Tags: Bombardier | WTO | Boeing | trade

Bombardier Hit With 300 Percent Jet Duties After Boeing Complaint

Bombardier Hit With 300 Percent Jet Duties After Boeing Complaint

Friday, 06 October 2017 02:34 PM

The U.S. slapped duties on Bombardier Inc.’s showcase commercial jet for the second time in as many weeks, upholding Boeing Co.’s case that its Canadian competitor sold planes at less than fair value.

The Commerce Department imposed a preliminary import duty of 80 percent on Bombardier C Series aircraft based on its finding, according to an emailed statement Friday. The agency ruled last week that the Montreal-based planemaker, which invested more than $6 billion to develop the all-new C Series, benefited from unfair subsidies.

The second round of import duties marks the latest blow for Bombardier, which received financial support from Quebec and Canada after its biggest jet came in two years late and about $2 billion over budget. The ruling is also bound to stoke tensions between the U.S. and two key allies, Canada and the U.K., which expressed disappointment with last week’s ruling.

Both charges -- last week’s 220 percent countervailing duties and Friday’s anti-dumping restrictions -- could be reversed by the U.S. International Trade Commission if the tribunal concludes that Boeing wasn’t injured by Bombardier’s jet program, a decision expected to be made next year. The Commerce department also still needs to issue a final ruling in both cases.

Bombardier fell less than 1 percent to C$2.18 at 2:00 p.m. in Toronto. The shares are about 4 percent lower than their level before the initial Commerce Department ruling last week.

Canadian Prime Minister Justin Trudeau, who called last week’s decision disappointing and vowed to fight for Canadian jobs, has warned that his government won’t buy Boeing military jets unless it drops the case. The controversy also could hang over his trip to Washington next week, where he is scheduled to discuss trade with President Donald Trump just as negotiators hold the fourth round of talks to amend the North American Free Trade Agreement.

‘Bitterly Disappointed’

British Prime Minister Theresa May said she was “bitterly disappointed” by last week’s decision, considering Bombardier employs more than 4,000 people in Northern Ireland. U.K. Trade Secretary Liam Fox and Irish Foreign Minister Simon Coveney have discussed the matter with U.S. Commerce Secretary Wilbur Ross this week.

The U.S. will begin collecting preliminary duties to offset the difference between the sales price and fair value, the Commerce Department said in its latest decision. The ruling applies to exports of 100- to 150-seat Canadian aircraft.

Boeing accuses Bombardier of selling its biggest jet in the U.S. at less than fair value, while benefiting from unfair government subsidies. The C Series wouldn’t exist without the assistance of the Canadian and Quebec governments, according to the U.S. planemaker.

“This determination confirms that, as Boeing alleged in its petition, Bombardier dumped its aircraft into the U.S. market at absurdly low prices,” the U.S. planemaker said in an emailed statement.

Delta Air Lines Inc. placed an order for at least 75 of the C Series planes last year, a deal with a list value of more than $5 billion, and deliveries are expected to begin next year. Neither Delta nor Bombardier immediately responded to requests for comment.

Bombardier has called Boeing’s complaint “unprecedented in its overreach.” The Canadian manufacturer argues that Boeing doesn’t make planes that compete with the aircraft -- an assertion that Delta backed up in its testimony before the International Trade Commission.

WTO Case

In a separate case, the World Trade Organization last week approved Brazil’s request to investigate Canada’s alleged use of more than $3 billion in government subsidies to produce Bombardier aircraft.

The South American nation began WTO consultations in February, saying Canada ran afoul of trade rules because its policies unfairly bolstered the domestic aerospace industry to the detriment of Embraer SA, an airplane producer based in Sao Jose dos Campos, Brazil.

Bombardier said it was “confident that the investments and contribution programs mentioned in Brazil’s petition are in full compliance with all WTO and international trade rules.”

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The U.S. slapped duties on Bombardier Inc.'s showcase commercial jet for the second time in as many weeks, upholding Boeing Co.'s case that its Canadian competitor sold planes at less than fair value.
Bombardier, WTO, Boeing, trade
Friday, 06 October 2017 02:34 PM
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