SAO PAULO (Reuters) - A U.S. decision to slap steep anti-subsidy duties on Bombardier Inc (BBDb.TO) jets should bolster Brazil’s case against Canadian subsidies at the World Trade Organization, the chief executive of Brazilian planemaker Embraer SA (EMBR3.SA) said on Wednesday.
Embraer CEO Paulo Cesar Silva told Reuters in an interview the U.S. Commerce Department’s preliminary decision on Tuesday, which would effectively triple the cost of Bombardier’s CSeries jets sold in the United States, was important in defining the rules of fair competition in the global aerospace industry.
“I think this should influence the WTO case,” Silva said, referring to a WTO panel set to open on Friday. “How can we have a level playing field when the Canadian government is paying billions of dollars to support Bombardier’s strategic mistakes?”
Last month Brazil asked the WTO to set up a panel to settle its complaint that Canada has hurt Brazil’s commercial jet industry with an estimated $3 billion in federal, provincial and local subsidies for Bombardier’s CSeries program.
Embraer shares rose 2 percent in Sao Paulo on Wednesday, as the preliminary U.S. duties threatened effectively to bar the most direct rival of the Brazilian planemaker’s regional E-Jets from their biggest market.
The largest of Embraer’s next-generation commercial jets, the E195-E2, goes head-to-head with Bombardier’s CS100. The Canadian planemaker’s larger CS300 jetliner threatens the smaller end of the 737 lineup from Boeing Co (BA.N), which filed the U.S. trade complaint.
In China, where a Bombardier executive said on Tuesday that the company aims to announce new sales in coming months, Silva said Embraer is confident of defending its market share in the 100-seat segment, which currently stands at 85 percent.
Silva also confirmed that Embraer is considering setting up a factory in China for final E-Jet assembly, given the promising outlook for that market.
Such a plant could open in 2020 or 2021, depending on partnerships that Embraer would look to develop, he said.
From 2002 to 2011, Embraer made its ERJ145 regional jet through a joint venture with Chinese partners in Harbin, but the government resisted a push to produce the newer E190 there.
The Harbin plant converted to making Embraer’s Legacy business jets in 2012 and closed in June 2016.
Reporting by Brad Haynes; Editing by Daniel Flynn and Tom Brown