By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The government of Brazil has announced it will open a formal complaint against Canada at the World Trade Organization (WTO) questioning the subsidies granted by the North American country to its aeronautical industry, specifically to Bombardier.
According to Brazil’s Ministry of Foreign Affairs, this year alone the Canadian government injected approximately US$2.5 billion into aircraft manufacturer Bombardier.
“There is indication that the Canadian Federal Government intends to make a significant new contribution to the company’s capital soon, to ensure the viability of the new C-Series aircraft and its placing on the market at artificially reduced prices,” said the statement released by the Ministry.
The statement concluded by saying, “In the assessment of Brazil, the support granted by the Canadian government to Bombardier has affected the competitive conditions in the market in a way that is incompatible with the commitments made by Canada in the WTO.”
The decision was applauded by one of Bombardier’s biggest competitors, Brazilian aircraft manufacturer Embraer. According to the Brazilian company multiple attempts were made to resolve the issue at the diplomatic level.
“Embraer believes that the formal dispute settlement process at the WTO is the only means to ensure a level playing field in the market,” said Paulo Cesar Silva, Embraer President and CEO. “Canadian subsidies have caused significant market distortions and are not in compliance with international trade rules.”
This will not be the first time the two countries filed complaints about each other’s aeronautical industry at the WTO. In the late 1990s Canada accused Embraer of obtaining subsidies from the Brazilian government for its E170 and E190 jets.
At the time Brazil counter-attacked, stating that Bombardier had also received subsidies from Canada. The WTO ruled in Brazil’s favor but both countries were fined.