WTO Rules Against Canadian Loans for Bombardier

On October 19, the World Trade Organization (WTO) ruled against a federal low-interest loan of $1.7 billion to Air Wisconsin so it could buy 150 commuter aircraft from Bombardier, stating that the practice violates trade rules. The WTO had earlier ruled against a similar practice by Bombardier's chief competitor, Brazil's Embraer.

As the over-supply crisis in the aircraft industry intensifies, competition for markets is becoming extremely fierce and the aircraft manufacturing monopolies are increasingly appealing to national governments to assist them to be more competitive. The government of Brazil has offered low-interest loans on a number of occasions to prospective buyers. In response, Bombardier appealed to the Canadian government, which guaranteed the $1.7 billion loan to Air Wisconsin and another $1.2 billion loan to Northwest Airlines to buy 75 regional jets from Bombardier.

Both the Canadian and Brazilian governments have declared that they will continue the illegal trade practice, despite the WTO rulings.