US escalates trade dispute with UK and Canada over Bombardier
08 October, 2017, 00:46
US trade officials on Friday ruled that Bombardier Inc. unfairly discounted sales of a new jetliner, setting up a battle as to whether Boeing Co. suffered any harm from competing with its Canadian rival.
The decision is expected to heighten trade tensions which flared last week after the U.S. announced a preliminary duty of almost 220% for subsidies Bombardier received, which was well above the 80% duty Boeing sought in its complaint.
The punitive tariffs will now have to be approved by the US International Trade Commission (ITC) early next year.
Bombardier can appeal the decision to a U.S. court or to a dispute-resolution panel created under the North American Free Trade Agreement (NAFTA).
The US investigation into Bombardier's C-Series aircraft, key parts of which are made in Belfast, follows a complaint from Boeing that the planes received unfair state subsidies.
Bombardier shares dipped 2 cents to C$2.18 immediately after the announcement but have since recovered. The duties would be applied to Bombardier's CSeries when delivered to Delta Airlines from the spring of 2018.
FILE PHOTO: A plane flies over a Bombardier plant in Montreal, Quebec, Canada on January 21, 2014. "The laws governing global trade are transparent and well known".
The case is a victory for USA rival Boeing Co.
Foreign Affairs Minister Chrystia Freeland said she was extremely disappointed, but not surprised given the "baseless and absurdly high" duties last week.
"Boeing had the chance to compete with Bombardier for Delta's purchase of aircraft in this size range, but Boeing's only proposed alternative to the CS100 was to offer Delta used Brazilian-made regional jets", Delta said in an e-mail statementcited by Bloomberg, explaining that Boeing simply doesn't produce aircraft of the size range it wanted.
Canadian-owned multinational Bombardier, which employs more than 4,000 people in Belfast, has been hit by a proposed 80% levy on exports to its southern neighbour, the US Department of Commerce has confirmed.
"The United States is committed to free, fair and reciprocal trade with Canada, but this is not our idea of a properly functioning trading relationship", said U.S. commerce secretary Wilbur Ross.
"We will continue to verify the accuracy of this decision, while doing everything in our power to stand up for American companies and their workers", Ross added.
But the industry is not so simple. "The quadrupling of the price tag effectively kills all sales of the CSeries in the US", the Seattle Times said. The program is expected to generate more than US$30 billion in business over its life and support more than 22,700 American jobs in 19 states.
The programme also received a billion USA dollars from the Canadian provincial government in Quebec in 2015 when its fortunes appeared to be ailing.
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