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.