A six-year fight between Brazil and Canada over state subsidies to each country's aviation industry looks set to be settled after a World Trade Organisation ruling in Brazil's favour.

The ruling allows Brazil to impose $248m (�156m) in "retaliatory sanctions" on Canada for illegal subsidies to three small airlines to get them to buy planes from Quebec-based Bombardier.

For Brazil, Santos-Dumont is the "father of aviation"

But the amount is far less than the $3.36bn Brazil was asking for - and in any case is unlikely to be applied.

Canada already has permission for $1.4bn of sanctions of its own but has never activated them. Now that both sides have weapons in their arsenal, a final settlement is the most likely outcome.

Big timers

Bombardier and Brazil's Embraer are the kings of the short-haul jet market.

Between them, the two have seen off or swallowed up almost all the competition including names such as Shorts of Northern Ireland, Fairchild of the US and Germany's Dornier.

Brazil is particularly proud of its aviation industry.

Patriotic Brazilians insist the Wright Brothers' experiment in 1903 was never independently confirmed, and Brazilian Alberto Santos-Dumont's 1906 take-off in France should really count as the first powered manned flight.

Both sides recognise that this litigation carried a high cost for bilateral relations Clodoaldo Hugueney Chief trade negotiator, Brazil

And Brazilians' ire was further stoked by the recent cancellation by Colombia of an order for Embraer light attack aircraft.

The anger resulted from alleged interference by a US general, who reportedly threatened to pull aid out of Colombia if the government did not spend the money on refitting US planes instead.

Honours even

Given the importance of the industry to both Brazil and Canada, accusations of illegal state aid come as little surprise.

The aviation row even got dragged into a beef scare in 2001, when Brazil suspected that Canadian anger over Embraer subsidies triggered a beef ban supposedly imposed over "mad cow disease" fears.

But after six years and several cases - and with the count standing at one victory apiece - it seems both are ready to call it quits.

"I believe that both countries will benefit greatly when we will have put this dispute behind us," said Canada's International Trade Minister, Pierre Pettigrew.

And Brazil's chief trade negotiator Clodoaldo Hugueney was also positive.

"Both sides recognise that this litigation carried a high cost for bilateral relations," he said.

"To the extent that we can find a solution, the way will open to new relations with Canada."