These rules were made by the industrialised countries

Henrique Rzezinski Embraer

Brazil is complaining about a $1.1bn low-cost loan provided by the Canadian government to ensure the sale of 75 regional jets made by Bombardier to Air Wisconsin, a subsidiary of United Airlines.

Bombardier and Brazil's Embraer are deadly rivals in the fast-growing regional jet market, which involves commercial planes with less than 100 seats.

Canada has already won a case against Brazil in the World Trade Organisation, arguing that Brazil's export subsidies give Embraer's planes an unfair advantage in international markets.

And Bombardier said it would have been at a "distinct disadvantage" if Canada had not provided the loan subsidy.

But Embraer is angry that its attempt to produce an advanced technology product is being stymied by its rivals.

"The problem is that there is no level playing field," said Embraer spokesman Henrique Rzezinski.

" It's simply that these rules were made by the industrialised countries."

The WTO has ruled that Canada has the right to impose $1.4bn in trade sanctions against Brazil in retaliation for its export subsidies - but so far Canada has been reluctant to impose the penalties for fear of exacerbating the situation.

Brazil leads opposition

Brazil is already positioning itself as the country which is most reluctant to endorse an unfettered Free Trade Area of the Americas, which is the central trade policy objective of the Bush administration.

Mr Bush is scheduled to speak on the subject before the Organisation of American States on Tuesday before travelling to Canada on Friday for the start of the summit.

On Monday President Bush said that it could be done, but "it's going to require a lot of hard work and effort to do so," and renewed his call to gain fast-track negotiating authority from the US Congress.

The FTAA proposal, which would be based on the existing Nafta agreement between the US, Canada, and Mexico, would create a trade area with 784m people and a GDP of $11 trillion.

Last week US proposals to bring forward the starting date for the FTAA by two years to 2003 were rejected after Brazilian opposition.

Brazil wants to strengthen its own regional trade pact, Mercosur, which links its economy with those of Chile and Argentina first, and give space for its own industries to grow.

Embraer the star

Embraer is precisely the kind of industry Brazil wants to nurture and develop.

It is Brazil's largest exporter, with $2.3bn in sales and a back order book worth $25bn for more than 1,000 planes.

The privatised company employs 10,000 in a factory near Sao Paulo, and makes $300m in profit.

It is planning to introduce a new range of models, including the ERJ170, competing in the 70-100 seat market, and the Legacy, a long-range corporate jet which will compete against Bombardier's Global Challenger.

Analysts believe that it has a chance to overtake Bombardier, the world's third largest aircraft manufacturer, particularly if it is also able to expand its military business.

Bombardier, which employs 28,000 in Canada and 50,000 world-wide, also makes transportation equipment. It owns Shorts in Northern Ireland and Learjet in the United States.