Embraer in talks with Brazil about WTO challenge on CSeries

Embraer CEO Paulo Cesar Silva

Embraer CEO Paulo Cesar Silva

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Embraer is in discussions with the Brazilian government about the possibility of challenging the Québec provincial government’s $1 billion investment in Bombardier’s CSeries program through the World Trade Organization (WTO), according to Embraer CEO Paulo Cesar Silva.

Speaking to ATW and Aviation Week editors, Silva reiterated his objection to the government investment in the CSeries program, in which Québec now has a 49% stake. Silva believes the government investment played a role in Delta Air Lines choosing the CSeries over an Embraer aircraft when placing a firm order for 75 CS100s earlier this year.

“I continue to be very unhappy with this,” Silva said. “We are very worried about the situation because this is causing a huge disruption in the market. We are competing no longer with Bombardier, we are competing with the Canadian government that is now manufacturing aircraft through the CSeries program. It is very unfair.”

He added that Brazil-based Embraer is “talking very seriously with our government about moving to a different level of conversation, a more disruptive conversation between Brazil and Canada. Of course, it’s not up to Embraer. It’s up to Brazil and our government to do it at the WTO. We are definitely talking with our government, and they are worried about it.”

But Silva conceded that the WTO “is not efficient at all” as a forum for settling aircraft subsidy disputes, citing the ongoing back-and-forth at the WTO between the US and EU over alleged Airbus and Boeing subsidies. “So, as an aircraft manufacturer, I would like to have [a global] industry agreement [on subsidies],” he said. “Maybe after this Airbus-Boeing dispute, [there can be] an industry agreement.”

A universal agreement on aircraft subsidy rules “is a possibility,” Silva said, adding, “As an industry, I think it’s something we should look at.”

Speaking to Aviation Week in July at the Farnborough Airshow, Québec premier Philippe Couillard defended investing $1 billion for a 49% stake in the CSeries program. “There is not a cent of subsidy in this government intervention,” he said. “It’s equity and warrants, similar to what any other investor would have done. I know the competitors will not be very happy, but I challenge anyone to find anything [that would indicate this is not a] typical commercial investment.”

Aaron Karp aaron.karp@penton.com

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