UPDATE 1-Canada examining whether aid to Bombardier is too risky

Wed Nov 18, 2015 2:25pm EST
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(Adds quote, context of trade disputes)

By Leah Schnurr

OTTAWA Nov 18 (Reuters) - The Canadian government is examining a request for assistance from struggling aircraft maker Bombardier Inc, Liberal Innovation Minister Navdeep Bains said on Wednesday, adding that one consideration was whether such aid would be too risky.

Bains, who took office with the new Liberal government two weeks ago, told reporters at an aerospace conference that he had spoken with Bombardier Chief Executive Alain Bellemare and would make sure that any assistance was "good value for taxpayers."

The provincial Quebec government has already decided to pay $1 billion for a near 50-percent stake in the long-delayed CSeries jet program, which is billions of dollars over-budget.

Asked if it was risky for the federal government to invest in the CSeries, Bains said, "That's part of the due diligence."

He declined to say how much Bombardier was asking for. "I don't want to negotiate in public but there's no doubt they definitely made a request," he said.

The minister also said he would ensure any help would comply with international trade law. Direct export subsidies violate international rules, and experts said that even government investment in the program could well be challenged at the World Trade Organization (WTO).

Canada and Brazil fought a fierce WTO dispute in the 1990s over accusations of subsidies to Bombardier and Embraer.

Any dispute over Canadian aid to Bombardier this time could draw in much bigger combatants, since the CSeries passenger jet would compete with Boeing and Airbus planes.

(Reporting by Leah Schnurr; Writing by Randall Palmer; Editing by Cynthia Osterman, Bernard Orr)