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Business Law: Canada and Brazil Aircraft Industry

Business Law Canada and Brazil Aircraft Industry

In the late 1990s arose a dispute between Canada and Brazil on the Aircraft industry; specifically civil aircraft industry. According to the Brazil, aircraft industry in general can be said to be the production industry of all aircrafts including their different types, systems, engine parts, services and materials. This is in relation to other companies that are either directly or indirectly linked to the industry. In relation to the broad definition of the aircraft industry, Canada believed that they were not given room to air their beliefs and arguments in accordance to the dispute. It is believed that Brazil came up with new policies in relation to civic aircraft industry and wanted all other states that were in the field of aircraft to adhere with them: to Canada these policies were not in alignment with their ways and they did not provide guidance as to how they can be implemented.

The case was mainly about the aircraft industry and began in the year, 1997, On 10th March. The complainant was Brazil, the defendant was Canada and the United States and European were the third parties. The case was built on countervailing measures and subsidies of article 3, 3.1a and 3.2. The case is estimated to have taken a period of three years, where the reports of the appellate body and the panel were circulated.

The dispute was established in the year 1997 by Brazil in relation to Canada. The following year, 1998, a panel was formed to oversee the case: this was followed by the circulation of the panel report, the appellate body report and the adoption in the year, 1999. However Canada decided to go for an appeal referring to the original panel: this was followed by the circulation of the appellate body report, the panel report and the adoption in the year, 2000.

In relation to the ensuing dispute, Canada argues that any party that is viewed as the complainant should come up with a prima facie in accordance to each element that is being claimed. According to Canada, prima facie case is whereby lack of refutation that is affected by the party that is defending requires the panel to rule in favor of the party that is complaining and presenting the prima facie. Therefore, Canada believes that Brazil should come up with a prima facie presentation of each claim thus; Brazil should show that the activity issue is: a subsidy that is encompassed in the meaning of the SCM agreement on financial contribution and export performance should be contingent in relation to exports of the aircrafts. In addition, Canada also argues that the panel should not accept a prima facie in the situation where;

  • It is not in line with the proposition tendered for it.
  • It does not add up to proof and is not consistent internally.
  • It entails information from press which is not credible and independent and is uncorroborated.
  • It is vague hence; it can be ignored.

On the other hand, Brazil believes and argues that it does not agree with the view of Canada that its claims are entirely based on export propensity in relation to the Canadian aircraft industry. Brazil believes that there are various factors and attributes that add up to support the aircraft industry of Canada. Moreover, Brazils goes on to argue that although they agree with the Canadian statement that Article three is both backward and forward looking, Brazil has different reasons as to why it has dispute with the Canadian aircraft industry and how it is being run. Brazil also argued that its focus on loan guarantees and finances in relation to the SCM agreement was partly to show that Canada was in infringement of its obligations (WORLD TRADE ORGANIZATION, 1999). 

A third party that is concerned with the dispute is the European communities. In response to how the export contingency had been interpreted by the Brazil in relation to the SCM agreement of article 3.1, which entails intentions to increase exports. The European Communities believe that through the adoption of this process, it would lead to a benefit being conferred regardless of how the exports will be increased. Moreover, the European Communities perceive the approach used by the Brazil is highly unjustified and seems to overlook how the SCM agreement categorizes subsidies into three aspects: these are; non-actionable subsidies, action subsidies and prohibited subsidies. This is in the sense that Brazil believes that given non-actionable subsidies should also be considered as prohibited.

In relation to the case of the dispute between Canada and Brazil, it falls mainly into two Broad categories of law: these are international law and business law. International law can be defined as the body of law that governs the legal relations among or between states or nations. In addition to this, international law is set rules that are generally termed and accepted as binding or, holding relations between nations and states (Lori Fisler Damrosch L. H., 2009). On the other hand, business law can be defined as the law that covers all laws in relation to sales, agency, contracts, employment and agency law, property, business organizations and bailment. Moreover, other well known areas can be said to consist of the following; insurance, estate planning, creditor and consumer protection, and wills. In addition, research findings show that business law also deals with given aspects such as managing a business, buying and selling and contracts that are entered for business purposes (Hirschl, 1942).

The panel was established in the year 1998, as the DSB panel that was associated in coming up with a solution that was meant to settle the dispute that was between Brazil and Canada. Moreover, European communities and the United States which were the third party members in the dispute decided to lay back and not engage fully in the dispute proceedings. The panel which had been highly proposed by Brazil made their decision based on the facts.

The panel body ruled that; given measures that were being outlaid by Canada were not inconsist with the SCM agreement of articles 3.1 and 3.2. In addition, the panel decided to reject the proposal made by Brazil about the assistance of the EDC in relation to export subsidies that constitutes the regional aircraft industry in Canada. These decisions and rulings that were made, led the State of Canada to file for an appeal the following year. This was based on given aspects of legal interpretation and law that had been made by the panel.

On the other hand, the Appellate Body came to the conclusion that the panel body had erred following their process in that they had failed to examine and look at the arguments of Brazil that had been not in compliance with the SCM agreement; in addition, this was linked to the TPC program that had been revised. Moreover, the Appellate Body found out that Brazil had also overlooked the fact that Canada had not put in place the rulings and recommendations of the DSB.

In conclusion, I believe that the rulings and recommendations that were made by both the panel and the Appellate body were in accordance to the SCM agreement and looked at each party’s argument before coming up with a ruling. Moreover, the rulings helped in settling the dispute between Canada and Brazil in relation to the aircraft industry in general.


Hirschl, S. D. (1942). Business law. LaSalle Extension University.

Lori Fisler Damrosch, L. H. (2009). International law:cases and materials. USA: West.

WORLD TRADE ORGANIZATION. (1999). Canada – Measures Affecting The Export Of Civilian Aircraft. World Trade Organization.

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