This represents Canadian capitalists' biggest trade war ever. The government here had taken retaliatory measures twice before under WTO rules--against the European Union and Australia. Both cases, however, involved relatively small trade sanctions.

The Canada-Brazil conflict stems from the fierce competition over the lucrative market for regional jets between Empresa Brasileira de Aeronautica (Embraer) and Montreal-based Bombardier, the world's third-largest airplane manufacturer.

In early May, the WTO sided with Bombardier and asked the Brazilian government to end its financing program for planes sold by Embraer. Within hours of that decision, officials in Ottawa, under pressure from Bombardier, pulled out of high-level talks with Brazilian representatives over the dispute and said they were asking the WTO for permission to slap Brazil with sanctions.

The Brazilian government had been offering to eliminate subsidies on future sales of regional jets, while refusing to undo contracts signed in the past for jets that have not been delivered. "It is not a question of wanting to or not. We have to honor the sales contracts already signed," said José Alfredo Graça Lima, a Brazilian government official.

The Brazilian government offered to compensate Canadian business and Bombardier for past sales by giving Bombardier privileged access to Brazilian state contracts. Ottawa and Bombardier rejected the offer as insufficient and said Brazil must promise to stop selling planes as a condition of any further talks.  
 
'Unprecedented' trade war
"This is unprecedented in the history of the World Trade Organization [and its predecessor]," said Valdemar Carneiro Leao, director of the economic department of Brazil's foreign ministry.

"Indeed, far from being a feud over airplane subsidies, the dispute appears to be shaping into a battle between north and south," noted an article in the Toronto Globe and Mail. The Brazilian government will be asking its partners in the Mercosur customs union--Argentina, Chile, Paraguay, and Uruguay--and other third world nations for support in its trade war with the Canadian government, said Brazilian foreign minister Luiz Felipe Lampreia.

In Canada, the Aerospace Industries Association is lobbying to win support for Ottawa's position among aerospace companies in Britain, France, Germany, Japan, and the United States. "This issue is larger than the interests of one company or one industry sector, or for that matter, Canada alone," commented the Association's president, Peter Smith.

Embraer said that Ottawa is being intransigent by not recognizing that Brazilian companies cannot offer direct financing to clients with rates as low as those provided by companies in more economically developed countries.

"We're definitely dealing with a very important issue for the future of emerging nations. One thing that countries like Brazil, trying to get into high-tech markets, must have is the right to compete and the same kind of playing field," said Henrique Rzezinski, Embraer's vice president of foreign relations.

None of the unions to which thousands of Bombardier employees in Canada are affiliated have yet commented officially on this trade war between an imperialist power and a semicolonial nation. However, in a March 2000 "Statement on International Trade," Canadian Labour Congress officials took a decidedly nationalist, pro-company stance. The statement denounced "the secretive decision-making process of the WTO that has resulted in attacks on Canadian industries," among which they cited the aerospace industry.

Michel Dugré is a member of the Union of Needletrades, Industrial and Textile Employees in Montreal.  
 
 
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