Bom­bardier, Boe­ing clash at trade hear­ing

The Hamilton Spectator - - BUSINESS - ALEXAN­DER PANETTA WASH­ING­TON —

The next po­ten­tial Canada-U.S. trade dis­pute un­folded Thurs­day as aero­space gi­ants clashed at a Wash­ing­ton hear­ing that marked the for­mal launch of in­ves­ti­ga­tions into Boe­ing’s al­le­ga­tions that Bom­bardier re­ceived sub­si­dies al­low­ing it to sell its CSeries planes at be­low-mar­ket prices.

“The U.S. mar­ket is the most open in the world, but we must take ac­tion if our rules are be­ing bro­ken,” U.S. Com­merce Sec­re­tary Wil­bur Ross said in a state­ment af­ter the hear­ing be­gan.

U.S. aero­nau­tics pow­er­house Boe­ing ar­gued at the hear­ing that du­ties should be im­posed on Bom­bardier air­craft, in­sist­ing its smaller Mon­treal-based ri­val re­ceives gov­ern­ment sub­si­dies that give it an il­licit toe­hold in the in­ter­na­tional mar­ket.

Lob­by­ists, lawyers and aero­space ex­ec­u­tives crowded the room for a lit­tle bat­tle play­ing out in the broader con­text of the day’s larger trade news: the U.S. an­nounce­ment that NAFTA rene­go­ti­a­tions will start in the next 90 days.

Bom­bardier has made it clear that its true goal is to grab half the in­ter­na­tional mar­ket share for 100to 150-seat air­craft, ac­cord­ing to Boe­ing, which ar­gues its ri­val has re­ceived an un­fair head start from Cana­dian tax­pay­ers.

Boe­ing vice-pres­i­dent Ray­mond Con­ner said the sale of cheap, sub­si­dized planes to Delta Air Lines helped build mo­men­tum for Bom­bardier to en­ter a new mar­ket. If Bom­bardier reaches its stated goal, he said, it would squeeze Boe­ing from that mar­ket and cost the com­pany US$330 mil­lion a year in an­nual sales.

Boe­ing has pe­ti­tioned the U.S. Com­merce De­part­ment and the U.S. In­ter­na­tional Trade Commission to in­ves­ti­gate sub­si­dies of Bom­bardier’s CSeries air­craft that it says have al­lowed the com­pany to ex­port planes at well be­low cost. A pre­lim­i­nary de­ter­mi­na­tion on the pe­ti­tion is ex­pected by June 12.

If the ITC de­ter­mines there is a threat of in­jury to the U.S. in­dus­try, pre­lim­i­nary coun­ter­vail­ing du­ties could be an­nounced in July, fol­lowed in Oc­to­ber by pre­lim­i­nary anti-dump­ing du­ties, un­less the dead­lines are ex­tended.

Boe­ing is call­ing for coun­ter­vail­ing du­ties of 79.41 per cent and an­tidump­ing charges of 79.82 per cent.

Lawyers for the U.S. aero­space gi­ant ar­gued Thurs­day that Bom­bardier’s own words prove it was res­cued fi­nan­cially by multi­bil­lion­dol­lar as­sis­tance from the Que­bec gov­ern­ment, which last year in­vested US$1 bil­lion in ex­change for a 49.5 per cent stake in the CSeries. The com­pany also shored up its fi­nances by sell­ing a 30 per cent stake in its rail­way di­vi­sion to pen­sion fund man­ager Caisse de dépôt for US$1.5 bil­lion.

The fed­eral gov­ern­ment re­cently pro­vided a $372.5-mil­lion loan. That’s on top of about $1 bil­lion re­ceived in 2008 from Ot­tawa, Que­bec and Bri­tain to de­velop CSeries.

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