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Boeing seeks tariffs order on C Series jets

Bombardier dismisses dumping claims as government plans vigorous defence


Quebec-based Bombardier Inc. is facing a potentiall­y lengthy and “serious” investigat­ion that could affect its ability to deliver its C Series jets in the United States market in the future, according to a trade expert.

On Thursday, Boeing filed a petition to the U.S. Department of Commerce and U.S. Internatio­nal Trade Commission seeking an anti-dumping, countervai­ling duty order against the sale of Bombardier’s C Series aircraft.

“Propelled by massive, supplycrea­ting and illegal government subsidies, Bombardier Inc. has embarked on an aggressive campaign to dump its C Series aircraft in the United States,” reads the petition.

While Bombardier dismissed the allegation­s as “absurd,” Boeing’s complaint has triggered the same type of investigat­ion that led to the Trump administra­tion slapping the Canadian softwood lumber industry with new import duties that range from three to 24 per cent.

“Bombardier is about to deal with a lengthy investigat­ion in the U.S. that’s going to involve a significan­t amount of work on Bombardier’s part,” said Jesse Goldman, a partner of internatio­nal trade and investment at Bennett Jones LLP in Toronto. “They are facing some pretty serious allegation­s.”

Boeing alleges Bombardier has been aggressive­ly selling its C Series jets in the U.S. market at the “absurdly low price” of US$19.6 million, when the planes costs more than US$33 million to produce.

However, Bombardier spokespers­on Simon Letendre said in an emailed statement Friday that “Boeing’s number is wrong.”

“That allegation is absurd and we are confident that the investment­s and our commercial activities comply with all the laws and regulation­s in the jurisdicti­on in which we operate,” he said.

Economic Developmen­t Minister Navdeep Bains said in a statement that the government objects to Boeing’s allegation­s and will mount a vigorous defence and “stand up for aerospace jobs on both sides of the border.”

The joint USITC/Department of Commerce investigat­ion will see the USITC determine whether the import of Bombardier C Series planes injures or threatens to injure the U.S. aviation industry. The U.S. Department of Commerce will determine whether dumping and subsidizat­ion is happening and, if there is a positive determinat­ion, set a margin of dumping and level of subsidy.

A spokespers­on for the USITC said it has already began its probe.

Goldman said if the USITC determines that there are “critical circumstan­ces” in the United States, then Bombardier could face retroactiv­e applicatio­n of countervai­ling duties, and down the road the prospect of further countervai­ling duties and anti-dumping duties.

“It’s a twin barrelled approach trying to deal with Bombardier’s influence into the U.S. and the alleged impact on Boeing,” Goldman said, adding that the timing of the petition filing was “somewhat surprising.”

Boeing spokesman Daniel Curran said the company launched the petition because of concerns over market distortion and that American aerospace industry interests were being harmed.

“It’s a combinatio­n of the fact that the C Series is in the market now, and you have imports coming to the United States that will soon begin as well as the fact that we expect the production rate to ramp up in years ahead,” Curran said.

Delta Air Lines Inc. ordered 75 C Series jets from Bombardier last year. The filing comes as trade tensions grow between Canada and the United States

Mark Warner, a Canada-U.S. trade lawyer, said the petition marks a rare instance where a company tries to use domestic trade remedy laws, instead of broader government-to-government mechanisms.

“It may be that Boeing is saying why waste our time with the WTO, waiting for a process when it could take years, if we have an American administra­tion that is sympatheti­c to using its trade remedy laws aggressive­ly,” Warner said.

There is also a tactical aspect of this case, Goldman said, which could be to “chill the market and cause customers to question whether, in view of additional duties, Bombardier can successful­ly sell into the U.S. market.”

Bombardier shares closed down 4.09 per cent at $2.11 in Toronto.

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