August 22, 2017
Brazil seeks help from WTO over Bombardier subsidies
After failed consultations with Canada over what was considered to be US$3.0 billion of unfair subsidies provided to Canadian plane and train manufacturer Bombardier, an approach will be made to the World Trade Organization by the Brazilian government to establish a dispute settlement panel.
Brazil has estimated that US$3.00 billion has been provided to Bombardier for its CSeries of jets in the form of regional, provincial and local subsidies. As a consequence, it is claimed that Bombardier has been able to offer its aircraft at appreciably and unfairly lower prices than its direct competitor, Brazil’s Embraer E195 aircraft.
According to a statement from the Brazilian government: “In the Brazilian government’s opinion, the high subsidies granted by Canada to Bombardier resulted in serious damage to Brazil’s airplane industry and several of the programs involve subsidies banned by WTO rules.”
The original complaint was opened in February this year, though is built on the back of decades of antagonistic rivalry between the two manufacturers, and is not dissimilar to the long-running spats between Boeing and Airbus.
This latest dispute brought about by Brazil is as a result of the purchase of 75 CSeries jets from Bombardier by U.S. carrier, Delta Airlines. At list price, the deal should have been worth US$5.6 billion, but Embraer were beaten by what they believe was a deal which saw Bombardier sell the jets at below break-even price.
In addition, Boeing has lodged a complaint, claiming unfair trade, which may result in U.S. duties becoming payable on the new Bombardier jets. Currently the U.S. government is investigating the matter before deciding whether or not to proceed with the anti-dumping and anti-subsidy claims.