Brazil takes jets beef to WTO

SAO PAULO • 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, 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 US$5.4 billion CSeries airliner program, which challenges Embraer’s largest commercial jets.

“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 got a US$1billion bailout from the Quebec government this year. The plane maker also sold a 30-per-cent stake in its rail unit to pension fund manager Caisse de dépôt et placement du Québec for US$1.5 billion.

Bombardier spokesman Olivier Marcil says the Montreal-based company is confident that all investments in the company “are fully compliant” with all World Trade Organization rules and regulations, The Canadian Press reported.

He added that Brazil’s threatened action is “ironic” given the level of government subsidies and support it has given to Brazilian aircraft manufacturer Embraer.