Whoo-doggies, Wilburine ain’t messing around with this dispute.
U.S. aerospace manufacture Boeing filed an unfair trade complaint against Canadian aerospace company Bombardier stating the Canadian government was subsidizing the manufacturing of 100- to 150-seat large civil aircraft. Canada does subsidize their airline manufacturing, everyone knows this is true – even Canadians admit it.
Boeing was seeking an 80% import tariff on purchase contracts from U.S. airline carriers. Secretary of Commerce Wilbur Ross looked into the trade dispute and agreed with the position of Boeing. However, the Commerce Dept. did not stop at 80%. Wilburine estimated, then initiated, a whopping 219.63% countervailing duty assessment against Bombardier.
Today, U.S. Secretary of Commerce Wilbur Ross announced the affirmative preliminary determination in the countervailing duty (CVD) investigation of 100- to 150-seat large civil aircraft from Canada, finding that exporters of this merchandise received countervailable subsidies of 219.63 percent.
The Commerce Department will instruct U.S. Customs and Border Protection to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on these preliminary rates.
“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” said Secretary Ross. “The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”
Although Canadian civil aircraft subject to this investigation have not yet been imported, an April 2016 press release announcing the sale of Canadian civil aircraft to a U.S. airline valued the order to be in excess of $5 billion. (read more)
All of this is happening in the middle of Round #3 NAFTA negotiations being held in Canada right now. Here’s the initial Canadian response:
(Via CBC News) The U.S. Department of Commerce has clobbered aerospace giant Bombardier with a hefty 220 per cent countervailing duty on the sale of its CS100 commercial jets to a U.S. airline following a trade complaint from an American rival.
The department ruled that Bombardier benefited from improper government subsidies, a finding that deals a blow to the Montreal-based company’s chances in its ongoing dispute with U.S. rival Boeing.
Boeing, which had complained that Bombardier inked a deal with Delta Air Lines for up to 125 of the jets by offering the planes at below-market price, wasted no time Tuesday in declaring victory.
“Subsidies enabled Bombardier to dump its product into the U.S. market, harming aerospace workers in the United States and throughout Boeing’s global supply chain,” the company said in a statement.
The dispute is not about limiting innovation or competition, it continued, but rather “has everything to do with maintaining a level playing field and ensuring that aerospace companies abide by trade agreements.”
The financial penalties aren’t officially due until Bombardier delivers the first CS100 to Delta some time in the spring. (read much more)
[…] Tuesday’s ruling was a stunning turn in the dispute, as Boeing had been asking for an 80 per cent duty.
The list price for the planes is around $6 billion. But the actual amount of money involved in the deal has not been made public, and Boeing has alleged that it is much less.
The case has major implications for Bombardier as it could not only endanger its deal with Delta but also hinder future sales in the U.S. and hurt Canadian aerospace companies that work with Bombardier.
Speaking before the ruling, Prime Minister Justin Trudeau promised to continue to stand with Bombardier and Canada’s aerospace industry. He also once again threatened to cut government ties with Boeing.
“Certainly we won’t deal with a company that’s attacking us and attacking thousands of Canadian jobs,” Trudeau said outside the House of Commons.
With one preliminary ruling out of the way, the Commerce Department will now turn its attention to whether Bombardier “dumped” its CS100s into the U.S. market by selling them below cost.
That finding is scheduled for Oct. 4, but could be delayed.