Graham Warwick/WASHINGTON DC
The World Trade Organisation (WTO) has upheld its decision that Brazil's Proex export support programme illegally subsidises Embraer regional jet sales.
The WTO's appellate body also upheld a ruling that the Technology Partnerships Canada (TPC) fund illegally subsidised Bombardier's regional aircraft programmes - but the Canadian manufacturer nevertheless seems to have scored victory in the long-running dispute, with the $4.5 billion in Proex commitments made to Embraer customers eclipsing the $100 million in TPC funding provided for its Dash 8-400 and CRJ-700 programmes.
The WTO will adopt the rulings at the end of August, after which both countries have 90 days to remove the subsidies. It is not clear what action Brazil will take - but the ruling makes it clear that Proex takes effect when an Embraer aircraft is exported and treasury bonds issued to cover subsidy payments, and not when an initial original commitment is made.
Bombardier says $3.7 billion in Proex commitments for undelivered aircraft cannot, therefore, be paid. Embraer president Mauricio Botelho maintains, however, that "existing commitments will be maintained" - while Brazil has said in its filing that it will claim to have complied with the WTO ruling if it eliminates Proex while continuing to make subsidy payments under existing commitments.
Bombardier executive vice-president Yvan Allaire argues that if Brazil does not comply with the WTO ruling, it will "become kind of a rogue member of an international organisation".
He adds that Canada might respond by asking the WTO to investigate development and sales financing provided to Embraer by Brazil's BNDES bank.
Source: Flight International
