Canada is expected to appeal against the latest World Trade Organisation (WTO) interim ruling which prohibits the C$1.7 billion ($1 billion) financing subsidy that the government gave Air Wisconsin to purchase up to 75 Bombardier CRJ200s. A final ruling is expected by mid-November, after which Ottawa has 30 days to respond.
The WTO told Canada it also broke international trade rules in 1996 by subsidising $880 million in Bombardier CRJ sales to Delta regional carrier Comair and C$100 million in loans to Spanish regional Air Nostrum. The loans to Air Nostrum and Air Wisconsin came from the Export Development Corp's (EDC) Canada Account which has been criticised before by the WTO.
Brazil lodged a complaint with the WTO after Bombardier in April beat Embraer to the Air Wisconsin deal with the aid of soft loans. The ruling does not cover the recent sale of 75 CRJ440s to Northwest Airlink, and Brazil warns it may launch a fresh protest if it finds evidence of similar subsidies.
Canada will have 90 days from the time the final ruling is released to withdraw the financing after which Brazil can seek retaliatory action. Final rulings historically have confirmed interim reports. Canada will appeal, says government trade official Oussamah Tamim, adding that the WTO ruling doesn't condemn EDC's corporate account per se, but only certain transactions.
Canada says its Air Wisconsin financing only matched what Brazil had been doing. Brazil's latest ProEx programme was ruled legal by the WTO in July.
Source: Flight International
