US Department of Commerce rules against Bombardier
The United States Department of Commerce issued its final decision in a trade dispute between the US planemaker Boeing and Canadian Bombardier. The Department of Commerce stood by its earlier decision to side with Boeing, obliging an approximately 300% tariffs for Bombardier’s C Series jets import.
Boeing launched the dispute earlier in 2017, alleging that the Canadian government is illegally subsidizing Bombardier’s C Series commercial airliner program and that the planes are being sold in the US at “absurdly low” prices, referring to Delta Airlines (DAL) and Bombardier deal for C Series planes.
The US Secretary of Commerce Wilbur Ross announced on December 20, 2017 standing by the preliminary findings issued in September 2017. They found Bombardier guilty of the antidumping duty and countervailing duty violations. In an official press release released on December 20, 2017, the Department of Commerce states that “exporters from Canada sold 100- to 150-seat large civil aircraft in the United States at 79.82 percent less than fair value”. It also concludes that Canada is providing “unfair” subsidies equal to 212.39% rate for Bombardier’s aircraft.
The Department of Commerce ruled to implement 79.82% anti-dumping margin for Bombardier in addition to the subsidy rate of 212.39%. The Canadian news outlet The Globe and Mail notes that together these tariffs “nearly quadruple” the C Series price in the US. This duty would first affect the major US carrier Delta Airlines (DAL) , which announced the approximately $5 billion-worth purchase of C Series jets back in April 2016, but haven’t imported them to the United States yet.
“This decision is based on a full and unbiased review of the facts in an open and transparent process,” Ross is quoted in an official statement by the Department of Commerce. “The United States is committed to a free, fair, and reciprocal trade and will always stand up for American workers and companies being harmed by unfair imports”.
Bombardier reacted to the Department of Commerce ruling by calling it “divorced from reality”. The reality here refers to Boeing’s petition as “an unfounded assault on airlines, the flying public, and the US aerospace industry”. The Canadian plane maker also called the decision ignorant of “long-standing business practices in the aerospace industry, including launch pricing and the financing of multibillion-dollar aircraft programs”.
“The fact is that the C Series simply does not threaten Boeing. Boeing did not compete in the Delta campaign,” Mike Nadolski, Vice President Communications and Public Affairs at Bombardier is quoted stating in an official press release issued on December 20, 2017, post the ruling announcement. “It has not made a plane sized to Delta’s needs for many years, since it stopped producing the 717 and 737-600. Moreover, Boeing has acknowledged that it has oversold its 737 production capabilities and has a backlog of more than 4,300 aircraft orders that stretches years into the future”.
“We remain confident that at the end of the process, the United States International Trade Commission will reach the right conclusion, which is that the C Series benefits the US aerospace industry, US airlines, and the US flying public,” the Canadian manufacturer adds, referring to the fact that the United States International Trade Commission (ITC) is to make the final ruling in the case and can overrule the Department of Commerce determinations. The final ruling is expected in February 2018.
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