Brazil files WTO complaint against Canada after aid for Bombardier

The Canadian government says it will give Bombardier $372.5 million Canadian (US$285 million) in repayable loans over four years to support two aircraft projects.

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

"These are repayable program contributions coming from existing programs, and we are very confident that they are fully compliant with Canada's global trade obligations", Bombardier spokesman Simon Letendre said in an email. The Brazilian government in a statement Wednesday said it has requested consultations with Canada under the WTO dispute settlement system.

"In Brazil's understanding, Canadian subsidies artificially affect the worldwide competitiveness of the sector, in a manner incompatible with Canada's obligations to the WTO", Brazil's Ministry of Foreign Affairs said in a statement.

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. He said the support conforms to WTO rules, adding that all countries, including Brazil, help their aerospace sectors.

"Bombardier plays a vital role, both as an anchor employer and an innovation leader", said Innovation, Science and Economic Development Minister Navdeep Bains during a news conference inside a Bombardier hangar in Dorval, Que.

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Canada and Brazil have a long history of trade disputes over government support to the aerospace sector.

Quebec's spending on the CSeries, along with a separate $1.5 billion investment by the province's largest pension fund in Bombardier's rail division, already risks triggering a trade feud between the company and Brazilian planemaker Embraer SA EMBR3.SA .

Bombardier spokesman Simon Letendre said Brazil provided $588 million in lines of credit to Embraer in 2014 through the Brazilian Development Bank for the development of the Legacy 500, a mid-sized business jet.

"We want good-quality jobs", he said on February 7.

Embraer is the world's biggest aircraft builder after Boeing and Airbus. In addition, the development costs of the KC390 were fully funded by the Brazilian government to the tune of $1.5 billion.

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