Trade Compliance

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U.S. Trade Commission Votes to Proceed with Bombardier Investigation

Posted June 09, 2017

A preliminary determination by the United States International Trade Commission (USITC) today held that there is a “reasonable indication” that U.S. aerospace manufacturer Boeing Corporation is threatened with material injury from imports of 100- to 150-seat large civil aircraft from Canada that are allegedly being subsidized and sold in the United States at less than fair value.

As a result of the Commission’s affirmative determinations, the U.S. Department of Commerce will continue to conduct its antidumping and countervailing duty investigations on imports of the subject goods from Canada, with its preliminary countervailing duty determination due on or about July 21, 2017, and its antidumping duty determination due on or about October 4, 2017.

In its unprecedented petition to Commerce, Boeing called for countervailing duties of 79.41% and anti-dumping duties of 79.82%. The American plane maker accuses Bombardier of running “an aggressive campaign” to dump its civilian aircraft in the U.S.  Likening Bombardier’s business development strategy to that of its arch-rival Airbus, Boeing claims that the Montreal-based company has “blatantly and intentionally demonstrated its goal of muscling its way into the U.S. aviation market by offering its heavily subsidized planes at cut-rate pricing, to the serious detriment of American workers and Boeing, the only member of the domestic industry.”

Similar to the U.S. government’s argument in one of the long-running Airbus cases at the World Trade Organization, Boeing contends that the Bombardier C Series would not exist without lavish support from the Canadian government. It alleges that the Canadian government, the province of Quebec and the United Kingdom massively subsidized the C Series, first with hundreds of millions of dollars in so-called launch aid in 2005 and then, from Quebec in 2015, a $2.5 billion “bailout” in the form of equity infusions.

For its part, Bombardier says that Boeing’s claims are unfounded and without merit, insisting that the company “structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate, including those issues raised by Boeing” – a stance that is strongly backed by the Trudeau government. “We absolutely reject this complaint. We think it is absolutely groundless,” Foreign Minister Chrystia Freeland said today in a radio interview.

To better understand the fundamental nature of the dispute along with some of the broader issues that it raises, the conservative National Review yesterday published an opinion piece wickedly eviscerating Boeing’s position on the matter. The article features excerpts from the briefs submitted to Commerce by the Canadian government and Delta Airlines (purchaser of the aircraft that apparently prompted the complaint) which amusingly summed up Boeing’s argument this way: “Boeing has not demonstrated a reasonable indication of an imminent threat of material injury to the domestic industry. Instead, Boeing has built its case around a single sale it did not lose, for an aircraft it does not produce, in a market segment it ceased serving in 2006.”

The Commission’s public report 100- to 150-Seat Large Civil Aircraft from Canada (Inv. Nos. 701-TA-578 and 731-TA-1368 (Preliminary), USITC Publication 4702, June 2017) will contain the views of the Commission and information developed during the investigations.

The USITC advises that the report will be available here after July 10, 2017.