In The Media

Bombardier scores big win over Boeing in U.S.-Canada trade dispute

by David J. Lynch & Aaron Gregg (feat. Eric Miller)

The Washington Post
January 26, 2018

An independent commission on Friday rejected proposed tariffs on imported Canadian aircraft, a reminder of the limits on President Trump’s authority to reshape U.S. trading relationships with the world.

By a 4-0 vote, the International Trade Commission ruled that Boeing, the Chicago-based aircraft maker, had not been injured by multibillion-dollar Canadian subsidies for Bombardier aircraft. As a result, 300 percent tariffs that the Commerce Department had suggested to counter those subsidies will not take effect.

Still, the surprise verdict by a panel of nonpartisan government experts is likely to have little impact on the president’s plans to erect other barriers against what he regards as unfair trade.

“This decision should be viewed as limited to an extraordinary set of facts,” said Dan Ujczo, a trade attorney with Dickinson Wright. “It in no way should be interpreted as a broad-scale limitation on the Trump administration’s trade enforcement authority.”

In Montreal, where negotiators are meeting to overhaul the North American Free Trade Agreement between the United States, Canada and Mexico, the decision was welcomed. Canadian officials had bitterly objected last year as the U.S. moved toward effectively barring Bombardier from the lucrative American market.

“This means a major irritant between the two countries disappears, and having that irritant disappear becomes a very positive thing for reaching a NAFTA deal,” said Eric Miller, president of the Rideau Potomac Strategy Group.

The ITC commissioners, who are appointed for nine-year terms designed to insulate them from political influence, preside over a fact-heavy, technocratic process.

The president exercises more direct control over other trade remedies, such as the “safeguard” tariffs he imposed this week on imported solar panels and washing machines, as well as potential actions against China for stealing trade secrets.

“He’s got an independent hand on all of those,” said Edward Alden, a trade policy expert at the Council on Foreign Relations.

This week’s tariffs on solar panels and washing machines also had immediate economic and diplomatic implications, with at least one importer promising to raise prices and the South Korean government filing a complaint at the World Trade Organization.

The ITC ruling on Bombardier comes as a growing number of U.S. companies file complaints against overseas rivals, hoping to win support from the Trump administration, which has vowed to crack down on trade cheaters. Last year, the number of anti-dumping and countervailing duty investigations launched by the Commerce Department rose more than 60 percent.

But the unanimous ITC decision, coming after preliminary rulings that pointed to steep tariffs, caught many analysts by surprise. The Commerce Department last year issued preliminary findings that the governments of Canada and the province of Quebec had unfairly subsidized development of Bombardier’s medium-range C Series aircraft, which U.S. officials said were then sold in the U.S. below their cost of production.

Commerce Department officials proposed combined duties of up to 300 percent on the Canadian jets. None of the planes had yet been delivered to U.S. airlines, although Delta inked a $5 billion deal for them in 2016.

Analysts said Boeing’s bid for help ultimatelyfell short because the company overreached, asserting an unsupported injury claim. The aircraft maker did not compete directly with the single-aisle Bombardier aircraft and had not bid for the Delta order at the heart of the case.

“This was always a stretch in terms of Boeing’s claims,” said Alden. “It was obvious Boeing was trying to stretch the definition of injury pretty significantly. . . . There were a lot of things here that were pretty far outside the norm.”

The ruling leaves Boeing in a difficult spot. The Canadian government has already retaliated against the aircraft maker for its petition for government protection.

Late last year, Canadian officials made good on an earlier threat to cancel a proposed purchase of F/A-18 Super Hornet fighter planes, dealing a blow to Boeing’s defense contracting business.

Now, Boeing finds itself in a situation in which it has alienated a key customer for its defense business and irked a key commercial customer in Delta Air Lines, while failing to block the U.S. expansion plans of its Canadian rival.

Boeing officials expressed “disappointment” with the ruling, while Bombardier applauded it.

“Today’s decision is a victory for innovation, competition, and the rule of law,” Bombardier said in a statement. “It is also a victory for U.S. airlines and the U.S. traveling public.”

Likewise, Canadian government officials, business groups and labor leaders welcomed the unexpected verdict.

“I’m thrilled that common sense has finally won out and that these ridiculous tariffs have been tossed,” said Unifor National President Jerry Dias. “The USITC ruling means that good-paying Bombardier jobs can stay in Canada.”

The dispute took a twist in mid-October when Bombardier agreed to sell the C Series plane to Airbus, a deep-pocketed European aerospace giant that is Boeing’s closest competitor.

The companies promised to shift future production of the plane from Canada to Mobile, Ala. Airbus executives argued that moving production in that way should allow them to avoid the tariff.

“The fact is that when you produce an aircraft in the U.S., it’s not subject to any U.S. import tariff rules,” Bombardier President Alain Bellemare said in an October news conference.

In its arguments before the trade commission, Boeing’s lawyers cast doubt on the idea that Airbus would set up a production line in Alabama, arguing that the company could change its plans.

“There is no joint venture. Period. And there may never be one,” Boeing’s lawyers argued in the company’s most recent official filing with the commission. “The parties have not broken ground on anything in Mobile related to the joint venture, let alone a full C Series production facility.”

Boeing later revealed in December that it is pursuing a joint venture with Brazilian aerospace firm Embraer, a close competitor with Bombardier in the market for smaller commercial jets. The two companies have not announced a finalized deal yet.


Be the first to comment

Please check your e-mail for a link to activate your account.
SUBSCRIBE TO OUR NEWSLETTERS
 
SEARCH
PODCAST

An Update on the NAFTA Renegotiations

May 21, 2018


On today's Global Exchange Podcast, we touch base with CGAI's North American trade experts in light of a busy week on the NAFTA file in Washington. After months of hard-pressed negotiations, and 6 weeks of 'perpetual' discussions in Washington, the deal has reached its next turning point, with Congressional leadership signalling that they'd need a new deal by May 17th in order to have it passed before U.S. mid-term elections in the Fall. With no deal in sight, and the Congressional deadline now in the rear-view mirror, we sit down with Sarah Goldfeder, Laura Dawson, and Eric Miller to ask where we go from here.


IN THE MEDIA

Between Trump, Iran and North Korea, Canada’s G7 has a high potential for chaos

by Chris Hall (feat. James Trottier & Colin Robertson), CBC News, May 18, 2018

The struggle Trudeau could face if Kinder Morgan walks away from Trans Mountain

by Robert Tuttle & Michael Bellusci (feat. Dennis McConaghy), Bloomberg News, May 18, 2018

Canada 'a laughing stock': Experts react to Trans Mountain indemnity

by April Fong (feat. Dennis McConaghy), BNN Bloomberg, May 18, 2018

AUDIO: NAFTA update

with Danielle Smith (feat. Sarah Goldfeder), Global News Radio, May 18, 2018

VIDEO: NAFTA Deadline Day (@ 3:00)

with Don Martin (feat. John Weekes), CTV Power Play, May 17, 2018

VIDEO: Deal or no deal on NAFTA: Canada and U.S. send mixed messages

with Rosemary Barton (feat. Colin Robertson), CBC The National, May 17, 2018

Trump’s 'submission' strategy is not working so expect NAFTA talks to drag on

by Kevin Carmichael (Feat. Eric Miller), Financial Post, May 17, 2018

Backstop deal may be last hope for TransMountain pipeline, says former oil executive

by CBC News (feat. Dennis McConaghy), CBC News, May 17, 2018

Stuck with limited oil export options, Liberals may regret B.C. tanker ban

by John Ivison (feat. Dennis McConaghy), National Post, May 17, 2018

Feds OK early start to construction of navy’s new supply ships

by Lee Berthiaume (feat. Dave Perry), The Canadian Press, May 17, 2018


LATEST TWEETS

HEAD OFFICE
Canadian Global Affairs Institute
Suite 1800, 421-7th Avenue SW
Calgary, Alberta, Canada T2P 4K9

 

OTTAWA OFFICE
Canadian Global Affairs Institute
8 York Street, 2nd Floor
Ottawa, Ontario, Canada K1N 5S6

 

Phone: (613) 288-2529
Email: contact@cgai.ca
Web: cgai.ca

 

Making sense of our complex world.
Déchiffrer la complexité de notre monde.

 

© 2002-2018 Canadian Global Affairs Institute
Charitable Registration No. 87982 7913 RR0001

 


Sign in with Facebook | Sign in with Twitter | Sign in with Email