MONTREAL – Brazil has launched a formal complaint to the World Trade Organization over Canadian subsidies to the aerospace sector, hours after the federal government announced $372.5-million in interest-free loans to Bombardier.
The South American government says in a news release that it has requested consultations with Canada under the WTO dispute settlement system.
Brazil says Canadian federal, provincial and local subsidies “artificially affect the international competitiveness of the sector” in a way that is inconsistent with Canada’s WTO obligations.
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It says the timing and location of talks should be agreed upon by the two countries in the coming weeks.
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 last year alone.
Company CEO Paulo Cesar Silva says the subsidies have helped the development and survival of the CSeries passenger jet program and allowed Bombardier to sell the plane at artificially low prices.
Last year, Bombardier received a US$1-billion investment for the CSeries from the Quebec government in exchange for a 49.5-per-cent stake. The company also sold a 30 per cent stake in its railway division to pension fund manager Caisse de depot for US$1.5 billion.
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Canadian International Trade Minister Francois-Philippe Champagne said Tuesday that the government is prepared to defend financial support like the one awarded Tuesday, saying all countries, including Brazil, help their aerospace sectors.