Canada tried to end Boe­ing-Bom­bardier dis­pute: sources

The Globe and Mail Metro (Ontario Edition) - - News - DAVID LJUNGGREN OT­TAWA AL­LI­SON LAM­PERT MON­TREAL

Canada last month at­tempted to end a deep­en­ing dis­pute with Boe­ing Co. by sug­gest­ing it could with­draw a threat not to buy Su­per Hor­net jets if the U.S. firm dropped a trade chal­lenge against Cana­dian plane maker Bom­bardier Inc., three peo­ple with knowl­edge of the mat­ter told Reuters.

The in­for­mal pro­posal would have cre­ated an un­usual link between trade and arms deals, which are typ­i­cally sep­a­rated in in­ter­na­tional ne­go­ti­a­tions, trade an­a­lysts said, and showed the lengths Canada is will­ing to go to pro­tect Bom­bardier jobs.

Ot­tawa froze talks on a planned pur­chase of 18 F-18 Su­per Hor­net jets for more than $5-bil­lion (U.S.) af­ter Boe­ing in April launched a trade chal­lenge ac­cus­ing Bom­bardier of dump­ing its new C Se­ries air­lin­ers into the U.S. mar­ket.

Se­nior Canada gov­ern­ment of­fi­cials and Boe­ing met last month to dis­cuss the dis­putes, of­fi­cials said.

One of the sources fa­mil­iar with the dis­cus­sions said Ot­tawa’s propo­si­tion to Boe­ing had been, “If we re­solve the chal­lenge, that will al­low us to re­sume our dis­cus­sions on the F-18,” but said Boe­ing dis­missed the idea of link­ing the two dis­putes.

Boe­ing walked away with none of the is­sues re­solved, Canada’s am­bas­sador to the United States told re­porters this week, with­out elab­o­rat­ing.

A Boe­ing spokesman de­clined to com­ment. One in­dus­try source said Boe­ing sees the al­leged C Se­ries dump­ing as a long-term threat to its civil­ian-air­liner busi­ness and has shown lit­tle in­ter­est in a com­pro­mise, even at the risk of los­ing the mil­i­tary con­tract.

“The Cana­dian gov­ern­ment is try­ing to link the F-18 file with the Boe­ing-Bom­bardier dis­pute. The po­si­tion of Boe­ing and the U.S. gov­ern­ment is that they are not linked,” a sec­ond source di­rectly fa­mil­iar with the mat­ter said.

The of­fice of Cana­dian For­eign Min­is­ter Chrys­tia Free­land, who has over­all re­spon­si­bil­ity for re­la­tions with the United States, said it could not con­firm the sources’ ac­count. Time is run­ning out for Canada to end the dis­pute.

The U.S. De­part­ment of Com­merce is set to hand down its ini­tial rul­ing on Sept. 26 on whether to im­pose coun­ter­vail­ing du­ties on the C Se­ries, a de­ci­sion that could dampen air­lines’ de­mand for the 110-130 seat jets in the key U.S. mar­ket.

That de­ci­sion could also boost Boe­ing’s lever­age in any fu­ture talks with Canada, although the duty would only po­ten­tially ap­ply af­ter a fi­nal rul­ing by the U.S. In­ter­na­tional Trade Com­mis­sion (ITC) in 2018.

Bom­bardier spokesman Mike Nadol­ski said on Fri­day the com­pany is fo­cused on the 2018 rul­ing and noted Boe­ing did not take part in the Delta com­pe­ti­tion that the C Se­ries won.

“It’s re­ally hard to see how they are harmed,” he said in an e-mail.

Dan Pear­son, a for­mer ITC chair­man, said it was likely the Com­merce De­part­ment would de­ter­mine pre­lim­i­nary du­ties against Bom­bardier, giv­ing Boe­ing lever­age in any ne­go­ti­a­tions.

Boe­ing has ac­cused Bom­bardier of im­i­tat­ing Euro­pean ri­val Air­bus SE by try­ing to mus­cle into the U.S. mar­ket with cut-rate pric­ing to win a key April, 2016, or­der from Delta Air Lines Inc.

The first source said Canada ide­ally still wanted to buy the F-18s rather than look­ing for other op­tions.

“[Boe­ing has] put us in a sit­u­a­tion where they’re forc­ing us to make hard choices … we can’t do busi­ness with some­one who is ac­tu­ally killing our in­dus­try,” the source said.

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