Published: Fri, May 19, 2017
Business | By Max Garcia

Canada warns it may cancel US jet buy over Bombardier probe

Canada warns it may cancel US jet buy over Bombardier probe

If the United States finds that Canadian subsidies for Bombardier have harmed Boeing and imposes duties, demand for the CSeries in the United States could suffer and airlines could pay more.

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 US announcement that NAFTA renegotiations will start in the next 90 days.

The move adds to existing trade tensions between the US and Canada, centered on the lumber and dairy industries.

It argues that Bombardier's true goal is to grab half the US market share for 100-to-150-seat aircraft and it is using its sale of cheap planes to Delta to build momentum.

May 18 Canada suggested on Thursday it could scrap plans to buy Boeing Co fighter jets if the United States backed Boeing's claims that Canadian plane maker Bombardier Inc dumped jetliners in the US market. "If you don't fix it now, it will be too late to do anything about it later".

"Boeing admits it does not compete with exports of the CS100 aircraft, so it is all the more hard to see these allegations as legitimate, particularly with the dominance of the Boeing 737 family in the US market", according to Freeland's statement. A preliminary determination on the petition is expected by June 12.

Commerce said that if the investigations determine that CSeries planes were dumped in the US market or unfairly subsidized, it would collect duties equal to the value of the benefits. Final determinations are scheduled for October and December.

The former head of Boeing's commercial aircraft unit told the panel that government subsidies for Bombardier allowed the Canadian company to sell small, 100- to 150-seat jet liners at prices Boeing could not match.

Boeing lawyers are arguing before the trade commission that Bombardier's own words prove it was rescued financially by multibillion-dollar assistance from the Quebec government. She also hinted that Ottawa might take action against the United States company. Canada's federal government also recently provided a US$275 million loan to Bombardier, which struggled to win orders for its new medium-size plane.

Canadian Foreign Affairs Minister Chrystia Freeland said officials "strongly disagree" with the investigation, insisting it was a tactic by Boeing to block the new aircraft.

Bombardier representatives countered that their planes never competed with Boeing in a sale to Delta - which the American rival describes as a seminal moment. "If this is a case of David vs. Goliath, Boeing has cast itself in the wrong role". The U.S. and the European Union have been embroiled for years in disputes related to subsidies provided to Boeing and Airbus SE. That means the US$330 million Conner expressed concern about amounts to one-third of one per cent of its annual sales.

- With files from Ross Marowits in Montreal.

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