regard to prohibited subsidies, the SCM Agreement is not intended to apply retroactively. Thus, for Brazil, this 1989 DIPP and SDI subsidy, even though it was inconsistent with Canada's obligations under the Tokyo Round Code, which applied at the time the subsidy was granted, is not subject to the current SCM Agreement. Accordingly, Brazil concedes that the Panel may disregard DIPP contributions made prior to 1 January 1995.

4.78 The Panel notes that because Brazil has dropped these claims, the substantive arguments of the parties concerning them are not included in this report.

C. Brazil's Request Regarding Additional Fact Finding

1. Arguments of Brazil

4.79 Brazil, in a preliminary submission, requests the Panel to engage in additional fact-finding by requesting Canada to present to the Panel and the parties, at the first meeting of the Panel, the complete details of all operations of the Export Development Corporation, the Canada Account, the Technology Partnerships Canada and its predecessor programmes, the Canada-Québec Subsidiary Agreement on Industrial Development, and the Société de Développement Industriel du Québec with regard to the civil aircraft industry, including all grants, loans, equity infusions and loan guarantees, or any other direct or indirect financial contribution of any kind.

4.80 According to Brazil, public information is available to show that the measures listed in its request for establishment of a panel (1) involve a financial contribution by government; (2) to the Canadian manufacturer of regional civil aircraft; (3) conferring a benefit on that manufacturer; (4) contingent in law or in fact on export. Brazil argues that its arguments in the case would be handicapped because Canada declined to provide transaction-specific details concerning these measures during consultations, on the stated grounds of confidentiality.

4.81 For Brazil, Canada's position is at odds with the teachings of the Appellate Body in India - Patent Protection for Pharmaceutical and Agricultural Chemical Products:

4.82 Brazil asserts that this statement makes clear that Canada was not justified in declining to disclose relevant details during consultations. Brazil further argues that there is no justification for declining to produce confidential information at the panel stage of dispute settlement. Article 18.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes permits Members to designate information submitted to the Panel as confidential and requires other Members to respect that designation. Brazil notes that Members that believe the procedures of Article 18.2 are inadequate are free to propose an alternative procedure to the Panel.⁵⁹

4.83 Brazil recalls that in India Pharmaceuticals the Appellate Body specified that, "If, in the aftermath of consultations, any party believes that all the pertinent facts relating to a claim are, for any reason, not before the panel, then that party should ask the panel in that case to engage in additional fact-finding".⁶⁰ Brazil argues that the result of Canada's refusal to disclose the details of the operations of these measures with regard to regional civil aircraft would be that not all of the pertinent facts relating to its claim would be before the Panel.

To continue with Arguments of Canada

⁴⁹ (1997) WTO Doc. WT/DS50/AB/R, at para. 94.

⁵⁰ Id. at para. 37.

⁵¹ Brazil - Export Financing Programme for Aircraft, WT/DS/46/5.

⁵² (1998) WTO Doc. WT/DS62, 67/AB/R, at para. 70.

⁵³ Korea - Taxes on Alcoholic Beverages, (1998) WTO Doc. WT/DS75, 84/R, at para. 10.16, citing European Communities - Customs Classification of Certain Computer Equipment, (1998) WTO Doc. WT/DS62,67/AB/R, at paras. 58-73.

⁵⁴ (1998) WTO Doc. WT/DS75, 84/R, at para. 10.16.

⁵⁵ Id.

⁵⁶ Exh. BRA-28

⁵⁷ Brazil - Measures Affecting Desiccated Coconut, WTO Doc. WT/DS22/AB/R Report of the Appellate Body adopted on 20 March 1997, at 15.

⁵⁸ AB-1997-5, WT/DS50/AB/R (19 December 1997) para. 94.

⁵⁹ Indonesia - Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R (2 July 1998) para. 14.7.

⁶⁰ AB-1997-5, WT/DS50/AB/R (19 December 1997) Para. 94