Canada Treads Softly with Bombardier Funding

Author

09 February, 2017

Sao Paolo-based Embraer, a fierce rival of Bombardier's, said it supports its government's complaint.

Canada Government science and economic development innovation minister Navdeep Bains said: "This contribution from the the government of Canada will secure the highly skilled, well-paying jobs for middle-class Canadians who work in the aerospace sector".

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. This assistance, plus potential future government aid, "deepen distortions in the aircraft sector to the detriment of Brazilian interests", the foreign ministry said.

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.

Brazil said it has submitted a request for consultations with Canada under the World Trade Organization's dispute settlement system, and says the two countries should agree on the timing and location of talks within the coming weeks.

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.

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"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 CSeries program, but have also allowed Bombardier to offer its aircraft at artificially low prices", says Paulo Cesar Silva, Embraer's chief executive. This might seem curious given today's news, but one should remember that Bombardier had been angling for US$1 billion of federal funding to match Quebec's contribution.

Brazilian aircraft manufacturer Embraer SA said Wednesday that it supports the move.

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

The $372.5 million in repayable loans, announced Tuesday night, will go towards research and development of Bombardier's new Global 7000 business jet and the ongoing development of the CSeries.

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


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