Embraer wary over Quebec funding for rival's jet

Tue Nov 10, 2015 5:52pm EST
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By Tim Hepher

DUBAI (Reuters) - A top executive at Brazil's Embraer expressed concern on Tuesday about Quebec's decision to pump $1 billion into the struggling airplane project of a Canadian rival, saying planemakers should compete on a level playing field.

However, he said Embraer had not so far raised Quebec's decision to purchase a near-50-percent stake in Bombardier's CSeries with the Brazilian government, which has clashed with Canada over aircraft subsidies in the past.

"We don’t know yet the full details about this partnership, so we would like very much to get to know them and we are following this process," Paulo Cesar Silva, chief executive of Embraer Commercial Aviation, told Reuters at the Dubai Airshow.

"Of course there is a concern, because we want to make sure we are on a level playing field," he said in an interview.

Canada and Brazil, which compete in the market for small passenger jets, waged a dispute at the World Trade Organization over mutual accusations of aerospace subsidies in the 1990s.

The trade row was dwarfed by a now decade-old subsidy battle between the European Union and United States over support for their respective planemakers Airbus and Boeing.

The WTO faulted investments by France into one of Airbus's predecessors because they ignored "usual investment practice," a yardstick likely to determine whether Brazil can successfully challenge Quebec's recent stake purchase.

"We don’t know the details of the agreement, but it raises worries. It is hard to say at this point if this is an actual subsidy or not," a government official involved in trade policy told Reuters in Brasilia.   Continued...