By Todd Benson
SAO PAULO (Reuters) - Embraer (ERJ.N: Quote, Profile, Research, Stock Buzz) is closely watching Mitsubishi's plans to develop a regional jet and will urge Brazil to challenge Japan at the World Trade Organization if the project benefits from illegal government subsidies, the Brazilian company's chief executive said on Monday.
"Japan is a member of the WTO, and Brazil is not going to sit by and watch a government subsidize a commercial product," Embraer CEO Frederico Fleury Curado said at the Reuters Latin America Investment Summit in Sao Paulo.
Last week, Mitsubishi Heavy Industries Ltd (7011.T: Quote, Profile, Research, Stock Buzz) unveiled a $1 billion project to build a regional jet with 70 to 90 seats, taking a big gamble in a market dominated by Embraer (EMBR3.SA: Quote, Profile, Research, Stock Buzz) and Canada's Bombardier Inc (BBDb.TO: Quote, Profile, Research, Stock Buzz).
Though Mitsubishi plans to finance most of the project itself, it said it would also seek cash from the state-owned Development Bank of Japan, automaker Toyota Mortor Corp (7203.T: Quote, Profile, Research, Stock Buzz), and trading houses Mitsui & Co (8031.T: Quote, Profile, Research, Stock Buzz), Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) and Sumitomo Corp (8053.T: Quote, Profile, Research, Stock Buzz).
"It's not acceptable for someone to develop a new product with money from Japanese tax payers. It's not acceptable at all, because in Brazil that does not happen," said Curado, a longtime Embraer executive who became CEO a year ago.
"I can't speak for the Brazilian government, but I can say that we will encourage the government to monitor this issue very closely," he added.
Still, Curado stressed that he does not see the Japanese jet as an immediate threat since it won't be ready to take to the skies before 2013.
"I don't think their timing is ideal," he said. "By the time the Japanese jet is ready to hit the market it's going to be at the wrong end of a wave of products with new technology that are going to be a step ahead." Continued...
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