Canada set to slap sanctions over jet dispute with Brazil
WebPosted Wed Nov 29 21:20:59 2000
OTTAWA - After talks broke down Wednesday in Rio de Janeiro, the Canadian government said that the time for talking is over and the time for sanctions is here. Canada will impose sanctions of up to $344 million a year on Brazil over its ProEx subsidies to jet makers.
Last August the World Trade Organization (WTO) granted Ottawa permission to impose sanctions. The purpose of the sanctions is to compensate Canada for Brazilian export subsidies for regional jets made by Embraer.
The conflict focused initially on government subsidies to both Embraer and Bombardier. The WTO ruled that both countries' programs violated international open trading rules. Both countries modified their programs, but still accused each other of breaching WTO rules. In July, a WTO panel ruled in Canada's favour.
Brazil is supposed to unveil a new subsidy program next month, but Canadian government officials still contend that the new ProEx replacement program is unfair.
Brazil's Embraer, the world's fourth largest civil aircraft maker, competes directly with Bombardier Inc., the number three aircraft maker worldwide. Bombardier controls just over half of the regional jet market, which is the fastest growing segment of the aircraft market. The more efficient regional jets hold between 35 and 90 passengers and are used on shorter-haul flights between urban centres.
Before it can apply the sanctions, Canada must apply to the WTO's Dispute Settlement Body (DSB) for permission. The country must request permission before the DSB meets on Dec. 12.
No other talks are planned between the two parties.
Bombardier's shares closed down down 50 cents to $22.90 on Wednesday.