Brazil complains to the WTO about loan to Bombardier

The Brazilian Government's understanding, shared by Embraer, is that the Canadian Government's subsidies to Bombardier violate Canada's WTO obligations.

Simon Letendre, a Bombardier spokesman, told AFP that Embraer itself received substantial "contributions" in various forms from the Brazilian government.

"These are repayable program contributions coming from existing programs, and we are very confident that they are fully compliant with Canada's global trade obligations", Bombardier spokesman Simon Letendre said in an email.

Bombardier in 2016 received a $1 billion investment for the CSeries from Quebec in exchange for a 49.5 per cent stake in a limited partnership focussed on the CSeries.

The foreign ministry in Brazil said it had requested consultations with Canada at the WTO "over subsidies given by the Canadian government at a federal, provincial and local level to the aerospace industry". Bombardier is expected to begin paying royalties to the federal government in April for selling seven CSeries a year ago after the company received $350 million in loans in 2008 in support of the aircraft.

Under WTO rules, if Canada and Brazil are unable to reach agreement in the next 60 days, the complaining party - Brazil - may request adjudication.

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Bombardier rival Embraer says it supports Brazil's move to challenge what it says is US$4 billion in support from various levels of government, including US$2.5 billion previous year alone.

Embraer offered its support of the Brazilian government's action.

"It is essential to restore a level playing field to the commercial aircraft market and ensure that competition is between companies, not governments", he said in a separate news release.

Bombardier spokesperson Simon Letendre said in statement emailed to CBC News that the company is "very confident that all forms of support provided to Bombardier.are fully compliant with Canada's worldwide trade obligations". The company also sold a 30 per cent holding in its railway division for $1.5 billion to Quebec-based pension fund manager Caisse de dépôt.

Most of the money is evidently earmarked for continued development of the Global 7000 long-range "four suite" business jet, first announced in 2010 and scheduled for entry into service in the second half of 2018.

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  • Megan Austin