Labor unions urge Brazil to block Boeing-Embraer tie-up

BRASILIA (Reuters) - Labor union leaders on Monday accused Brazil's government of negotiating a tie-up between local planemaker Embraer SA EMBR3.SA and Boeing Co BA.N behind the backs of Brazilians, underscoring political tensions weighing on the delicate talks.

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“We are being left in the dark. No one is explaining to us why this is good for Brazil,” said Herbert Claros da Silva, vice president of the metalworkers union of Sao Jose dos Campos, told a Senate hearing. “We ask President Temer not to sell Embraer.”

Government officials and Embraer executives were invited but did not appear at the hearing called by Workers Party Senator Paulo Paim to discuss the talks between Boeing and Embraer for a potential partnership over which the government has veto power.

No other senators attended the hearing of the Senate’s human rights committee, although the Boeing-Embraer tie-up has drawn criticism from politicians that could complicate a deal as October general elections approach.

Embraer and Boeing declined to comment on the hearing. A spokesman for the Defense Ministry, which has led a government working group vetting the deal, said the hearing was about jobs and not a defense matter.

The Brazilian government, which privatized Embraer in recent decades but still holds a decisive golden share, has resisted the outright sale of Embraer to Boeing due to concerns over the loss of sovereign control over its defense programs.

The two companies are reportedly seeking government approval for a compromise agreement that would involve Boeing investing in a third, newly created company including Embraer’s commercial aircraft division but excluding its defense unit.

Boeing's proposed tie-up with Embraer, the world's third-largest planemaker, would give it a leading share of the 70- to 130-seat market and create stiffer competition for the CSeries program designed by Canada's Bombardier Inc BBDb.TO and backed by European rival Airbus SE AIR.PA last year.

Union leader Silva acknowledged at Monday’s hearing that a tie-up would initially be a boon for Embraer as Boeing would help market its shorter-range jets around the world.

But he said many of the 14,000 workers at Embraer’s plants in Sao Jose dos Campos, half of which are unionized, were worried about their jobs a decade down the road if they end up working for a U.S.-based company.

Reporting by Anthony Boadle; Editing by Lisa Shumaker