CANADA - MEASURES AFFECTING THE EXPORT
OF CIVILIAN AIRCRAFT



Recourse by Brazil to Article 21.5 of the DSU




Report of the Panel

(Continuation)

5.75 After our review of the Arrangement's text, we next consider a number of systemic issues that arise in the context of the second paragraph of item (k). In particular, we evaluate our conclusions drawn from the texts of item (k) and of the Arrangement in the light of the context of item (k) and the object and purpose of that provision and the SCM Agreement. In particular, we consider whether our conclusion based on the texts is consistent with the overall object and purpose of the SCM Agreement of disciplining trade distorting subsidies while at the same time maintaining special and differential treatment for developing countries in respect of export subsidies.

5.76 In the light of our conclusions on the above issues, we then need to consider whether the Policy Guideline does, as Canada argues, ensure in respect of the Canada Account programme that any future Canada Account transactions in the regional aircraft sector will qualify for the safe haven of the second paragraph of item (k).

(a) Textual analysis of the second paragraph of item (k)

5.77 Before commencing our detailed textual analysis, we recall that the second paragraph of item (k) reads as follows:

"Provided, however, that if a Member is a party to an international undertaking on official export credits to which at least twelve original Members to this Agreement are parties as of 1 January 1979 (or a successor undertaking which has been adopted by those original Members), or if in practice a Member applies the interest rates provisions of the relevant undertaking, an export credit practice which is in conformity with those provisions shall not be considered an export subsidy prohibited by this Agreement".

5.78 It is well accepted that the OECD Arrangement is an "international undertaking on official export credits" in the sense of the second paragraph of item (k).⁶⁸ Moreover, in practice the OECD Arrangement is at present the only international undertaking that fits this description. Thus, we understand the essence of the second paragraph of item (k) at least at present to be that "an export credit practice" which is in "conformity" with "the interest rates provisions" of the OECD Arrangement "shall not be considered an export subsidy prohibited by" the SCM Agreement⁶⁹.

5.79 Given this, in practice eligibility for item (k)'s safe haven from the prohibition on export subsidies is defined entirely in terms of the OECD Arrangement, at least for the time being. Thus, the critical element of our analysis must be to examine the Arrangement in detail, to determine what it applies to and how conformity with its interest rate provisions can be determined. We consider therefore that before we can come to any judgement as to the sufficiency or insufficiency of the Policy Guideline to ensure that all transactions under the Canada Account will be eligible for the safe haven in item (k), as Canada argues, we must determine the answers to the following questions: (1) what are "export credit practices" in the sense of item (k) of the Illustrative List; (2) what are the "interest rates provisions" of the OECD Arrangement; (3) which types of export credit practices conceptually could be in conformity with the interest rate provisions of the Arrangement in its current form; (4) what provisions and considerations are relevant to judging conformity with the Arrangement's interest rates provisions? Only once we have answered these questions will we be in a position to judge whether the Canada Account Policy Guideline is sufficient to ensure that Canada Account transactions in the future will qualify for the safe haven of the second paragraph of item (k) (or at any rate should be presumed to qualify therefor, in the absence of evidence to the contrary).

(i) What are "export credit practices" in the sense of item (k) of the Illustrative List of Export Subsidies?

5.80 Because at the most basic level the safe haven in the second paragraph of item (k) is available only for certain "export credit practices", we must first consider the definition and scope of this term. We consider that in its ordinary meaning, this must be a relatively broad term. That is, this term on its own suggests any practices that might be associated in some way with export credits (i.e., export financing). This certainly would involve export credits as such, but presumably other sorts of practices as well. The first paragraph of item (k) provides useful context in this regard. In particular, we note that the first paragraph refers exclusively to "export credits" and "credits", in contrast to the second paragraph's reference to "export credit practices". This supports the conclusion that the second paragraph of item (k) concerns a broader range of "practices" than export credits as such.

5.81 In our view, the OECD Arrangement provides further context for understanding the term "export credits", particularly in view of the role of the Arrangement in determining qualification of the safe haven in the second paragraph of item (k). Here we note in particular the stated "scope of application" of the Arrangement, found in its Article 2, namely "all official support for exports of goods and/or services, or to financial leases" with repayment terms of two years or more, as well as tied aid⁷⁰. This supports our view of the broad meaning of "export credit practice". Furthermore, we can conceive of no basis to consider any practice associated with export credits as a priori not constituting an "export credit practice" in the sense of the second paragraph of item (k).⁷¹

(ii) What are the Arrangement's "interest rates provisions"?

5.82 Before considering in detail the question of the OECD Arrangement's "interest rates provisions" and "conformity" therewith, we note that in its own words, the Arrangement is a "Gentlemen's Agreement" among its participants, which "seeks to encourage competition among exporters from the OECD-exporting countries based on quality and price of goods and services exported rather than on the most favourable officially supported export credits", by placing "limitations on the terms and conditions of export credits that benefit from official support", including minimum premium benchmarks, the minimum cash payments to be made at or before the starting point of credit, maximum repayment terms and minimum interest rates which benefit from official financing support. Thus, it "sets out the most generous repayment terms and conditions that may be supported". The Arrangement applies to officially supported export credits with repayment terms of two years or more, relating to exports of goods and/or services or to financial leases, and addresses the circumstances in which official support in the form of trade-related tied and partially untied aid may be given and/or mixed with officially supported export credits⁷². It contains, in addition to its main text, special Sector Understandings which apply to aircraft, ships and nuclear power plant. The Participants to the Arrangement, as listed in Article 1(a) thereof, are "Australia, Canada, the European Community (which includes the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom) Japan, Korea, New Zealand, Norway, Switzerland, and the United States"⁷³.

5.83 To answer the question of which are the interest rate provisions of the Arrangement, we once again turn to its ordinary meaning. Here we note that there is no section of the Arrangement entitled "Interest rates provisions", nor does the Arrangement use or define this term. Nevertheless, we note that there are a number of provisions that specifically address interest rates as such. These are Article 15 -Minimum Interest Rates; Article 16 - Construction of CIRRs; Article 17 - Application of CIRRs; Article 18 - Cosmetic Interest Rates; and Article 19 - Official Support for Cosmetic Interest Rates. (In addition, in the specific context of this dispute, Article 22 of the Sector Understanding on Export Credits for Civil Aircraft⁷⁴ covers minimum interest rates with respect to all new aircraft except large aircraft⁷⁵, along with spare engines, spare parts, maintenance and service contracts in respect of those aircraft⁷⁶, and Article 28(b) covers minimum interest rates with respect to used aircraft.)

5.84 Among these provisions, Article 15 appears to contain the basic interest rate provisions of the Arrangement, as the other provisions identified that specifically address interest rates seem to be dependent on and thus subordinate to it. Specifically, Article 15 establishes the basic rule that "minimum interest rates" are to be applied, i.e., respected, by all Participants when providing "official financing support". After establishing as a general principle the application of "minimum interest rates", Article 15 goes on to specify that the Commercial Interest Reference Rates ("CIRRs"), "shall" be applied. Specifically in respect of regional aircraft, Articles 22 and 28(b) of Annex III (the Sector Understanding for civil aircraft) provide that the CIRRs "shall" apply.

5.85 We note that the basic rule, that "minimum interest rates shall apply" is worded in a general manner, suggesting the possibility that more than one framework or system of "minimum interest rates" (i.e., other than the CIRRs) could be agreed under the Arrangement, and that to the extent that this is the case, these other systems also would constitute particular "minimum interest rates" in the sense of the Arrangement. Indeed this is the case with respect to the Sector Understandings for ships (which applies a minimum interest of 8 per cent in all cases) and for nuclear power plant (which applies "Special Commercial Interest Reference Rates"). We note further, however, that at present, the only "minimum interest rates" referred to in (and thus covered and regulated) by the main text of Arrangement are the CIRRs, and that as indicated, the CIRRs apply to regional aircraft, pursuant to the Articles 22 and 28(b) of the Sector Understanding for civil aircraft.

5.86 With respect to the CIRRs, Article 15 contains a number of general rules, all essentially oriented toward ensuring that the CIRRs reflect commercial fixed-interest lending rates and practices. In particular, Article 15 states that the CIRRs should represent final commercial lending interest rates in the domestic market of the currency concerned, that they should closely correspond to the rate for first-class domestic borrowers, that they should be based, where appropriate, on the funding cost of fixed interest-rate finance over a period of no less than five years, that they should not distort domestic competitive conditions, and that they should closely correspond to a rate available to first-class foreign borrowers.

5.87 Article 16 puts into concrete technical terms how CIRRs are to be constructed, i.e., on the basis of a fixed margin over government bond yields of varying maturities. More specifically, this Article provides that the CIRR for a currency generally should be at a fixed margin of 100 basis points above a base rate, which in turn is set at either a three-year, five-year or seven-year government bond yield, depending on the repayment terms of the financing in question, or at a five-year government bond yield for all maturities, at the option of the country providing the support⁷⁷. Article 16 also provides that countries lending in a currency other than their own shall apply the CIRRs for that currency. Finally, Article 16 contains provisions whereby a country can change the base rate system that it applies, and whereby a CIRR can be established for the currency of a non-Participant (if a Participant wishes to provide official support in that currency).

5.88 Article 17, concerning the application of CIRRs, limits the amount of time in which interest rates can be fixed, and imposes an additional margin over the CIRR where financing terms are fixed in advance of the contract date. In addition, where official financing support for floating rate loans is provided, the lender is not allowed to offer the borrower the option of applying the lower of the CIRR at the time of the contract or the short-term lending rate, over the life of the loan. That is, the borrower is not permitted during the life of a loan to switch between the CIRR as of the contract date and a short-term rate, depending on which is lower at a given time⁷⁸.

5.89 Finally, Articles 18 and 19 impose limits on "cosmetic interest rates", which the Arrangement describes as rates below the relevant CIRR which benefit from official support, and which may involve a compensatory measure including a corresponding increase in the contract value or other contractual adjustment. These Articles provide, inter alia that official financing support by means of direct financing shall not be provided at rates below the CIRR, and that other official financing support also shall not be offered at below-CIRR (cosmetic) rates. Thus, these provisions appear to be intended to prevent Participants from offering official financing support for lower-than-CIRR financing, whether or not the below-CIRR rate is achieved directly through the face interest rate or through adjustment of the other terms and conditions of the financing to circumvent the CIRR minimum.

5.90 In particular, we note that pursuant to Article 19(c), a Participant intending to support a transaction should clarify, in response to an inquiry from another Participant, the "financial terms and mechanisms, including the compensatory measure" (emphasis supplied), while pursuant to Article 19(d) a Participant with information suggesting that "non-conforming terms" may have been offered by another Participant shall try to determine whether the transaction benefits from official financing support and whether or not the terms of the support conform to the provisions of Article 15 ("minimum interest rates"). An important conclusion that we draw from this is that the mechanism in 19(c) and (d) clearly implies that conformity with the CIRR cannot be judged unless all terms and conditions of a transaction, including any "compensatory measures", are known.

5.91 There are no other provisions of the Arrangement that directly or explicitly pertain to the interest rate, and thus it would seem that the natural reading of the Arrangement is that the above-mentioned articles constitute the entirety of the Arrangement's "interest rates provisions" (at least in respect of regional aircraft). Clearly the central one of these provisions is the CIRR, which as noted is the only minimum interest rate system defined and thus regulated by the Arrangement in this sector⁷⁹.

5.92 We note that our view as to which are the interest rate provisions of the Arrangement is very different from that of Canada. Canada presented a list of what it considers those provisions to be⁸⁰, which, as Canada explains, encompasses all provisions of the Arrangement that in Canada's view affect the interest rate as such or the amount of interest paid in a transaction. In support of its position, Canada argues that compliance with the CIRR alone should not be enough to qualify an "export credit practice" for the safe haven in item (k)⁸¹. We agree that this is an important consideration, and as noted above, Article 19 (which both we and Canada have identified as one of the "interest rate provision") seems to suggest a way to address this question of "circumvention". Thus, it is by no means evident to us that the best or only way to address this question is through an expansive definition, such as that proposed by Canada, of what constitute the "interest rates provisions" of the Arrangement. (This issue is discussed in detail in paras. 5.107-5.114, infra)

(iii) Which types of "export credit practices" could conceptually be "in conformity with" the "interest rates provisions" of the OECD Arrangement in its current form?

5.93 Having identified the "interest rates provisions" of the OECD Arrangement, we are next faced with the question of the types of "export credit practices" in respect of which interest rate provisions exist and therefore apply. This is a critical question, because, as noted above, qualification for the safe haven of the second paragraph of item (k) at present is exclusively determined by the conformity of an "export credit practice" with the interest rate provisions of the Arrangement. Thus, before we can be in a position to determine the conformity of a given export credit practice with those interest rate provisions, we will need to know whether it is of the type that conceptually could be subject to, and thus in conformity with, those provisions. This means, as a matter of logic, that conformity with the interest rate provisions is a meaningful issue only in respect of types of export credit practices for which such provisions exist.

5.94 Thus, we return to Article 15 which, as we noted, is the Arrangement's central interest rate provision in that it sets forth the basic minimum interest rate rule. The chapeau of Article 15 reads in relevant part as follows:

"The Participants providing official financing support through direct credits/financing, refinancing and interest rate shall apply minimum interest rates; the Participants shall apply the relevant Commercial Interest Reference Rates (CIRRs)."

5.95 Thus Article 15 makes very clear what is subject to its minimum interest rate rule. That is, Article 15 states explicitly that what is subject to the minimum interest rate rules is not all forms of "official support" covered by the Arrangement but rather "official financing support", which is limited to "direct credits/financing, refinancing or interest rate support"⁸². In other words, this provision of the Arrangement seems to specify that at present these, and only these, forms of "official support" covered by the Arrangement are subject to the minimum interest rate rule.

5.96 We note that the minimum interest rate rule specifically applicable to regional aircraft⁸³ (i.e., paragraph 22 of Part 2 of Annex III of the Arrangement, the part of the Sector Understanding on civil aircraft other than large aircraft), is identical to that in Article 15 of the Arrangement. In particular, this provision states:

"The Participants providing official financing support shall apply minimum interest rates; the Participants shall apply the relevant CIRR set out in Article 15 of the Arrangement".

5.97 Thus, we conclude that in the case of regional aircraft, as is the general rule under the Arrangement, what is subject to the minimum interest rate rule is official financing support - direct credits/financing, refinancing or interest rate support.

5.98 On the basis of our identification of the Arrangement's "interest rates provisions" and of the types of "export credit practices" to which those provisions apply, the only logical conclusion that we can draw is that the only forms of export credit practices which at present are potentially eligible for the safe haven are those subject to the interest rate provisions of the Arrangement in its current form, namely direct credits/financing, refinancing and interest rate support⁸⁴. By implication, this means that the other forms of official support for export credits covered by the Arrangement (e.g., guarantees and insurance), are simply not eligible for the safe haven, because they are not covered by the existing interest rate rule, and therefore cannot be "in conformity" or out of conformity with it. Thus, for now, there is no safe haven from the prohibition on export subsidies for these forms of official support⁸⁵. Rather, their conformity with the SCM Agreement can only be judged on the basis of Articles 1 and 3 of that Agreement.

5.99 We note that Canada takes a very different position, arguing that export credit insurance and guarantees ("pure cover") also are subject to the "interest rates provisions" of the Arrangement and thus are eligible for the safe haven. Specifically, Canada argues that export credit guarantees involve an interest rate in respect of the underlying loan, and that the guaranteed loan itself must respect the relevant interest rate provisions, which for Canada means that the "interest rates provisions" apply to guarantees/insurance as such⁸⁶. On the basis of the above discussion, however, Canada's reading of the Arrangement does not seem to be supported by the text thereof, given that Article 15 explicitly omits from its own scope of application guarantees and insurance.

5.100 Moreover, we note that the Arrangement establishes explicit rules concerning guarantees and insurance, specifically by establishing minimum premium benchmarks. The minimum benchmarks are set with respect to adequacy of premiums to cover the "sovereign" and "country" credit risk involved in supported transactions. These benchmarks also apply explicitly to official financing support. Thus, both the minimum premium rule and the minimum interest rate rule on their faces make clear whether or not they apply to guarantees and insurance.

5.101 The conclusion that only official financing support is potentially eligible for the safe haven does not necessarily mean, however, that all official financing support would be eligible. Rather, continuing the logic of the analysis, it would appear that the safe haven could only be potentially available to those specific kinds of official financing support to which the CIRRs (or if applicable, the special minimum interest rates under the Sector Understandings) apply, given that these are the only existing systems of minimum interest rates under the Arrangement. Thus, in the case of regional aircraft, as the CIRRs are the relevant minimum interest rates, it is only support that is subject to the CIRRs with respect to which "conformity" with minimum interest rates - which are exclusively defined in terms of the CIRRs - even would be relevant and could be judged. Thus, the question of which export credit practices pertaining to regional aircraft are potentially eligible for the safe haven in the second paragraph of item (k) cannot be fully answered without considering the nature of the CIRRs.

5.102 Perhaps the most important aspect of the CIRRs⁸⁷ in this regard is that they are fixed interest rates established for various currencies, rather than floating rates. In particular, under Article 15 of the Arrangement, as a general principle CIRRs are to be established on the basis of fixed interest rate finance over a period of no less than five years. Article 16 provides more specifically that CIRRs generally are to be set at 100 basis points above the medium- to long-term yields on government bonds issued in the relevant currencies. Given that they are expressed solely as fixed interest rates, the CIRRs can only meaningfully be applied to transactions with fixed interest rates. That is, there is simply no practical or meaningful way to apply rules concerning minimum fixed interest rates to floating rate transactions⁸⁸. Thus, we conclude that only official financing support at fixed interest rates is subject to minimum interest rates, given that the CIRRs are expressed as, and thus can only apply to, fixed rate transactions.

5.103 As noted above, Canada argues that Article 17(b) of the Arrangement authorizes, and thus makes eligible for the safe haven of item (k), official financing support at floating rates, even where such financing is at a below-CIRR interest rate. In particular, Canada states that Article 17(b) establishes that "the minimum floating interest rate is the 'short-term market rate'"⁸⁹, and further argues that this is "generally understood to refer to international benchmarks such as LIBOR".

5.104 Article 17(b) reads as follows:

"b) Where official financing support is provided for floating rate loans, banks and other financing institutions shall not be allowed to offer the option of the lower of either the CIRR (at the time of the original contract) or the short-term market rate throughout the life of the loan."

Thus, as Canada notes, Article 17(b) does contain a reference to official support for floating rate loans. In our view this text does not, as Canada argues, clearly authorize official support for floating rate financing at rates below CIRR⁹⁰, or establish that any such financing is "in conformity" with the interest rate provisions of the Arrangementand therefore qualifies for the safe haven in item (k).

5.105 Indeed, Article 17(b) does not set forth any specific rules with respect to the absolute or relative levels of interest rates at which floating rate financing can be offered. Rather, Article 17(b) appears exclusively to pertain to (and to prohibit) the possibility that a lender could offer a borrower the option to switch between an interest rate at the CIRR that was prevailing on the date of the original contract and the short-term market rate prevailing at any given moment during the life of the loan. Thus, in our view, the reference to the "short-term market rate" is only a descriptor of the prevailing floating interest rate. In our view, this provision simply recognizes that, over the life of a loan, short-term interest rates may move above and/or below the fixed interest rate that was prevailing at the original date of the loan contract, and establishes a rule prohibiting switching between fixed and floating-rate financing throughout the life of the loan to take advantage of such movements. This is not the same as affirmatively authorizing the provision of floating rate financing at interest rates below the relevant CIRR, or indeed as establishing any rule whatsoever concerning minimum levels for floating interest rates. We can find no basis for reading into this provision any such rule, let alone any implicit reference to LIBOR or any other putative "minimum" floating interest rate.

5.106 Thus, on the basis of the foregoing analysis we conclude that the safe haven in the second paragraph of item (k) at present is potentially available only to export credit practices in the form of direct credits/financing, refinancing, and interest rate support at fixed interest rates with repayment terms of two years or more⁹¹. In other words, any such practices involving floating interest rates, as well as official support for export credits with shorter maturity or in the forms of guarantees and insurance, because none are subject to the Arrangement's "interest rates provisions", most especially the CIRR but also the sector-specific minimum interest rates in the Sector Understandings, would not be eligible for the safe haven, as it simply would not be possible to judge their "conformity" with the relevant interest rate provisions of the Arrangement, all of which pertain exclusively to fixed rates.

68 This was confirmed by the Appellate Body in Brazil - Aircraft, WT/DS46/AB/R, para. 180, adopted 20 August 1999.

69 We take note of the reference to "a successor undertaking" in the second paragraph of item (k). In this regard, first, it is clear from this reference that to the extent that the Arrangement today is the only undertaking of the kind referred to in the second paragraph of item (k), if in the future a "successor undertaking" were to take effect, export credit practices conforming with the interest rate provisions of that undertaking also would be eligible for the safe haven in that paragraph. Thus, our detailed analysis of the Arrangement in its present form is not in any way intended to exclude this possibility. Second, for purposes of our analysis of the Arrangement, we assume that the Sector Understandings on Export Credits for Ships, for Nuclear Power Plant, and for Civil Aircraft, contained in Annexes I-III of the Arrangement, form an integral part of the Arrangement itself. Even if in the strict sense this were not the case (an issue that we do not here decide), in our view these Sector Understandings at a minimum would constitute "successor undertakings" in the sense of the second paragraph of item (k), as the Arrangement as originally implemented in 1979 did not contain these Annexes. Rather, its very brief sector-specific provisions (which at the time pertained to conventional power plants, to ground satellite communications stations, and to ships) were contained in paragraph 4 of its main text. The Sector Understandings were negotiated and implemented later, and incorporate by reference provisions of the Arrangement. Thus, if they are not formally integral to the Arrangement, there is no doubt that these Understandings at a minimum constitute successor undertakings, and thus, conformity with the "interest rates provisions" of the Understandings would qualify an export credit practice for the safe haven in the second paragraph of item (k).

70 Canada states that, pursuant to the Arrangement's Sector Understanding on Export Credits for Civil Aircraft, tied aid for aircraft is not permitted except for humanitarian purposes. (Oral statement of Canada (Annex 2-3) at Attachment, footnote 1.)

71 As discussed below, this does not mean that all such practices can be "in conformity with" the interest rate provisions of the OECD Arrangement. However, while there may be no basis in the Arrangement in its current form to judge the "conformity" of all such practices with the Arrangement's "interest rates provisions" (i.e., those provisions simply may not apply to all such practices), this clearly does not a priori exclude the possibility that new provisions or undertakings might be developed in the future that would permit such a judgement in respect of such practices.

72 OECD Arrangement, "Introduction" section. Emphasis added.

73 Article 1(b) further provides that "[o]ther countries willing to apply these Guidelines may become Participants following prior invitation of the existing Participants".

74 Annex III of the OECD Arrangement.

75 We note that, according to the list of aircraft models in the Sector Understanding on civil aircraft, aircraft with up to 70 seats are classified as other than large aircraft. This is consistent with information provided during the original dispute, i.e., that regional aircraft generally are in the 30-70 seat range. (WT/DS70/R, at footnote 535).

76 Spare engines, spare parts, maintenance and service contracts are covered by Part 3 of the Sector Understanding concerning civil aircraft. Article 27 of that Understanding provides that except as specifically set forth in Part 3, the relevant provisions of Parts 1 and 2 apply to spare engines, spare parts, and maintenance and service contracts. As there are no specific provisions in Part 3 concerning interest rates, the applicable interest rates for spare engines, spare parts, maintenance and service contracts in respect of regional aircraft thus would be those in Part 2 (i.e., the CIRRs).

77 Specific exceptions are set forth for the Yen and for the Euro.

78 Canada argues in its answers to questions (see Canada's replies to the Panel's Canada Account questions 2(b), 2(d) (Annex 2-4)) that Article 17(b) of the Arrangement means that official support in the form of floating rate financing is in conformity with the Arrangement. While Article 17(b) does refer to floating rate financing, it contains no minimum interest rate rule in respect of such financing, and indeed makes clear that the CIRR is not applicable thereto. The issue of floating rate financing and Article 17(b) is discussed in more detail in paras. 0 - 5.106, infra.

79 As noted, the other Sector Understandings (on export credits for ships and for nuclear power plant) also have interest rate rules, which are specific to those sectors.

80 See, Oral statement of Canada (Annex 2-3) at paras. 69-80 and Attachment. In this list, Canada identifies the following Articles of the Arrangement as its interest rates provisions relevant to regional aircraft: 2, 3, 7, 9, 10, 13, 14, 15, 16, 17, 19, 21(a), 26, and 29, and identifies as well the following Articles of the Sector Understanding: 21, 22, 23, 24, and 25 of Annex III, Part 2 (new aircraft other than large aircraft), and 28, 29, 30 and 31 of Annex III, Part 3 (spare engines, spare parts, maintenance and service contracts).
 
81 Oral statement of Canada (Annex 2-3) at para. 76.

82 The Introduction section of the Arrangement contains the same definition of "official financing support" as that in Article 15.

83 Canada, in its list of Arrangement provisions that it considers to be the interest rate provisions, refers to this provision as relevant in the context of regional aircraft. As noted in footnote 75 above, this is consistent with information provided in the original dispute.

84 With repayment terms of two years or more, recalling that the Arrangement's coverage is limited to transactions of this maturity.

85 As noted above, this by no means rules out the possibility that in the future interest rate provisions might be developed for other types of export credit practices, in which case the safe haven would potentially be available for such practices.

86 Canada's reply to the Panel's Canada Account question 2(b) (Annex 2-4) at para. 9.

87 As is the case as well for the other specific interest rates in certain of the Sector Understandings.