Fri, Dec 22, 2017 - Page 10 News List

US administration sides against Bombardier Inc


US President Donald Trump’s administration on Wednesday recommended steep anti-subsidy duties on Bombardier Inc’s CSeries jets, setting up the next round of a fierce international trade dispute between the US and Canada.

The US Department of Commerce’s announcement to impose duties of nearly 300 percent stems from a complaint by Boeing Co that Bombardier had been unfairly and illegally subsidized by the Canadian government, allowing the planemaker to dump its newest jetliner in the US market below cost.

“Today’s decision validates Boeing’s complaints regarding Bombardier’s pricing in the US, pricing that has harmed our workforce and US industry,” Boeing said in a statement on the decision, which was generally expected within the aerospace industry.

Delta Air Lines Inc, 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 US$79.5 million, according to list prices, or some US$5.9 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 US, based on Boeing’s assertion that Delta received the planes for US$20 million each, well below an estimated cost of US$33 million and what Bombardier charges in Canada.

Bombardier criticized the US decision as out of touch, citing the Canadian planemaker’s plan to team up with European Airbus SE to launch assembly of the CSeries from a production line in Mobile, Alabama, making it a domestic product for US buyers.

“Unfortunately, the Commerce Department decision is divorced from this reality and ignores long-standing business practices in the aerospace industry, including launch pricing and the financing of multibillion-dollar aircraft programs,” Bombardier said in a statement.

The US penalty against Bombardier is only to take effect if the lesser-known US International Trade Commission (ITC) rules in Boeing’s favor — as it so far has — in its final decision expected early next year.

The Canadian government is to consider its next steps and options for appeal, Canadian Minister of Foreign Affairs Chrystia Freeland said.

“We are steadfast in our determination to defend Canadian companies and workers against protectionism,” Freeland said in a statement.

Boeing has failed to demonstrate that it is being threatened with injury by the CSeries “in a market segment it exited more than a decade ago,” Freeland said.

At a contentious hearing of the ITC on Monday, Canada said 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 open its trade case.

US-Canadian trade relations have also chilled over disputes about Canadian softwood lumber and US milk protein products.

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