Question Period Note: Brazil WTO dispute against Canada concerning trade in commercial aircraft

Ongoing WTO Panel review of Canadian support measures to Bombardier CSeries aircraft (now the Airbus A220).

• We are confident that our support measures to the aerospace industry fully respect international trade rules

• Canada's aerospace industry is of strategic importance to Canada

• Canada will continue to defend its support measures and the workers across the country this industry represents.

At Brazil's request, a WTO panel was established in September 2017 to determine whether federal, provincial and municipal support measures to Bombardier's CSeries (which was renamed the Airbus A220 after Airbus' acquisition of a controlling interest in the program) are consistent with the WTO Agreement on Subsidies and Countervailing Measures

Key measures challenged are:
- repayable contributions (RC) from the governments of Canada ($350 million and $120 million) and Québec ($117 million) provided for the development of the CSeries;
- an equity infusion of USD 1.5 billion by the Caisse de dépôt et placement du Québec in BT Holdo (a holding of Bombardier Transportation); and
- an equity infusion of USD 1 billion by Investissement Québec in the CSeries Aircraft Limited Partnership.

Brazil argues that the RCs and both equity infusions are substantial causes of product and price effects on the CSeries programs and that additional, "smaller", subsidies have complemented these effects. Brazil also argued that its aircraft manufacturer, Embraer, has suffered various forms of price effects in certain sales campaign or markets.

Canada is of the view that its support measures are not subsidies and, even if they were, they did not have a negative impact on Embraer.

First written submissions were filed in December 2018 (Brazil) and May 2019 (Canada) and the first hearing took place in September 2019. On November 7, Brazil requested that the Panel suspend the proceedings for five months on grounds that the pending merger between Embraer and Boeing is limiting Embraer's ability to support Brazil it the WTO dispute. The Panel granted Brazil's request and, effective November 22, the dispute is suspended. The WTO Panel will set new timelines when it reconvenes on April 15, 2020.
On a related note, on January 24, 2020, Canada and 16 other members of the WTO (including Brazil) committed to work together to put in place an interim arrangement for appealing WTO panel reports. When finalized, this process could be used in an eventual appeal of the WTO panel decision regarding support to Bombardier.

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