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Brazil accuses Canada of unfairly supporting Bombardier — WTO

09 February 2017

Brazil-with the support of its native aircraft manufacturer, Embraer-has requested consultations with the Canadian government at the World Trade Organization (WTO) to discuss government subsidies to the C Series program.

The province of Quebec, where Bombardier is based, injected $1 billion into the company's CSeries program a year ago.

Last year, Bombardier scored an order from Delta Air Lines Inc DAL.N for 75 CSeries jets, worth some $5.6 billion at list prices, beating out Embraer's competing E-Jets with below break-even prices, according to the Brazilians.

Bombardier sought an additional $1 billion investment in the CSeries joint venture from the federal government, but the Trudeau administration ultimately committed to a CAD$372.5 million ($282 million) pledge for repayable contributions, with most of that cash devoted to research and development costs for the Global 7000 business jet.

Brazil is challenging Canadian and Quebec government financial support for the C Series, saying it has enabled Bombardier to sell its CS100 and CS300 commercial airliners at "artificially low prices". This might seem curious given today's news, but one should remember that Bombardier had been angling for US$1 billion of federal funding to match Quebec's contribution.

Brazil's Foreign Ministry said in a statement Wednesday that government subsidies to Bombardier have created distortions in the worldwide aeronautical market that are incompatible with WTO rules and that negatively affect Brazil's interests.

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"It is essential to restore a level playing field to the commercial aircraft market and ensure that competition is between companies, not governments", he said in a separate news release. "I am very much prepared to fight for what we are doing", he said, adding that Brazil and other countries help their aerospace industries too.

By the end of 2015, Bombardier faced what chief executive Alain Bellemare described as an existential crisis.

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

"We want good-quality jobs", he said on February 7.

It says the timing and location of talks should be agreed upon by the two countries in the coming weeks.