Boeing/Bombardier dispute gets political as leaders weigh in
The dispute between two airplane manufacturers in North America continues to reverberate across the Atlantic. Given the potential ramifications of the case that include the loss of thousands of jobs, billions in illegal subsidies and potentially even a trade war, the dispute has forced international leaders to draw in. The prime ministers of the UK and Canada joined forces on Monday, September 18, to press Boeing and the Trump administration to drop the aerospace company’s pursuit of a trade complaint against Bombardier. Meanwhile, potential buyers of Bombardier’s C Series are waiting out the dispute.
The core of the issue
Boeing is currently locked in a legal battle against its Canadian rival Bombardier. The US plane maker launched its dispute earlier this year, 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.
“Bombardier has sold airplanes in the US for millions of dollars less than it has sold them in Canada, and millions of dollars less than it costs Bombardier to build them,” Boeing claimed in an e-mailed statement. “This is a classic case of dumping, made possible by a major injection of public funds.”
Last year, Quebec’s provincial government carried out a $1 billion investment in the C Series program that provided the Montreal-based Bombardier a huge step forward and paved the way for two breakthrough orders – with Air Canada and Delta Airlines. In addition, Canada’s federal government pledged C$372.5 million ($302 million) in what it called “repayable program contributions” to a pair of Bombardier projects, including the C Series, earlier this year, Bloomberg reports.
Bombardier denies the allegations. In a statement posted on its website, the plane maker urged the US government to reject Boeing’s trade claim, saying that it is “pure hypocrisy” for Boeing to indicate that the C Series launch pricing is a “violation of global trade law” when Boeing “does the same for its new aircraft.” According to Bombardier, “Boeing’s self-serving actions threaten thousands of aerospace jobs around the world, including thousands of UK and US jobs and billions of purchases from the many UK and US suppliers who build components for the C Series.”
Last week, on September 12, Canada’s ambassador to the US, David MacNaughton, announced that Boeing walked away from talks with Canadian officials which were aimed at resolving the dispute. MacNaughton said the two sides offered a number of proposals before Boeing broke off the talks. Ambassador’s comments were the first revelation that the Canadian government spoke directly with Boeing about the dispute, Toronto’s Star writes.
The strongest rhetoric, however, came from Prime Minister Justin Trudeau on Monday, September 18, at a joint press conference in Ottawa alongside UK Prime Minister Theresa May. There, Trudeau threatened to halt what he called Canada’s “significant procurement” of Boeing Co.’s fighter jets while the company pursues its trade dispute. “We won’t do business with a company that’s busy trying to sue us and put our aerospace workers out of business,” Trudeau told the press. Meanwhile, Boeing says it “is not suing Canada” but that the matter is a commercial dispute with the Canadian company.
In Trudeau’s view, Boeing is acting in its own “narrow economic interest to harm a potential competitor.” Therefore, “We will continue to stand up for jobs and stand up for the excellent airplane that is the Bombardier C Series aircraft,” Trudeau told the press. The prime minister’s tough stance comes after the US Defense Security Cooperation Agency’s approval last week of the potential sale of F-18 Super Hornets, valued at $5.23 billion, to the Canadian government.
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