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<title>BRAZIL BLOCKS CANADA'S REQUEST FOR A WTO RULING ON BRAZILIAN AIRCRAFT SUBSIDY</title>
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<p><font face="Arial"></font><font face="Arial"></font><font face="Arial" size="+1"></font><font face="Arial" size="+1"><strong>February 1, 2001 <em>(1:00 p.m. EST)</em> No. 13</strong></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong>BRAZIL BLOCKS CANADA'S REQUEST FOR A</strong></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong>WTO RULING ON BRAZILIAN AIRCRAFT SUBSIDY</strong></font><font face="Arial"></font></p>
<p><font face="Arial" size="+1"></font><font face="Arial">International Trade Minister Pierre Pettigrew and Industry Minister Brian Tobin announced today that Brazil has
blocked Canada's request for the World Trade Organization (WTO) to examine the latest version of PROEX, a
Brazilian export program.</font></p>
<p><font face="Arial">"Brazil's efforts to block our request for clarification on their most recent revisions to PROEX confirm our view
that PROEX is still illegal, and Brazil knows they would lose another WTO panel," said Minister Pettigrew.</font></p>
<p><font face="Arial">"Canada will not be deterred. We will continue to press for Brazil to make PROEX compliant," added Minister
Tobin.</font></p>
<p><font face="Arial">At a WTO meeting this morning, Canada requested that a WTO compliance panel determine whether Brazil
has fully implemented WTO rulings that ordered it to withdraw its illegal PROEX export subsidy on regional
aircraft. Brazil used procedural objections to block Canada's request for clarity on this issue. As a result,
Canada's request has not yet been granted. </font></p>
<p><font face="Arial">Brazil claims that it has modified PROEX to comply with four WTO rulings that declared it to be a prohibited
export subsidy that should be withdrawn. The PROEX program offers below-market financing to clients of the
Brazilian aircraft manufacturer Embraer.</font></p>
<p><font face="Arial">Canada will request a special WTO meeting to take place within the next 10 days, at which time a compliance
panel will be established automatically.</font></p>
<p align="CENTER"><font face="Arial">- 30 -</font></p>
<p><font face="Arial">Background information is attached.</font></p>
<p><font face="Arial">For further information, media representatives may contact:</font></p>
<p><font face="Arial">Sylvie Bussières</font></p>
<p><font face="Arial">Office of the Minister for International Trade</font></p>
<p><font face="Arial">(613) 992-7332</font></p>
<p><font face="Arial">Heidi Bonnell</font></p>
<p><font face="Arial">Office of the Minister of Industry</font></p>
<p><font face="Arial">(613) 995-9001</font></p>
<p><font face="Arial">Media Relations Office</font></p>
<p><font face="Arial">Department of Foreign Affairs and International Trade</font></p>
<p><font face="Arial">(613) 995-1874</font></p>
<p><font face="Arial">This document is also available on the Department of Foreign Affairs and International Trade's Internet site:</font></p>
<p><a href="https://bac-lac.wayback.archive-it.org/web/20070221023342/http://www.dfait-maeci.gc.ca/"><font face="Arial">http://www.dfait-maeci.gc.ca</a></font></p>
<p align="CENTER"><font face="Arial"><strong></strong></font><font face="Arial" size="+1"><strong>Backgrounder</strong></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong>CHRONOLOGY OF PROEX DISPUTE IN THE WTO</strong></font></p>
<p><font face="Arial"></font><font face="Arial"><strong>June 18, 1996</strong></font></p>
<p><font face="Arial">Canada requests establishment of WTO panel to rule on legality of PROEX.</font></p>
<p><font face="Arial"><strong>July 10, 1998</strong></font></p>
<p><font face="Arial">Canada requests second WTO panel to examine PROEX.</font></p>
<p><font face="Arial"><strong>March 12, 1999</strong></font></p>
<p><font face="Arial">WTO Panel declares PROEX subsidy for regional aircraft to be a prohibited export subsidy.</font></p>
<p><font face="Arial"><strong>August 2, 1999</strong></font></p>
<p><font face="Arial">WTO Appellate Body confirms that Brazil must withdraw PROEX export subsidies.</font></p>
<p><font face="Arial"><strong>December 9, 1999</strong></font></p>
<p><font face="Arial">Canada requests establishment of a WTO panel to rule on the compliance of Brazil's revisions to PROEX.</font></p>
<p><font face="Arial"><strong>May 9, 2000</strong></font></p>
<p><font face="Arial">WTO Compliance Panel confirms that Brazil has not complied with the WTO rulings on PROEX.</font></p>
<p><font face="Arial"><strong>July 21, 2000</strong></font></p>
<p><font face="Arial">WTO Appellate Body confirms that Brazil has not brought PROEX into compliance with its WTO obligations,
and that PROEX continues to be an illegal trade subsidy.</font></p>
<p><font face="Arial"><strong>August 28, 2000</strong></font></p>
<p><font face="Arial">WTO Arbitration Panel rules Canada can apply $344 million per year in countermeasures against Brazil.
Confirms PROEX program has done significant damage to the Canadian aircraft industry.</font></p>
<p><font face="Arial"><strong>December 12, 2000</strong></font></p>
<p><font face="Arial">Canada formally requests and is granted authority from WTO's Dispute Settlement Body to impose economic
countermeasures against Brazil for its continued use of PROEX. </font></p>
<p><font face="Arial"><strong>February 1, 2001</strong></font></p>
<p><font face="Arial">Brazil blocks Canada's request for the WTO to examine the latest version of PROEX.</font></p>
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