Skip to main content

The C Series aircraft is shown in Mirabel, Quebec on September 16, 2013

AF/AFP/Getty Image

The World Trade Organization approved Brazil's request to investigate Canada's alleged use of more than $3-billion in government subsidies to produce Bombardier Inc. aircraft.

The South American nation began WTO consultations in February, saying Canada ran afoul of trade rules because its policies unfairly bolstered the domestic aerospace industry to the detriment of Brazilian plane maker Embraer SA. Canada offered billions of dollars in loans, equity infusions, grants, and tax credits to Bombardier, Brazil said.

The probe by the Geneva-based trade body adds to pressure on Montreal-based Bombardier just days after the U.S. Commerce Department slapped import duties of about 220 per cent on the company's C Series jets. That followed an investigation that began after a complaint by Boeing Co.

Story continues below advertisement

Globe editorial: On the book of Bombardier vs. Boeing, skip to Chapter 19

"We are confident that the investments and contribution programs mentioned in Brazil's petition are in full compliance with all WTO and international trade rules," Bombardier spokesman Simon Letendre said by email.

A spokesman for the Canadian international trade ministry said the government will defend Bombardier and the Canadian aerospace industry. "All aircraft-producing countries provide some form of support to their aircraft industry," the spokesman, Joseph Pickerill, said by email. "Canada will be examining closely Brazilian government support."

At the WTO, Brazil said Canada's various aircraft subsidies violate WTO rules because they are contingent on export performance and require the use of domestic over imported goods.

'Fair Trade'

Subsidies have allowed Bombardier to sell its aircraft at "artificially low prices," Embraer Chief Executive Officer Paulo Cesar Silva said in a statement. "In order to ensure that competition in the commercial aviation market continues to be between companies, and not governments, it is essential to restore a level playing field, respecting fair trade conditions."

The WTO will now appoint three dispute-settlement panelists to determine whether Canada's various financing programs for Bombardier violated international trade rules. Though such investigations typically take less than a year, a ruling in the case may be extended to 2019 because of delays and staffing shortages at the WTO.

Story continues below advertisement

"This is par for the course for the aerospace industry," Cam Doerksen, an analyst at National Bank Financial in Montreal, said in an interview. "Canada and Brazil have had previous aircraft fights at the WTO. This dispute is not something that's measured in months. It will take years."

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter