Canada rejects Brazil's WTO challenge over Bombardier aircraft

Brazil has formally challenged Canada at the World Trade Organization over what it says are unfair subsidies for aircraft builder Bombardier, the WTO website said. Canada immediately rejected the allegation, saying its support was entirely legal.

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." The statement singled out aid for Bombardier's C Series airplanes.

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

According to the Brazilian complaint, Bombardier, a direct competitor of Brazil's Embraer in the regional and business jet sector, received $2.5 billion in government aid just in 2016.

Embraer is the world's biggest aircraft builder after Boeing and Airbus.

"The subsidies that the Canadian company has already obtained and continues receiving from the Canadian government have not only been fundamental in the development and survival of the C Series program, but have also allowed Bombardier to offer its aircraft at artificially low prices," said Paulo Cesar Silva, Embraer's CEO, in a statement.

But Joseph Pickerill, a spokesman for Canada's minister of international trade, said that "Canadian support measures to the aerospace industry, including to Bombardier, were developed in full knowledge of WTO rules and are consistent with these obligations."

He added, in an email to AFP, "We are confident that our announcement respects international law."

Brazil lodged its complaints a day after the Canadian government had granted Bombardier a four-year loan of 372.5 million Canadian dollars ($283 million) at favorable terms. The company originally sought $1 billion, but said its situation has improved.

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

After repeated delays and a doubling of its production costs to more than $5 billion, Bombardier delivered its first CS100 commercial planes last June, and its first CS300s at the end of the year.

In late 2015, Bombardier received a $1 billion bailout from the Quebec government, giving the province a 49.5 percent stake in the C Series project.