Brazil minister says Canada signals it wants deal on Bombardier funding

By Alonso Soto and Anthony Boadle

BRASILIA (Reuters) - Canada has signaled it is willing to negotiate with Brazil to resolve a feud over funding for jet maker Bombardier Inc that threatens to turn into an international trade dispute, Brazilian Trade Minister Marcos Pereira said Thursday.

In December, Brazil said it will start proceedings against Canada at the World Trade Organization over what it calls unfair support worth $2.5 billion for Bombardier from the province of Quebec.

Pereira said Canada's International Trade Minister Francois-Philippe Champagne told him at the World Economic Forum in Davos last week that his government wants to discuss the case.

"He (Champagne) signaled, very clearly, that he would like to talk to try to find a solution before litigation materializes," Pereira said.

Brazil has argued that Quebec's investment coupled with plans by the Canadian government to inject $1 billion into Bombardier's CSeries jet program has allowed aggressive discounts hurting Brazilian rival Embraer SA, along with Boeing Co and Airbus Group SE.

Asked for a reaction to Pereira's comments, Champagne spokeswoman Anne-Louise Chauvette said by e-mail that "at this time, no dispute settlement proceedings have been filed on this matter at the WTO".

In July, Canadian Prime Minister Justin Trudeau brushed off Brazil's concerns as evidence that rivals were afraid of strong competition from the CSeries.

Bombardier and Embraer have battled for decades over the regional jet market. The plane makers traded accusations of unfair subsidies in the late 1990s that their countries hashed out at the WTO.

Pereira said he is confident the trade row will not derail talks between Canada and the South American trade bloc Mercosur to start free trade negotiations. The bloc is made up of Argentina, Brazil, Paraguay and Uruguay.

"I believe both countries are mature enough to separate both issues," Pereira said.

(Additional reporting by Allison Lampert in Montreal; Editing by David Gregorio and Chizu Nomiyama)