The long and bitter dispute between Brazil and Canada over government subsidies for regional jet sales has been settled by the World Trade Organisation (WTO), which has upheld earlier rulings that such activities are illegal.
An appeal panel's investigation found that original WTO rulings were correct and ordered that a Brazilian sales subsidy, known as Proex - for Embraer regional jets - and a Canadian development subsidy, known as TPC - for Bombardier regional aircraft - should cease within 90 days from the end of August.
Canada's industry minister, John Manley, has made it clear that his country will comply with the ruling. Brazil's position is less certain. Embraer president Mauricio Botelho's interpretation of the ruling is that Proex is not intrinsically illegal and could be acceptable to the WTO with "minor changes". Bombardier Capital's chairman, Yvan Allaire, does not take that view and warns that the eyes of Canada and European Union governments will be on Brazil to make sure it complies. Fairchild Aerospace, a German-based regional aircraft manufacturer, is also said to be urging the EU to ensure Proex ceases.
The dispute seems unlikely to affect regional jet market share at either Bombardier or Embraer - both companies have strong order backlogs.
Source: Airline Business
