A few weeks back we discussed on this FPA blog how Brazil was likely to choose the French candidate as its new fighter jet over its American and Swedish rivals. Part of the decision to choose the French Rafale jet was based on past restrictions by the US on Embraer and Brazil to sell its Super Tucano plane to Venezuela. The US claimed the Super Tucano could not be sold to Venezuela because it had US components that they did not want sold to Venezuela for security reasons. Restrictions on equipment from the US were not the main reason Brazil is interested in the French Rafale, but it did factor into its rationale for choosing the French fighter.
Recently, the USAF cancelled its order of $355 million to purchase the Super Tucano from Embraer and its American partner to the surprise of everyone involved. While there is no clear evidence that the cancellation was a possible outcome of Brazil’s choice of the French fighter, protests from the companies involved in the contract in Brazil and the US seem to be quite serious with the US Department of Justice and the USAF both conducting investigations into the contract. Despite Embraer and its US partner winning the contact late last year, the competitor to the contract has challenged it and the Department of Justice and USAF officials have taken to looking into some details in the agreement and have cancelled the contract for the time being. Despite this, the USAF still expressed their interest for the Super Tucano and hoped that these planes would eventually equip their Afghan allies in that region. Embraer and its US partner expressed their strong dissatisfaction with the recent cancellation and said they do not know what issue or detail in the agreement caused the investigations. The Brazilian government expressed its position in its own strong words, supporting Embraer and the Super Tucano team in the US.
While legal contacts for the international sale of any large equipment is usually complicated due to the nature of dealing with two legal systems that often try to benefit one party against the other, government procurement contracts linked to defence and national policy makes these legal agreements subject to political whims. Special interest groups for large industrial contracts always have a great deal of influence over the choice of contact, especially in a large industry like aviation that can produce jobs for more than one generation. Factoring in the pressures of the US-Brazil relationship, the view of the US in the Southern Cone and past issues like the Tucano sale to Venezuela, the Brazilian government’s reaction should be no surprise to anyone involved in the agreement. Whether it is Embraer versus a smaller US firm or giants like Boeing and Airbus eternally waltzing in various court battles, legal challenges seem to make a lot of money for any lawyer who chooses to service the aviation industry.