Gov't of Canada to loan Bombardier $283M across 4 years

Gov't of Canada to loan Bombardier $283M across 4 years

Brazil – with support of Embraer – requests WTO consultation.

February 9, 2017
Eric Brothers, Senior Editor

Dorval, Canada –The Government of Canada will provide US$283 million in repayable contributions to Bombardier Inc. across four years to fund research and development for the Global 7000 business jet and ongoing activities related to the development of the C Series aircraft.

Navdeep Bains, Canada’s minister of innovation, science and economic development, said, “This contribution from the Government of Canada will secure the highly skilled, well-paying jobs for middle-class Canadians who work in the aerospace sector. It will also ensure that Canada has a strong, stable and competitive aerospace industry, which is a major driver of economic activity and innovation across the country.”

The aerospace industry provides more than 211,000 quality jobs for Canadians and US$21.3 billion annually in GDP to Canada’s economy.

As Canada’s largest aerospace company, Bombardier supports thousands of jobs in design, engineering, and manufacturing through its nation-wide supply chain of companies. Bombardier sources state the C Series program directly employs approximately 2,000 people, and at full production, the Global 7000 is expected to directly employ approximately 3,000 people.

The Government of Canada has a long-standing relationship with Bombardier, including nearly US$307 million to support the C Series and a Bombardier-led consortium to develop advanced systems for future aircraft – not counting sizeable investments by Quebec.

The repayable contribution to the Global 7000 jet will be made through the Strategic Aerospace and Defence Initiative (SADI), which supports research and development activities that help Canadian companies develop new technologies.

While the Global 7000 jet is to get the majority of the funds, another portion of this investment will be made through the government’s existing contribution agreements with Bombardier to support ongoing activities related to the development of the company’s C Series aircraft.

Brazil reacts
Shortly after the announcement, Brazil, with Embraer’s support, formally requested consultations with the Canadian Government at the World Trade Organization (WTO) in Geneva regarding subsidies benefiting Bombardier’s C-Series aircraft program.

Brazil’s request for consultations highlights the financial support provided to Bombardier, which a government source calculates to be more than US$4 billion from the Canadian national, provincial, and local governments.

“The subsidies that the Canadian company has already obtained and continues receiving from the Canadian government have not only been fundamental in the development and survival of the C Series program, but have also allowed Bombardier to offer its aircraft at artificially low prices,” said Paulo Cesar Silva, Embraer's CEO. “It is essential to restore a level playing field to the commercial aircraft market and ensure that competition is between companies, not governments.”

In December 2016, the Council of Ministers of the Brazilian Foreign Trade Chamber (CAMEX) had authorized the opening of dispute settlement proceedings against Canada. The request for consultations is the first stage of this proceeding and will allow access to additional information regarding the support given to Bombardier. The Brazilian Government’s understanding, shared by Embraer, is that the Canadian Government’s subsidies to Bombardier violate Canada’s WTO obligations.

Embraer’s new E2 jets compete for regional jet market share with Bombardier’s C Series.

Sources: Innovation, Science and Economic Development Canada; Embraer