Fri, Feb 10, 2017
Alleges Bombardier Has Received Illegal Subsidiaries From The Canadian Government
On behalf of Embraer, Brazil has filed a complaint with the World Trade Organization over Canadian government's investment in Bombardier’s CSeries.
“Brazil notified the WTO Secretariat that it had requested WTO dispute consultations with Canada regarding alleged subsidies provided to Canadian aircraft manufacturer Bombardier,” the WTO announced Wednesday. It came on the heels of an announcement that the Canadian government would be providing $372 million (Canadian) in loans to Bombardier. The majority of those loans will prop up the Global 7000 corporate jet program, but some will go to the CSeries, which competes with Embraer’s EJets.
“The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel,” the WTO said.
Leeham News and Comment reports that the province of Quebec had in the past provided $1 billion (U.S.) in an equity investment into the CSeries program. A quasi-government pension plan fund also invested more than $1 billion (U.S.) for a 30% share of BBD’s train business. Bombardier asked the government for $1 billion (U.S.).
According to Embraer, that investment created a de facto government entity giving Bombardier an unfair competitive advantage over the Brazilian planemaker. Bombardier was able to offer CSeries airplanes to Delta Airlines at a lower price than Embraer because of the government investment.
The federal money is interest-free, according to a news report. Interest-free, or below-market, loans were found to be illegal in the US vs European Union trade dispute over Airbus subsidies.
Bombardier said is a statement that the company is "very confident that all forms of support provided to Bombardier, including the repayable program contributions announced by the federal government yesterday, are fully compliant with Canada’s international trade obligations and we are prepared to defend our position alongside the Canadian government as Minister Champagne stated yesterday.”
(Images from file)
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