Bombardier's Airbus deal ‘will get around 300% US government tariff’
Bombardier and Airbus’ plans to build planes on US soil is likely to avoid massive multi-billion pound tariffs, according to top academics.
Airbus is taking a majority stake in the Canadian company’s C Series aircraft, which are part-made in Belfast.
Thousands of Northern Ireland jobs looked to be at risk after a complaint from rival Boeing resulted in the US administration imposing a provisional 300% tariff on each of the aircraft sold there, potentially scuppering a multi-billion pound deal with Delta Air Lines for up to 125 jets.
Professor Steve Maguire, a lecturer and member of the UK Trade Policy Observatory at the University of Sussex, told the Belfast Telegraph it’s likely the deal will circumvent potential tariffs.
“I think it probably will for two reasons. One, is politics. Airbus in Alabama, and it is going to be pretty tough for Boeing to argue... those American workers, that plant is full of American workers, who pay tax, and many would have voted for Donald Trump.
“It’s a political thing. These are American workers.
“Another thing is, in respect of tariffs, there is a plurilateral agreement with the World Trade Organisation (WTO).
“It removed all tariffs on trade in parts... if it is still in place.”
But Boeing general counsel Michael Luttig has said: “Any duties finally levied against the C Series... will have to be paid on any imported C Series airplane or part, or it will not be permitted into the country.”
Professor Steve Maguire said: “I presume Airbus will not move the wing production (from Belfast) and I can’t see how they would move it easily. That would suggest for the next few years it is safe.
“They have got a hell of a deal off Bombardier. The British government has eaten all of the development costs.
“It gets the upside — if it doesn’t work, my understanding is, they can pretty much walk away.”
Meanwhile, colleague, Dr Peter Holmes, also of the UK Trade Policy Observatory, said, following one conversation with staff at the ITC (International Trade Centre), that “it will be very likely” that the aircraft would be counted as American in origin, thus avoiding the tariffs. “Basically, coming out of an American factory you can’t put anti-dumping duties.
“But as the Financial Times said, they might try and go for the parts and components element.
“My guess is that any jobs which are going to displaced would be ones in Canada.”
Professor Maguire added: “The Americans could impose tariffs on the wings, and presumably the UK would fight and oppose that. But there is a plurilateral agreement, I understand, and parts generally tariff free.
“Both these companies are experienced. They know it takes a long time, and very rarely results in fines that damage business.”