Fallon Gets Tough On Trade Dispute Between Boeing And Bombardier

Calvin Saunders
September 28, 2017

Defence secretary Michael Fallon warned today that the USA tariffs imposed on Bombardier yesterday in a row with Boeing could jeopardise the UK's future relationship with the American firm.

Boeing has argued that the military sale to the Canadian government and its petition against Bombardier are not linked.

Bombardier officials did not immediately respond to what effect the ruling will have in Wichita, where it manufactures Learjet business jets, flight tests all the company's aircraft including the C Series, and services all manner of Bombardier business jets.

The Northern Ireland factory makes parts for Bombardier's new CSeries jetliner.

The future of the C Series jets appeared secure after Bombardier signed a 5.6 billion U.S. dollar (£4.16 billion) deal in 2016 to provide the aircraft.

Leitao nonetheless tempered his optimism by noting that it could take a long time to resolve the case, which he said poses a risk to Bombardier and is why Quebec will continue to support it.

Bombardier's widely traded B shares dropped 10 percent to C$2.04 at 10:02 a.m.in Toronto after sliding as much as 16 percent for the biggest intraday decline since October 2015.

Bombardier - which bought Short Brothers in 1989 - is one of Northern Ireland's largest employers.

The UK government and trade unions fear the ruling could put the jobs of 4,100 staff in Northern Ireland at risk.

The spat is roiling trade relations just as the US tries to renegotiate the North American Free Trade Agreement with Canada and Mexico.

US secretary of commerce Wilbur Ross said on Wednesday: "The US values its relationships with Canada, but even our closest allies must play by the rules".

British premier Theresa May on Wednesday said she was "bitterly disappointed" about a dispute between Canadian and US aircraft manufacturers which could cost around a thousand jobs in Northern Ireland.

As a result, Bombardier had drawn the public support of members of Congress and elected officials and even US airlines like JetBlue Airways and Spirit Airlines who wanted to expand the range of options for commercial airliners beyond Boeing and its European rival Airbus.

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That decision isn't expected until sometime next year, possibly May or June.

In a statement, Canadian Foreign Minister Chrystia Freeland said her government strongly disagreed with the ruling and would "always defend Canadian companies and Canadian workers against unfair and costly protectionism".

Boeing's complaint arose after Northern Ireland's powersharing administration and the UK Government pledged to invest nearly £135 million in the establishment of the C-Series manufacturing site in Belfast.

There are not that many USA countervailing orders that are this high, but it is lower than the 256% final duties slapped on Chinese cold-rolled steel past year.

"The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs", Bombardier said in a statement.

Rival Boeing claimed it received unfair state subsidies from the United Kingdom and Canada, allowing the sale of airliners at below cost prices in the US.

The entire dispute centres around an order Bombardier received for up to 125 C-Series aircraft from United States operator Delta Airways past year.

"We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicopters and they will also be bidding for other defence work", he said.

A final determination by Commerce is not expected until December 19.

Next, the International Trade Commission must determine that the subsidies to Bombardier harmed Boeing before it begins to impose any tariffs.

Boeing filed its complaint with the U.S. authorities after Bombardier sealed a $5.6bn deal with Delta Air Lines to sell 75 of its C Series jets a year ago.

Bombardier also maintains that the smallest single-aisle 737 does not compete with the CS100, the roughly 110-seat Bombardier model purchased by Delta.

Other reports by MaliBehiribAe

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