4.172 The Panel, after considering these comments, adopted the procedures for the protection of business confidential information contained in Annex 1 to this report.⁹⁰

4. Statements of Canada

4.173 After the Panel adopted the procedures, Canada sent a letter to the Panel indicating that it did not consider the procedures as adopted to confer sufficient protection for business confidential information. Canada indicates a serious concern regarding the protection of confidential business information, and states that it cannot divulge confidential business information in the absence of adequate procedures to protect that information. Canada notes that it proposed procedures that it considered sufficient to protect confidential business information.⁹¹ In Canada's view, the original procedures adopted by the Panel governing confidential business information provided a sufficient level of protection for that information.

4.174 Canada notes that its position regarding the treatment of certain sensitive confidential information is not an indication of a lack of good faith. In Canada's view, such information necessitates the strongest possible confidentiality procedure. The procedure suggested by Canada is such a procedure and it is clearly workable within the context of WTO dispute settlement proceedings. Insofar as it provides Members with the confidence to provide such information, such a procedure advances the goals and objectives of the WTO.

4.175 Canada submits that requiring a Party to hand over business confidential information to an adverse Party having a legal and commercial interest in that material and the absence of legal sanctions for the breach of these procedures, does not constitute effective procedures for the protection of such information. In putting in place such a procedure and subsequently requesting in its questions of 27 November and 10 December 1998 that Canada produce business confidential information, Canada argues that the Panel has placed it in a very difficult position.

4.176 Canada also stated that, while it would produce certain of the business confidential information requested by the Panel, it would do so only where it had been able to obtain releases from the private parties to the pertinent transactions, waiving their contractual rights to confidentiality.

4.177 Canada notes that in its view, the procedures governing confidential business information as modified at Brazil's request do not provide the requisite level of protection for any confidential business information that Canada would adduce. Canada argues that this information is of extreme sensitivity and is well protected in domestic law, under which the release of such information is subject to civil and criminal sanctions. Canada submits that in contrast, the WTO system does not provide for such sanctions, so that if a breach were to occur, there would be no effective recourse except potentially under domestic law against the very government that produced the evidence in compliance with a request from a Panel, an impossible situation. As a result, Canada states, it is not in a position to provide confidential business information to the Panel. Canada notes that Brazil's concerns over access could be overcome by special arrangements for 24-hour access to business confidential information at the WTO Secretariat and at any Canadian mission or embassy designated by Brazil.

4.178 The Panel asked Canada to explain how the level of protection under the procedures ultimately adopted by the Panel for the protection of confidential business information differs, in substance, from what would have been afforded by the procedures to which Canada indicates it could have agreed, given that under these latter procedures, only good faith would prevent a representative of a party that had signed a non-disclosure form from taking verbatim notes on the confidential business information on the premises of either the WTO or the opposing party, removing those notes from those premises and then disclosing them to non-authorized persons. The Panel asked whether exactly the same degree of good faith would not be involved under either set of procedures.

4.179 In response to this question, Canada indicated that the Panel's amended confidentiality procedures do not adequately protect private sector interests and the interests of the Government of Canada in maintaining effective control over the dissemination of business confidential information. In particular they may not be adequate to protect the Government of Canada from potential liability under domestic law, in the event the confidentiality provisions are not strictly observed.

4.180 In Canada's view, the essential difference between the confidentiality procedures originally proposed by the panel and those ultimately adopted are that the original procedures entrusted the commercial confidential materials to the care of a neutral third party, i.e. the WTO Secretariat. The modified procedures oblige Canada to entrust the materials to the care of the opposing Party, which Party, or at least nationals of the Party on whose behalf the present case is being pursued, may have an immediate and commercial interest in these materials.

4.181 For Canada, under the original procedures, any breach of these procedures is likely to take the form of detailed or verbatim notes on a document, as is implied in the Panel's question. Under the modified procedures, breach could take the form of a photocopy of the actual document. In Canada's view, the difference between the commercial and legal effects of the two potential forms of breach are substantial.

4.182 As to commercial effects, Canada submits that the uncertain authenticity of notes on a document will diminish its utility and correspondingly decrease the potential commercial injury that might be caused by its disclosure to an interested party. For example, in negotiations for the sale of aircraft, a purchaser might pass a copy of the term sheet proposed by one manufacturer/seller to the agents of a competing manufacturer/seller, as a means of inducing the first manufacturer/seller to lower its price or otherwise improve the terms of its offer. Canada views a copy of a term sheet as a far more effective inducement for the manufacturer/seller to vary his proposal than the assertion by the purchaser that the competing manufacturer/seller has offered better terms, even if the specific content of the alleged better terms is detailed by the purchaser.

4.183 As to legal liability, in Canada's view any claim, based on the production of detailed or verbatim notes, that business confidential information was improperly disclosed would constitute hearsay under Canadian law, and its evidentiary value would be limited. A photocopy of an original document, however, would constitute best evidence.

To continue with Arguments of the Parties Regarding Legal Issues

⁹⁰ The Panel notes that Canada, on 21 December 1998, sought clarification in the procedures to indicate that the "representative" referred to in Articles VI.2 and VIII.3 shall be an approved person. The procedures in Annex 1 reflect this change.

⁹¹ Indonesia -Automobiles, WT/DS54,55,59,64R (Panel Report) at para. 14.7.