Quebec finance minister confident Bombardier will prevail in Boeing trade dispute

Officials question if Bombardier received improper government subsidies and if it "dumped" its CSeries into the US market by charging too low a price.

0 September 26, 2017
The Canadian Press
The Canadian Press

OTTAWA — Quebec’s finance minister says he’s confident Montreal-based Bombardier will eventually come out on top in its bitter trade dispute with Boeing Co. — though he worries it could take a while.

Politicians, defence officials and Canada’s aerospace industry were waiting Tuesday for the U.S. Commerce Department to say whether it believes Bombardier broke trade rules.

The preliminary ruling comes after Boeing accused Bombardier of using government subsidies to sell its CSeries passenger jets to Delta Air Lines last year at what the U.S. manufacturer calls an unfairly low price.

Commerce officials are dealing with two questions: Did Bombardier receive improper government subsidies? And did it “dump” its CSeries planes into the U.S. market by charging too low a price?

Tuesday’s ruling deals with the first question and is expected to go against Bombardier, which could result in duties being slapped on every plane that the Montreal-based company delivers to Delta.

But those duties won’t fully apply until Boeing can prove that Bombardier’s deal with Delta hurt its business, which is where Quebec Finance Minister Carlos Leitao said he believes Boeing will lose.

Boeing contends that Bombardier broke U.S. and global trade laws by selling its planes at “absurdly low prices,” which makes for an unfair playing field and poses a risk to its long-term business.

But Boeing builds different planes than Bombardier and did not compete for the Delta contract, Leitao noted in an interview with The Canadian Press on the sidelines of a financial conference in New York.

“We think that the case that Boeing launched really has no merit,” said Leitao, whose government invested US$1 billion for a 49.5 per cent stake in the CSeries commercial jet program last year.

“And they will have a very difficult time in proving that Bombardier is causing material harm to that business in the United States.”

Leitao nonetheless tempered his optimism by noting that it could take a long time to resolve the case, which he said poses a risk to Bombardier and is why Quebec will continue to support it.

“At the end of the day, as often happens in this type of dispute, the Canadian side will win,” he said. “Now that day could be a very long day, so that’s where the risks come from.”

Tuesday’s preliminary ruling is only the first step along what could be a long road for the dispute, which has already become an international dogfight.

Commerce officials are expected to rule next month on whether Bombardier “dumped” planes into the U.S. market, which could result in more temporary duties.

But a final determination on whether to make those duties permanent won’t be made until the U.S. International Trade Commission decides whether Boeing was hurt by the deal.

That decision isn’t expected until sometime next year, possibly May or June. Whichever side loses could appeal to the U.S. Court of International Trade, which would drag things out even farther.

Delta agreed in April 2016 to buy 75 of Bombardier’s CS100 regional jets, with an option for 50 more. The deal was a major coup for Bombardier, which had struggled to sell its CSeries planes.

But Boeing alleges Bombardier sold the CS100s at an unfairly low price with help from federal and provincial government subsidies, and wants U.S. authorities to slap duties on the planes.

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 alleges 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 those aerospace companies that work with it.

The Trudeau government and Boeing were in talks to find a settlement, but they fell apart in August and the Liberals have since stepped up public pressure on the Chicago-based company to drop its case.

That includes threatening to cancel the planned purchase of 18 of Boeing’s Super Hornet fighter jets to temporarily augment Canada’s aging fleet of CF-18s, although the government has said it wants to keep talking to Boeing even after Tuesday’s decision.

News from © Canadian Press Enterprises Inc. 2016


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