Brazil to challenge Canada at WTO over Bombardier funding

SAO PAULO/ MONTREAL: Brazi l unvei led a probable challenge against Canadian regional and government funding for Bombardier Inc at the World Trade Organization, reviving a bitter trade feud between the Canadian jetmaker and Brazilian rival Embraer SA.

Brazil’s foreign ministry said on Monday its trade chamber had authorized WTO proceedings against Canada over US$ 2.5 billion in 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 late 1990s that their countries hashed out at the WTO.

The latest case stems from support for Bombardier’s roughly US$ 5.4 billion CSeries jetliner programme, which competes with some Embraer jets as well as the smallest products of plane giants Boeing Co and Airbus Group SE.

Bombardier, which considered bankruptcy protection last year after simultaneous airplane developments caused a cash crunch, confirmed a US$1 billion injection in the CSeries from the Quebec government in June.

It also sold a 30 per cent stake in its rail division to public and private pension fund manager Caisse de depot et placement du Quebec for US$1.5 billion.

Now, negotiations are underway for a US$1 billion federal cash injection.

Brazil is upset about the move, which has also drawn criticism from Boeing in the United States.

“There are indications that Canada’s federal government soon intends to make another signif icant capital injection in ( Bombardier) 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.

Montreal- based Bombardier said all investments in the company comply with trade rules and, as so often happens in spats involving the WTO, hit back with a counter-accusation.

“It is a bit ironic given the level of government subsidies and support Embraer has received,” said Olivier Marcil, a company spokesman.

“But Embraer insisted its rival was damaging the market. — Reuters