Embraer says the Brazilian Government will honour all existing contracts even if the World Trade Organisation (WTO) upholds its ruling that Proex export financing support for regional jet sales constitutes an illegal subsidy.
Hearings on Brazil's appeal against the decision have begun, with a final ruling expected by August. If the appeal is denied, Brazil will have until November to remove Proex support or modify the programme to make it WTO-compliant.
Embraer says it will continue to use Proex as it exists until the final WTO ruling, and adds that, even if the appeal is rejected, all contracts signed up to the end of this year will be honoured by the Brazilian Government.
Rival Bombardier argues, however, that such a move would be illegal, claiming a decision against Proex would require the removal of financing support for aircraft on order, but not yet delivered, when the final ruling takes effect. The Canadian company alleges that Proex support reduces the cost of buying an Embraer jet by over $2 million.
Embraer argues that WTO rulings are never retroactive and do not overrule existing contracts. The company says it is "confident a way will be found by the Brazilian Government to adjust Proex if necessary to meet the requirements of the WTO".
Bombardier cites legal opinion which says the WTO can overrule private contracts, but admits there is no precedent. Ottawa, meanwhile, is appealing against a ruling that its Technology Partnerships Canada (TPC) programme is not WTO compliant. TPC provides funding for Bombardier's regional aircraft programmes.
Source: Flight International
