Brazil files complaint against Canada over Bombardier

The federal government’s aid to Bombardier has triggered a new trade battle with Brazil

MONTREAL — The federal government’s aid to Bombardier has triggered a new trade battle with Brazil, which launched a formal complaint Wednesday with the World Trade Organization over Canadian subsidies to the aerospace industry.

“Canadian subsidies artificially affect the international competitiveness of the sector, in a manner inconsistent with Canada’s WTO obligations,” the Brazilian government said in a statement.

Brazil said Bombardier received at least US$2.5 billion in government support last year and that additional contributions may hurt the country’s interests by further distorting the aerospace industry.

Last year, Bombardier (TSX:BBD.B) received a US$1-billion investment for the CSeries passenger jet program 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.

On Tuesday evening, Ottawa announced it will provide $372.5 million in new loans to Bombardier to be paid in instalments over four years to support the Global 7000 and CSeries aircraft projects. Although the loans are interest-free, the government said it expects to earn a return, as it has done with past loans, through royalties for planes sold.

Under such an arrangement, Bombardier has so far paid $741 million into Ottawa’s coffers on $586 million in federal loans in the 1980s and 1990s, according to the company. Bombardier is expected to begin paying royalties to the federal government in April for selling seven CSeries last year after the company received $350 million in loans in 2008 in support of the aircraft.

Sao Paolo-based Embraer, a fierce rival of Bombardier’s, said it supports its government’s complaint. CEO Paulo Cesar Silva said the subsidies given to Bombardier have helped the development and survival of the CSeries and allowed the Montreal company to sell the plane at artificially low prices.

“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.

Brazil, which had threatened in December to launch a trade complaint, said the move will give it access to additional information about support to Bombardier.

Federal International Trade Minister Francois-Philippe Champagne said Tuesday that Ottawa is prepared to defend its financial support to Bombardier.

“I am very much prepared to fight for what we are doing,” he said.

Bombardier CEO Alain Bellemare was similarly defiant.

“This is the best plane in its class, so people are finding ways to come after us,” he said.

The company added Wednesday that all countries, including Brazil, help their aerospace sectors through tax breaks, royalties and research and development. It pointed to Brazil’s US$588 million in assistance to Embraer in 2014 through the Brazilian Development Bank for the development of its Legacy 500 business jet and another US$1.5 billion for development costs of the KC390 aircraft.

A spokesman for Champagne said Wednesday after Brazil’s trade complaint was announced that the federal government is confident that the loans respect international law.

The Brazilian government said the timing and location of talks with Canada should be agreed upon by the two countries in the coming weeks.

Just Posted

Red Deer College waiting for feds to finalize marijuana legalization

Like businesses, Alberta and municipal governments, Red Deer College is waiting for… Continue reading

Class size only part of the problem say Central Alberta teachers

Though the Alberta auditor general’s report points out that classroom sizes continue… Continue reading

Lacombe County promoting crime prevention measures

County pushing Crime Prevention Through Environmental Design principles

Red Deer doctor concerned about patient transfers to rural hospitals

Family physician says the move creates less incentive for expansion at Red Deer hospital

Fire permit season begins in March

Earlier springs in last few years prompted Alberta government to move up fire permit season

WATCH: Red Deer’s River Bend upgrades officially open

River Bend Golf and Recreation Area is the latest venue to be… Continue reading

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Stores make push in scan and go tech, hope shoppers adopt it

NEW YORK — Shoppers at self-checkout lanes scanning all their groceries after… Continue reading

‘Stars seemed to have aligned’ for new Halifax CFL bid, commissioner says

HALIFAX — CFL fans in Halifax have been told the league is… Continue reading

The language of ‘Black Panther’? It’s real. Give it a try.

OTTAWA — The military’s top general has promised to get to the… Continue reading

New execution date set for Georgia’s ‘stocking strangler’

ATLANTA — A man known as the “stocking strangler,” who was convicted… Continue reading

Man says he kicked Chevy Chase in self-defence in dispute

SOUTH NYACK, N.Y. — A New York man says he kicked Chevy… Continue reading

Supporters of Tina Fontaine’s family march in Winnipeg to support her family

WINNIPEG — Hundreds marched through the streets of Winnipeg on Friday in… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month