Canadian Prime Minister Jean Chretien has warned his government will continue to "fight fire with fire," in its dispute with Brazil over aircraft subsidies.

The statement is the strongest message yet that Ottawa is prepared to finance Bombardier's bid to supply up to 75 Bombardier CRJ200s to Northwest Airlines (Flight International, 29 May-4 June). Ottawa has already agreed to loan up to C$1.7 billion ($1.1 billion) to Air Wisconsin to buy Bombardier CRJs in retaliation against Brazil's refusal to satisfactorily amend its Proex funding scheme.

Chretien says that as long as Brazil continues to offer cut-rate financing to potential customers to purchase Embraer aircraft, Canada will do the same. The countries have been locked in a dispute over subsidies which has resulted in the World Trade Organisation finding in Canada's favour.

"In the case of Embraer, they are breaking the rules of the WTO in order to have a bigger share of the market and this is our response: we will fight fire with fire," says Chretien.

Canada's trade minister says no final decision has been made on the Northwest loan, which could be worth up to C$1.5 billion. The Brazilians have already protested to the WTO over the Air Wisconsin deal, which, deliberately, is exactly modelled on the latest version of Proex.

Source: Flight International