Liberals make fighter jet mess worse

Back in November, when the Liberal government announced it would be making an “interim” purchase of 18 Super Hornet fighter jets from Boeing, it was all about the need for speed.

There wasn’t time to hold an “open competition” to select a permanent replacement for the air force’s aging fleet of CF-18s, as the Liberals had promised during the election. The reason: the government had discovered a critical “capability gap” in our air defences that had to be filled at once.

Well, here we are in May, and the Super Hornets that were supposedly so urgently necessary to the defence of our national borders turn out to be just another in the apparently endless list of pawns to be sacrificed in pursuit of the Trudeau government’s real and only strategic objective, propping up Montreal-based Bombardier Inc.

Billions of dollars in direct and indirect aid to Bombardier, from both the federal and Quebec governments, having met with the entirely predictable response from its competitors — not only a suit before the World Trade Organization on behalf of Brazil’s Embraer, but latterly a complaint to the U.S. Commerce department by Boeing, demanding retaliatory duties of nearly 160 per cent — the government has now taken the unprecedented step of tying an important procurement decision to the outcome of a private trade dispute.

“Canada is reviewing current military procurement that relates to Boeing," Foreign Minister Chrystia Freeland declared last week, adding: “Our government will defend the interests of Bombardier, the Canadian aerospace industry and our aerospace workers.”

As if the implied threats were not quite heavy-handed enough, Canada’s ambassador to Washington, David MacNaughton, volunteered his opinion that Boeing, by availing itself of the remedies for alleged unfair trade practices prescribed under the laws of the United States, was guilty of “lousy customer relations.”

Nice little fighter-jet deal you got there. Pity if anything should happen to it.

The particulars of the dispute, we should be clear, are not the issue. Whatever the technical definition of an illegal export subsidy, there is no doubt that Bombardier is the beneficiary of government subsidy — many of them, in fact. Neither is there much disagreement that last year’s sale of 75 CSeries passenger jets to Delta — at a substantial loss — would not have been possible for a company that was deep in debt and rapidly running out of cash without the timely arrival of $1.3 billion in aid from the government of Quebec. Bombardier does not even bother to deny much of this. It says only that the scale of the support, and the discount on the planes, was not unusual or out of bounds, in an industry in which all of the players, including Boeing, are heavily subsidized.

That is true. It doesn’t make any side’s subsidy any smarter — indeed, that all sides are subsidizing each other’s jets to a draw only makes the stupidity of the whole exercise more obvious. Neither is the folly of one government’s subsidy made less by another’s tariff.

Rather than punish Delta for exploiting Bombardier’s weakness, the U.S. government would be better advised to take the Quebec taxpayers’ money and run.

So everyone’s in the wrong. That’s not the point — the point, rather, is that the government of Canada seems willing to escalate a dispute between two private companies into an all-out trade war — one that, as by far the smaller partner, we are in no position to win. If there is any country that has an interest in a rules-based approach to resolving trade disputes, it is us.

If the U.S. is abusing its own trade laws, there are other and better remedies available to us than cancelling procurement deals, whether through NAFTA or the WTO. If it is not — if it is we who are in the wrong, legally speaking — all the more reason not to do so.

It’s not clear what the government’s endgame is. Suppose our bluff is called — Boeing refuses to withdraw its complaint, the relevant U.S. authorities find in its favour and the tariffs are applied. Is it really ready to nix the Super Hornets deal in response?

Perhaps it is. The “interim” purchase has been almost universally criticized by military experts as an expensive distraction: What is needed, nearly everyone agrees, is to get started on acquiring a permanent replacement fleet. The “capability gap” was a transparent invention: the underlying rationale that we had to be ready to meet all of our NATO and Norad obligations simultaneously had never previously been part of defence doctrine.

THE GOVERNMENT SEEMS WILLING TO ESCALATE A DISPUTE INTO AN ALL-OUT TRADE WAR.

Absolutely nothing stands in the way, in other words, of the government going ahead with the promised competition — nothing except the Liberals’ other, and contradictory, promise that the Lockheed F-35 favoured by the previous Conservative government would not be part of it. But a truly open competition would expose the government to the embarrassing risk that the F-35, against which the Liberals had inveighed to much political effect, might win.

So: put off the competition until after the next election, using the interim purchase as a pretext. If it costs $12 billion all-in for planes that would likely be junked in 10 years, well, what price power? But now the Liberals have dragged one costly policy misstep into the midst of another, trapping themselves in yet another fork of their own making.

Either the Super Hornets are an urgently needed stopgap for a glaring deficiency in our military capacity, in which case the Liberals’ clumsy attempt at blackmail, if it does not collapse in humiliation, would trade away national security for the benefit of a failing, but well-connected, private company, or the planes, contrary to the government’s repeated assurances, were every bit as expendable as they now appear — in which case the Liberals merely broke a key election promise and lied about it.

Either way, it seems so unlike them.