Brazil to challenge Canada at WTO over Bombardier funding

Mon Dec 19, 2016 1:33pm EST
 
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By Brad Haynes

SAO PAULO (Reuters) - Brazil will challenge government funding for Bombardier Inc at the World Trade Organization (WTO), escalating the latest trade spat between the Canadian jet maker and its Brazilian rival Embraer SA.

Brazil's Foreign Ministry said on Monday that its trade chamber authorized WTO proceedings against Canada regarding $2.5 billion in state support for Bombardier from the province of Quebec.

Bombardier and Embraer have battled for decades over the regional jet market and traded accusations of unfair subsidies in the 1990s that their countries hashed out at the WTO.

The latest case stems from recent support for Bombardier's roughly $5.4 billion CSeries airliner program, which challenges Embraer's largest commercial jets, along with the smallest narrow-body aircraft made by Boeing Co and Airbus Group SE.

"There are indications that Canada's federal government soon intends to make another significant capital injection in the company to ensure the viability of the new CSeries and its placement in the market at artificially reduced prices," the Brazilian Foreign Ministry said in a statement.

Bombardier's chief executive said last week the company was still seeking federal funds.

Prime Minister Justin Trudeau said the government was working "very productively" with Bombardier and he hoped to make announcements in coming months.

"Canada's subsidies have created serious distortions in the market, in addition to violating current international norms," said Embraer Chief Executive Paulo Cesar Silva in a statement welcoming the Brazilian government's decision.   Continued...

 
A Bombardier aircraft is displayed at the Singapore Airshow at Changi Exhibition Center February 18, 2016.  REUTERS/Edgar Su