The US commerce department on Wednesday finalised steep anti-subsidy duties on Bombardier’s CSeries jets, setting up the next round of a fierce international trade dispute between the United States and Canada.
The move could threaten thousands of jobs at Bombardier's operations in Northern Ireland, where parts of the CSeries jets are made, with trade union Unite arguing the new tariffs are unfounded. Bombardier employs some 4,000 people near Belfast, where it has operated for decades.
The commerce department's decision to impose duties of nearly 300 per cent stems from a complaint by rival Boeing that Bombardier had been unfairly and illegally subsidised by the Canadian government, allowing the planemaker to dump its newest jetliner in the US market below cost.
Bombardier on Wednesday evening described the Boeing petition as “an unfounded assault on airlines, the flying public, and the US aerospace industry.” A spokesman added that the US commerce department’s decision ignored long-standing business practices in the aerospace industry.
Delta Air Lines, the second largest US carrier by passenger traffic, has an order for 75 of the 100-to-150 seat CSeries jets. The aircraft starts at $79.5 million (€67 million), according to list prices, or some $5.9 billion (€4.9 billion) for the total order, but carriers typically receive steep discounts.
If imposed, the duties would more than triple the cost of a CSeries aircraft sold in the United States, based on Boeing’s assertion that Delta received the planes for $20 million (€16.8 million) each, well below an estimated cost of $33 million (€27.7 million) and what Bombardier charges in Canada.
“The fact is that the C Series simply does not threaten Boeing. Boeing did not compete in the Delta campaign. It has not made a plane sized to Delta’s needs for many years, since it stopped producing the 717 and 737-600,” the Bombardier spokesman said.
Final decision
The commerce department’s penalty against Bombardier will only take effect if the lesser-known US international trade commission (ITC) rules in Boeing’s favour, as it so far has, in its final decision expected in early 2018.
The decision follows US commerce secretary Wilbur Ross’s pledge to aggressively police unfairly traded imports to help shrink US trade deficits.
The move comes as the US, Canada and Mexico are involved in a three-way negotiation to modernise the North American Free Trade Agreement (Nafta). The rift between the two plane makers could, however, move to a larger stage as Canada weighs a complaint to the World Trade Organisation or through Nafta regarding the dispute.
At a contentious Monday hearing of the ITC, Canada warned that a positive finding of material harm to Boeing by the group could represent a possible violation of international trade agreements and prompt a formal objection.
Canada earlier this month scrapped plans to buy 18 Boeing Super Hornet fighter jets, underlining Ottawa’s anger over the trade challenge. Boeing has said it considered all potential risks before deciding to launch its trade case.
US-Canadian trade relations have also chilled recently over disputes over Canadian softwood lumber and US milk protein products.
– Reuters
