Theresa May condemns Boeing's behaviour in Bombardier trade dispute
- Author: Michelle Webb Sep 28, 2017,
Sep 28, 2017, 0:13
The grievance was initially launched in April that alleged Bombardier was the beneficiary of subsidies from Quebec and the United Kingdom that was giving it an unfair advantage. The Canadian government said Boeing's claim is motivated by its desire to stifle competition to its own Boeing 737 passenger jets.
Bombardier has announced plans to boost C Series production from seven airplanes in 2016 to between 90 and 120 airplanes by 2020.
The Northern Ireland factory makes parts for Bombardier's new CSeries jetliner.
"While Delta has publicly spoken highly about the C Series, the risk of this order being rescinded will continue to weigh on Bombardier's share price, " Kevin Chiang, a CIBC World Markets analyst in Toronto, said in a note to clients Wednesday.
Action in the form of an worldwide trade dispute was brought against the plane-maker by Boeing over a new C-series plane made by the Canadian firm.
The decision from the US Commerce Department will raise tensions for the US with both the United Kingdom and Canadian governments.
If imposed, the duties would more than triple the cost of a CSeries aircraft sold in the U.S.to about $61 million per plane, based on Boeing's assertion that Delta received the planes for $19 million each.
That decision isn't expected until sometime next year, possibly May or June.
"We won't do business with a company that's busy trying to sue us and put our aerospace workers out of business", Canadian Prime Minister Justin Trudeau said earlier this month.
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.
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There are not that many Commerce countervailing orders that are this high, but it is lower than the 256 percent final duties slapped on Chinese cold-rolled steel previous year.
Quebec Finance Minister Carlos Leitao, whose government invested US$1 billion for a 49.5 per cent stake in the CSeries commercial jet program a year ago, said he was confident that Bombardier would beat Boeing.
The U.S. government said it planned to impose a 220% tariff to the cost of the jet after Boeing complained past year that Bombardier was selling it too cheaply and had unfairly benefited from Canadian government support.
Highlighting the upcoming role of USITC in determining whether Boeing suffered any harm from the C Series project, Bombardier claimed that Boeing had not even competed with it on the Delta Air Lines contract.
"The simple truth is that Bombardier created a superior aircraft that is more efficient, more comfortable, and quieter", said the company.
The Commerce Department is expected to decide by October 4 whether to also impose anti-dumping duties on the C Series. On that matter, Boeing is seeking duties of about 80 per cent.
Even then, the International Trade Commission also has to make a final determination on February 1, 2018.
Next, the International Trade Commission must determine that the subsidies to Bombardier harmed Boeing before it begins to impose any tariffs.
"We are confident the USITC will conclude that no USA manufacturer is at risk because neither Boeing nor any other USA manufacturer makes any 100-110 seat aircraft that competes with the CS100", Delta said in a statement.
Delta is taking the smaller CS100 model of the plane.
The first Bombardier jets are due to be delivered to Delta next spring.