Canada Broke International Trade Rules And Must Stop Subsidizing
(Source : Embraer ; issued Oct. 22, 2001)

SÃO JOSÉ DOS CAMPOS, Brazil - Embraer acknowledged with satisfaction last Friday's news about Brazil obtaining victory within the World Trade Organization (WTO) in the dispute with Canada on export credits for exporting commercial aircraft. Brazil's objective was to prove that several Bombardier financing operations for selling aircraft, specially to Air Wisconsin early this year, were illegal by not being in conformity with Canadian obligations towards WTO's Agreement on Subsides and Countervailing Measures.

"By declaring Canadian financial operations illegal, WTO confirms what we have always said. It becomes crystal clear now, from the results of the two panels recently decided by WTO on the dispute between Brazil and Canada, that Brazil's PROEX program is under full conformity with WTO rules and that Canada has been acting illegally", said Embraer president and CEO Maurício Botelho.

"It is necessary for the market to become aware that the truth is exactly the opposite of what the Canadians have been trying to impose, and WTO just gave us the evidence. And, very concerning, is to see a high-ranked Canadian official, in considering this defeat, challenging international law by announcing the continuing of these illegal subsides. This is the Canadian 'realpolitik'", added Maurício Botelho.

Yet according to news, Canada was urged to withdraw the illegal subsides within 90 days. "The fair thing to do would be canceling these operations, as they were implemented having full consciousness about its illegality, turning Embraer down by the use of unfair international trade practices", continued Maurício Botelho.

Another equally important news is the fact that the WTO decision reveals the illegality of operations done by Export Development Corporation (EDC) through Canada Account and Corporate Account, this way hitting both EDC programs. "It is far more serious than what we have imagined. In the first panel two years ago EDC was released from charges by alleging that these operations were protected by "confidentiality", but this time they had to disclose a few operations and the result was that illegality was proven in both programs", Botelho said.

It is worth mentioning that this decision finally shows that the Canadian allegations that their operations were offered in illegal terms as to oppose supposedly Brazil's illegal ones is not correct. "Brazil did not offer any financing which was not strictly in conformity with WTO rules. On the other hand, news indicate that among the few analyzed Canadian operations there is a high percentage of financing under illegal conditions", finalized Botelho.

Embraer hopes that Canada takes the WTO recommended measures and withdraws the illegal subsidies given to Bombardier


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