Export Subsidies Case Study

Topics: Government, Subsidy, International trade Pages: 3 (979 words) Published: September 27, 2014
When Do Government tax Azita Shafai Incentives become export subsidies Case Study TDMT 1353
1. Do you think Bombardier and Embraer are guilty as charged? Please explain your answer.

In my opinion I think Bombardier and Embraer are guilty as charged because both accuse each other of what they are individually guilty of. In that they both had government help in manufacturing aircraft whether it was a low interest federal loan or a subsidy, they are both guilty of breaching WTO subsidy practices. Although to their credit as smart businesses, subsidies are an important form of government intervention for aircraft manufacturers to meet deadlines. Unjustly though taxpayers are forced to gamble on the success of the subsidized projects. According to Marcio Chalegre Coimbra - Academia.edu. (n.d.). In my opinion I think both Bombardier and Embraer should collectively complain to the WTO to lift some of those subsidy practices. Because the legimitacy of subsidies lies only in that other countries are also subsidizing their own companies. Both of these manufacturers are competitive firms that demand government help only because the other is receiving government help as well. According to Marcio Chalegre Coimbra - Academia.edu. (n.d.). Both Embraer and Bombardier have been ruled against by the WTO in breaking subsidy practices. Which can only mean that for them to stay competitive and profitable they must continue to take low interest federal loans and subsidy’s to remain in business and meet those deadlines, which are hard to make without government intervention. Canada has already been awarded the right still unexercised to apply $1.4 billion in trade sanctions against Brazil over a seven-year period. According to Business - CBC News. Instead of affecting economic trade between the two countries, both Embraer and Bombardier should agree to a fair competitive business practice.

2. Do you...

References: Bombardier and Embraer can compete without government support | Marcio Chalegre Coimbra - Academia.edu. (n.d.). Retrieved from http://www.academia.edu/1099841/Bombardier_and_Embraer_can_compete_without_government_support
WTO says Canada 's Bombardier loans break trade rules - Business - CBC News. (n.d.). Retrieved from http://www.cbc.ca/news/business/wto-says-canada-s-bombardier-loans-break-trade-rules-1.314746
Four-year old Brazil-Canada dispute shows up failings of the WTO. (n.d.). Retrieved from http://www.twnside.org.sg/title/four.htm
GM Bailout Ends as U.S. Sells Last of ‘Government Motors’ - Bloomberg. (n.d.). Retrieved from http://www.bloomberg.com/news/2013-12-09/gm-bailout-ends-as-u-s-sells-last-of-government-motors-.html
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