Recap: Boeing-Bombardier trade dispute
The United States International Trade Commission (ITC) is to rule on the Boeing-Bombardier trade dispute today. The decision will reveal if a 300% tariff will be imposed on Bombardier’s C Series aircraft imported to the United States. Here’s what we know about the quarrel so far.
Boeing launched a trade dispute against Bombardier in 2017, alleging that the Canadian government is illegally subsidizing C Series commercial airliner program and that the planes are being sold in the U.S. at “absurdly low” prices.
Boeing backed this claimed by referring to Delta Airlines (DAL) and Bombardier deal for C Series planes. In the end of 2016, Delta Airlines (DAL) canceled a deal with Boeing for the purchase of 18 Boeing 787-8 Dreamliners. The amount of the canceled transaction is estimated at $4 billion. At the same time, in April 2016, Delta Airlines (DAL) entered into an agreement with Bombardier to purchase 75 CS100 aircraft valued at $5.6 billion.
Following the accusations, the U.S. government has already imposed 300% trade duties on C Series planes, but it is the ITC ruling, which will determine on whether the tax obligation will come into force.
Bombardier, in turn, denies harming Boeing business and claims that the U.S. manufacturer neither had aircraft suitable for Delta’s needs, nor did it have production capabilities to produce planes in an adequate timeframe. According to the company, its U.S. rival “did not compete in the Delta campaign. It has not made a plane sized to Delta’s needs for many years, since it stopped producing the 717 and 737-600”. “Boeing has acknowledged that it has oversold its 737 production capabilities and has a backlog of more than 4,300 aircraft orders,” the Canadian plane maker noted previously in one of its many statements on the matter.
The case recently got more complicated as the third player - Embraer – entered the scene. Earlier in January 2018, Bombardier’s attorneys asked the ITC to reopen Embraer’s E190-E2 file and include this aircraft into the same category as C Series and B737 planes.
The Boeing-Bombardier dispute is focused on 100 to 150 seat passenger planes with a range of over 2,900 nautical miles. The E190-E2, which has 100-seats, was considered too small for this category as its range was known to be less than 2,900 nautical miles. Bombardier now claims that new reports suggest that engineering improvements on the model allow it to reach the 2,900 nautical miles.
Boeing is rumored to be looking to buy Embraer, but is facing opposition by the Brazilian military. On December 21, 2017 the two companies confirmed they are “engaged in discussions regarding a potential combination”, but did not reveal any particular details.
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