US senator, Embraer in dispute over business jet subsidies

Washington DC
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A US senator from Cessna and Hawker Beechcraft's home state of Kansas wants to expand scrutiny of unfair trade practices by foreign aerospace companies, with a special focus on the business jet sector and Brazil's Embraer.

Senator Sam Brownback says he has approached the Senate Finance Committee to authorise a fact-finding report on the general aviation market by the US International Trade Commission.

The commission has no authority to enforce trade laws, but its assessments can influence trade policy. A similar report by the agency on the global market for large commercial aircraft preceded a 2004 case by the US Trade Representative against Airbus, which triggered a six-year-old trade dispute with the European Union.

embraer
 © Embraer
Senator Sam Brownback has voiced concerns over unfair trade practices by foreign aerospace companies, with a special focus on the business jet sector and Brazil's Embraer

In a speech on 24 August in Wichita, Brownback, who is running for governor of Kansas, voiced suspicions about Embraer's rapid rise in the business jet market: "They've got 15% of the market space after a flat dead start in 2002.

"To get 15% of the [business jet] market in that period of time, I don't think you can do without heavy subsidisation by the Brazilian government."

Embraer denies receiving illegal subsidies, including launch aid, from state funds. A public stock offering financed the $1 billion development programme for E-Jet commercial aircraft family, the company says.

The company also says that Brazil "has revamped its export financing programmes which have been judged fully compliant" by a World Trade Organisation panel.

In a recent commentary posted on his web site, Brownback says the ITC should investigate "foreign government actions or subsidisations" in the business aircraft sector, to include Canada and Europe as well.

The ITC report should also analyse "significant developments and trends that may affect the future competitiveness of the US business jet aircraft industry", Brownback wrote.