New York Times / By THE ASSOCIATED PRESS
GENEVA (AP) -- The World Trade Organization on Tuesday granted Canada permission to impose $226 million per year of sanctions against Brazil in a dispute over subsidies to the aircraft industry.
The approval followed an arbitrator's ruling that the sum was the amount Canada was losing because of Brazil's Proex export subsidies program to aircraft maker Embraer.
Canada has published a preliminary list of imports from Brazil on which it would consider imposing punitive tariffs, including sugar, tobacco, steel and textiles, but it has not yet specified exactly which items would be targeted.
It has no obligation to start imposing sanctions immediately, and it seems likely that it will wait to see whether the mere threat will force Brazil to change policy. Canadian Ambassador Sergio Marchi told the meeting that five separate WTO rulings had gone against Brazil, but the program was still in place.
Brazilian Ambassador Celso Amorim told the meeting that new regulations had been put into place last week and that the new system was legal under WTO rules -- a claim disputed by Marchi.
Amorim said Brazil and Canada could have settled their differences through consultations a long time ago had it not been for Ottawa's "unreasonable demands" about the new Proex system.
A WTO panel ruled in July that Canada was no longer breaking WTO rules in the way it subsidizes its own aircraft maker, Bombardier Inc. The two countries had originally accused each other of acting illegally in a series of claims and counterclaims taken to the WTO.
The original WTO ruling on Brazil said purchasers of hundreds of Embraer aircraft had costs reduced by several million dollars a plane due to the subsidy program, which reduced interest rates on financing for the export of Brazilian aircraft.
Only a handful of disputes have gone as far as trade sanctions in the six-year history of the WTO. Canada, along with the United States, is imposing sanctions on the European Union over its ban on hormone-treated beef and the United States also is applying sanctions over EU banana imports.
If Canada acts, it would be the first time that a developed country had imposed sanctions on a developing nation. The only developing country so far to seek permission for sanctions is Ecuador, which also sought to retaliate over bananas, but it has not yet taken action.:
