The long-running war between Bombardier and Embraer over subsidies has flared up again, with each accusing the other of failing to comply with World Trade Organisation (WTO) rulings, and again referring the matter back to the international body.

The latest battle centres on counter-claims that the regional aircraft giants failed to meet a 19 November deadline for compliance with the WTO's March ruling that Brazil's ProEx and Technology Partnership Canada subsidies were illegal - a finding upheld by its appelate body.

Canada contends that Embraer is required by the WTO to withdraw $3.7 billion of proposed ProEx subsidies on outstanding orders and options exported after 18 November. Embraer disputes this, and says retrospective action would expose it to legal actions by banks. "The old contracts signed with ProEx involve around 700 aircraft and there is no risk of an about-turn," says Embraer president Mauricio Botelho.

Embraer accuses Bombardier of "imperialistic ambition", and is not satisfied with Canada's promised withdrawal of $300 million of TPC research aid. "The ProEx interest bar has been raised in line with OECD rates, but Canada has been vague about TPC and has not gone far enough," it says.

The WTO is expected to convene a "compliance panel" in early December, with 60 days to compile a report - after which the two parties will have 15 days to fall into line or face as yet undetermined retaliatory action.

Source: Flight International