The world's two remaining manufacturers of regional jets are at it again. Brazil's Embraer is charging that Canadian government subsidies for purchases of Bombardier aircraft constitute unfair trading practices.

The World Trade Organization (WTO) agrees. Last week it upheld a panel ruling that Brazil could impose counter trade measures totaling $248 million against Canada. The ruling was issued by the WTO's Dispute Settlement Body (DSB) following Canada's rejection of an earlier DSB decision. However, despite the WTO's decision, Embraer is concerned about comments made by Canadian officials that they would "go as far as we have to" to keep Bombardier competition in the RJ marketplace.

Mauricio Botelho, president and CEO of Embraer, said that the WTO decision "is confirmation of the fact that Canada is subsidizing its regional jet industry," and that the trade body's rejection of a Canadian argument that subsidizing orders for CRJs was appropriate "because it was designed to meet a competing Brazilian offer."

Botelho called the decision "the final stage" in the long running dispute, started when Brazil began offering export credits to purchasers of Embraer aircraft, significantly reducing the purchase price. Brazil subsequently modified its program so that it was acceptable to the WTO. He stated that Embraer is concerned about comments by Bernard Landry, the premier of Quebec Province where Bombardier is headquartered, that the government of Quebec would do whatever it takes to keep Bombardier competitive, "including loan guarantees in the ball park of $3 billion." Landry argued that the guarantees are matching what Brazil is doing.

However, a Bombardier spokeswoman told C/R News that Landry's comments "were taken totally out of context" and that his statement clearly indicated that any support of the Canadian or Quebec government would be within the approved parameters of the WTO decision.