Brazil moves to retaliate in Canada jet dispute

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BRASILIA, Brazil, May 24 (Reuters) - Brazil said on Friday it was seeking
the go-ahead from the World Trade Organization to retaliate against Canada
in a six-year dispute over jet subsidies, a move that could result in Brazil
blocking $3.36 billion worth of Canadian imports.
Brazil's Foreign Ministry said it had asked the WTO to consider its request
for authorization to take "appropriate countermeasures" to subsidies given
by Canada to help its jet maker Bombardier Inc. (BBDb) win aircraft
contracts.

The request would be considered by the WTO's Dispute Settlement Body at a
June 3 meeting, the ministry said.

The WTO in February found that Canada had given illegal financing to three
airlines to purchase aircraft made by Bombardier, arch rival of Brazil's jet
maker Embraer (EMBR4)(ERJ).


That marked the first WTO defeat for Canada in a six-year trade battle with
Brazil over soft-loan subsidies to Bombardier and Embraer.

The WTO called on Canada to conform with WTO subsidy rules within 90 days, a
deadline that expired May 20. Earlier this week, Brazil said Canada had
failed to comply with the ruling.

Brazil said retaliation could amount to $3.36 billion in losses for Canadian
exporters to Brazil.

"The list of products that could be subject to the countermeasures
practically covers the entire universe of Canada's exports," the ministry
said in a statement.

At the June meeting, Canada can object to that value and a WTO panel would
resolve the dispute in 60 days.

Brazil reiterated it would continue to seek a mutually satisfactory solution
to the jet subsidies dispute in bilateral talks. Canadian International
Trade Minister Pierre Pettigrew said Wednesday he was optimistic Brazil and
Canada could resolve their dispute outside the WTO framework.

The WTO panel found that Canadian financing for Air Wisconsin -- a United
Airlines (UAL) affiliate -- Delta Airlines' (DAL) Comair and Spanish carrier
Air Nostrum amounted to prohibited export subsidies.


©2002 Reuters Limited.

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