Fairchild Swearingen Corp., alleging unfair competition, has asked the U.S. government to impose duties on imports of a Brazilian airplane popular with increasing numbers of commuter airlines.
Fairchild Swearingen is a subsidiary of Fairchild Industries of Germantown, Md.
In a petition to the International Trade Commission and the Commerce Department on Monday, Fairchild Swearingen charged that Empresa Brasileira De Aeronautica S.A., commonly known as Embraer, is being subsidized heavily by the Brazilian government, enabling it to offer preferential financing terms to U.S. commuter airlines buying its 18-passenger Bandeirante aircraft. Embraer is 51 percent owned by the Brazilian government.
As a result, Embraer's share of the U.S. market is growing at the expense of Fairchild Swearingen's 19-passenger Metro III and Beech Aircraft's 19-passenger Beech 99, the petition charges. The petition also says that Embraer delivered only two of its planes in the United States in 1978, but delivered 37 last year, giving it a 33 percent share of the U.S. market in aircraft of that size.
"In the face of increasing market penetration by Embraer, Fairchild has experienced lost sales, losses, underemployment, and reduced production," the petition contends.
Fairchild alleged that Embraer has offered a 9 percent interest rate to U.S. customers to finance their new aircraft, while Fairchild's U.S. customers would have to pay between 18 and 22 percent to finance their acquisition of the U.S.-built Metro aircraft. "The preferential financing in effect amounts to a price discount on each Bandeirante of 29 percent on average in a market where price and financing are extremely important," Fairchild said .
Under law, the U.S. International Trade Commission has 45 days to decide whether there is a reasonable indication that an industry in the United States is being injured or being threatened because of the alleged subsidized imports from Brazil.
If it decides in the affirmative, the Commerce Department then will take over to decide whether the imports, in fact, are being subsidized. If that answer is affirmative, the ITC will take the case back for its second finding: whether the domestic industry has been injured or is threatened by injury.
If Fairchild's contentions are upheld, under the Trade Agreements Act of 1979, the United States would impose countervailing duties on U.S. imports of Bandeirante aircraft equal to the amount of the subsidies received by Embraer from the Brazilian government. Fairchild estimated that the amount of the countervailing duties would be between 39 and 44 percent of the price of the imported aircraft.