Belfast Telegraph

Bombardier, Boeing dispute: Canadian firm's hope after US hearing on tariff setting

By Jonathan Bell

Bombardier has expressed its hope for overturning a possible 300% tariff on the sale of its C-Series jets in America.

Rival Boeing has petitioned the US Department of Commerce to sanction the firm. It claims the Canadian firm has benefited from "unfair" government subsidies allowing it to sell the C-Series jet at lower than cost price.

At a hearing on Monday of the US International Trade Commission, Boeing chief executive Kevin McAllister claimed Bombardier was able to sell the 125-seater new for a used price.

"Subsidised competitors don’t face the same market realities we do.  Our fortunes rise or fall based on the business decisions we make.  There’s no one there to bail us out if we misstep," he said.

Bombardier, however, has consistently rejected the claims.

Wings for its C-Series planes are made in Belfast and Bombardier has said the future of the plant is reliant on it sales. In October the manufacturer announced a link-up with Airbus allowing it to produce the planes in American in a bid to get around any tariff.

Following Monday's hearing, Mike Nadolski of Bombardier said: "We are very pleased with the evidence presented today by Bombardier, Delta, and others demonstrating that Boeing’s petition is an unfounded assault on airlines, the flying public, and the US aerospace industry. That has been true since the start of the investigation, and recent developments make it even clearer.

"Most significantly, the Bombardier and Airbus C Series partnership will include the construction of a new US manufacturing facility in Alabama. This facility will provide US airlines with a US-built plane thereby eliminating any possibility of Boeing being harmed by imports."

Bombardier estimates that the new Alabama assembly line will add 400 to 500 direct jobs in the United States, along with thousands more indirect and induced US jobs. It will also bring approximately $300 million in new foreign direct investment to the United States and add to the 22,700 jobs already supported by Bombardier’s C Series through its US supply base.

The Boeing dispute came to a head after a deal between Bombardier and Delta airlines for 75 jets.

Mr Nadolski added: "The Commission also heard clear evidence today 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. Moreover, Boeing has acknowledged that it has oversold its 737 production capabilities and has a backlog of more than 4,300 aircraft orders."

In its statement after the hearing, Boeing said: "Boeing brought this case seeking enforcement of US trade law, which mirrors the widely-accepted rules of international trade adopted by most WTO member nations, including Canada.

"The resulting Department of Commerce and ITC investigations are part of a longstanding, transparent, and rigorous fact-based process for resolving precisely these sorts of commercial trade disputes. Today’s hearing was simply the next step in that process, as the ITC considered extensive evidence that underscored the harm Bombardier’s unlawful actions have caused U.S. industry.

“These investigations have already established beyond question that Bombardier has taken billions of dollars in illegal government subsidies to prop up its C Series program. The C Series would not even exist at this point but for those subsidies.

"The investigations have also left no doubt Bombardier used these government funds to dump aircraft into the US market at absurdly low prices, millions below their cost of production and millions below the price of the same aircraft in Canada. Bombardier’s conduct is flatly inconsistent with US trade law, and it has caused severe harm to Boeing, its employees, and its suppliers.

“Boeing welcomes competition, but it must be competition on a level playing field. Bombardier can sell their aircraft anywhere in the world, so long as they follow the law and comply with the trade rules we have all agreed to.”

A final determination from the Department of Commerce is expected on Tuesday before the International Trade Commission makes its ruling in February. Should both find against Bombardier, the tariff would come into force the a week later. 

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