Canada is claiming victory in its long dispute with Brazil over regional aircraft export subsidies, but the extent of its victory is unclear.
A World Trade Oganisation (WTO) panel has ruled that Brazil's Proex export finance programme is an illegal subsidy and should be removed. Bombardier says Proex has allowed Embraer to reduce the price of its 50-seat ERJ-135 regional jet by $2.5 million.
Bombardier and the Canadian Government believe the WTO ruling applies to aircraft on order, but not delivered. Embraer disputes this, saying all existing Proex commitments will be maintained.
Bombardier accepts that the "damage has been done" in the 50-seat regional-jet market, but believes removal of Proex support will improve the prospects for its Dash 8 turboprop, by forcing Embraer to push up the price of its 37-seat ERJ-135. Brazil will contest the WTO ruling, meaning the earliest Proex could be removed would be September. Embraer will continue to use Proex, with "adaptations".
The WTO also ruled that two Canadian programmes, used in the development and sale of regional aircraft, constitute illegal export subsidies.
Source: Airline Business
