Brazil complains to the WTO about loan to Bombardier

Brazil says Canadian federal, provincial and local subsidies "artificially affect the global competitiveness of the sector" in a way that is inconsistent with Canada's WTO obligations.

Canada and Brazil have had a long-running dispute over government backing of Bombardier and Embraer, with both sides filing complaints against the other.

In July, Canada's government said it was following trade rules in the case.

The loan to Bombardier is far less than the USA $1 million the firm asked for in late 2015.

Canadian International Trade Minister Francois-Philippe Champagne said Tuesday that the government is prepared to defend financial support like the one awarded Tuesday, saying all countries, including Brazil, help their aerospace sectors.

Under WTO rules, if Canada and Brazil are unable to reach agreement in the next 60 days, the complaining party - Brazil - may request adjudication.

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Brazil's foreign ministry said in a February 8 statement that it has requested consultations with Canada under the WTO dispute settlement system "on subsidies granted by the Canadian government to the aircraft industry, at the federal, provincial and local levels, in particular the Bombardier CSeries program". "New contributions have been announced, which may further deepen distortions in the aircraft sector, to the detriment of Brazilian interests".

According to the Brazilian complaint, Bombardier, a direct competitor of Brazil's Embraer in the regional and business jet sector, received $2.5 billion in government aid just in 2016.

Embraer offered its support of the Brazilian government's action. The company also sold a 30 per cent stake in its railway division to pension fund manager Caisse de depot for US$1.5 billion.

"It is essential to restore a level playing field to the commercial aircraft market and ensure that competition is between companies, not governments", Silva said in a statement.

A spokesman for Champagne said Wednesday after Brazil's trade complaint was announced that the federal government is confident that the loans respect worldwide law.

The latest round of funding is aimed at research and development for the new Global 7000 business jet, via the Strategic Aerospace and Defence Initiative (SADI), as well as the C Series aircraft.

  • Adam Floyd