Brazil ups the ante in trade spat with Bombardier

Bombardier pushed back against Brazil after the South American country vowed Monday to launch a trade challenge against Canada over financial support for the aerospace and transportation company.

Brazil said it 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 Monday its trade chamber authorized WTO proceedings against Canada regarding US$2.5 billion in state support for Bombardier from the province of Quebec.

The two manufacturers have fought for decades over the regional jet market and traded accusations of unfair subsidies in the 1990s that their countries hashed out at the WTO.

Bombardier spokesman Olivier Marcil says the Montreal-based company is confident that all investments in the company “are fully compliant” with all WTO rules and regulations.

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.

Bombardier responded after Brazil’s Foreign Ministry issued a statement saying support for the company is incompatible with WTO rules and affects its Brazilian rival.

Bombardier received a US$1billion investment in the CSeries jet from the Quebec government this year and in late 2015 sold a 30 per cent stake in its railway division to pension fund manager the Caisse de depot for US$1.5 billion. The CSeries program challenges Embraer’s largest commercial jets, along with the smallest narrowbody aircraft made by Boeing Co and Airbus Group SE.

Ottawa is also looking to invest US$1 billion, which Brazil says is designed to ensure the viability of the new commercial jet by supporting sales at artificially reduced prices.

“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, reported by Reuters.

Bombardier’s chief executive said last week the company was still seeking federal funds.

Prime Minister Justin Trudeau said the government was working “very productively” with Bombardier and he hoped to make announcements in coming months.