Commerce Department sides with Boeing on CSeries tariff

by Ben Pena December 22, 2017, 0:20
Commerce Department sides with Boeing on CSeries tariff

The US Commerce Department on Wednesday confirmed its decision to impose punitive tariffs of almost 300 percent on airplanes manufactured by Canada's Bombardier (Toronto: BBD-A.TO - news) in a trade dispute that has inflamed relations with Ottawa.

"Boeing does not produce an aircraft in the same class as Bombardier's C Series and didn't even bid for the Delta contract it is complaining about, which leaves its complaint totally without merit".

The decision is not necessarily final; it could be overturned if the U.S. International Trade Commission finds that Boeing did not suffer material injury as a result of the Delta sale; the ITC's final decision is expected on february 1.

Boeing called for action from United States authorities saying the C-Series competes with its small 737 jet, a point refuted by Bombardier. Speaking after the verdict, Bombardier said, "Unfortunately, the Commerce Department decision is divorced from...reality and ignored long-standing business practices in the aerospace industry, including launch pricing and the financing of multibillion dollar aircraft programs". Bombardier and Boeing argued their cases Monday before the ITC, an independent, quasi-judicial USA agency.

"Today's decision validates Boeing's complaints regarding Bombardier's pricing in the United States, pricing that has harmed our workforce and USA industry", it added.

There is more information on the USA department of commerce decision here.

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The inquiry now moves to the United States global trade commission, which will examine if the dumping and subsidies caused injury to Boeing. The plan would create a new wrinkle because the planes would effectively be a USA product.

Delta is expected to wait for that new plant to open before taking delivery of their order.

Airbus, Boeing's European rival, reached a deal with Bombardier in October to purchase a 50.01 per cent stake in the C Series commercial jet and plans to build an assembly line in Alabama for American customers while maintaining the primary line in Mirabel, Que.

Boeing says that should not negate the duties because Airbus and Bombardier would import fuselages and wings and merely be assembling in the United States. The case has been a sore point in U.S.

It includes a 79.82% tariff to offset a Commerce Department ruling that Bombardier engaged in price dumping, meaning it sold the CS100s to Delta below its fair market value by that amount.

Susan Fitzgerald, the Unite regional officer for Bombardier in NI said: "This decision poses a devastating risk for the Northern Ireland economy".

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