Brazil drops WTO suit against Canada over aircraft subsidies

World Trade Organization (WTO)

The Brazilian government announced on Thursday that it has formally withdrawn its 2017 suit against the Canadian government at the World Trade Organization (WTO) over commercial aircraft subsidies.

The South American country challenged the subsidies granted by the Canadian government for the launch, development and production of the C-Series aircraft by Bombardier, a Canadian manufacturer of business jets, the Xinhua news agency reported.

According to the Brazilian government, the more than $3 billion granted distorted competitive conditions in the commercial aviation market and caused serious losses to Brazilian manufacturer Embraer.

“Brazil remains convinced of the soundness of the arguments presented in the case. However, litigation before the WTO has proven ineffective in remedying the impacts of such large-scale subsidies on the commercial aircraft sector,” Brazil’s Foreign Affairs Ministry said in a statement, adding that the aviation industry has changed since the dispute was initiated.

Bombardier’s withdrawal from the commercial aviation market, in particular the sale of its C-Series program to European company Airbus, which moved part of its final production to the US, “minimised the chances of obtaining a resolution to the litigation against Canada,” the statement said.

“With the conclusion of the litigation, Brazil will now focus with renewed impetus on launching negotiations for more effective disciplines on government support of the commercial aviation sector, covering the launch, development and production of commercial aircraft and related technologies,” the Foreign Ministry said.

“Negotiating more effective disciplines is the best way to restore a level playing field in the commercial aviation market, a sector that generates $500 billion annually and one million jobs worldwide,” the Ministry added.

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