The aerospace industry in general has a history of being subsidized by their home governments, be it Airbus or Boeing for large jets and Bombardier and Embraer for regional jets. The US-EU dispute over the subsidies given to Airbus and Boeing is a similar case in that it involved the aerospace industry, however, they came to an agreement that was WTO compliant and at the same time allowed for a certain amount of subsidies. Canada and Brazil, on the other hand, are in the middle of a trade war, with Canada having recently banned the importing of Brazilian beef on the ostensible grounds of preventing mad-cow disease.
The Brazil-Canada dispute has its genesis in a new segment of the civilian aircraft market ? regional jets flying routes less than 1,000 km in an average travel time of an hour. Regional jets are relatively new and have been driving the smaller propeller-driven aircraft out. This is largely due to two reasons: As airlines expanded using the hub and spoke system, they came to rely on regional jets to feed traffic to the hubs. Another reason is consumer demand for quieter, faster and versatile airplanes, which fits the regional jets perfectly.
Bombardier, based in Montreal, has emerged as a global player and national champion, ably assisted by the Government of Canada as well as the Province of Quebec. The government of Canada has taken a keen interest in developing a domestic aerospace sector. It has set up various programs such as TPC to help fund the hi-tech sector, including aerospace. Embraer has emerged from being a state-owned company that is governed by private law into the leader in regional jet sales. It has had some bad times in the past, but is now firmly in the black.
The basic dispute between Canada and Brazil is over th ...