Washington has sided with Boeing in its war with Bombardier and proposed punitive tariffs on US imports of the Montreal-based aircraft maker’s newest passenger jet, putting thousands of jobs at risk in Canada and the UK.
The preliminary ruling by the US Department of Commerce on Tuesday to impose tariffs of up to 219 per cent on Bombardier’s C Series jet comes after Boeing alleged that its rival was able to sell the aircraft at below cost because of subsidies from Canada and the UK.
A final ruling is not expected until early next year, but the US move will increase tensions with Canada and the UK, which both deny any wrongdoing and are threatening to boycott Boeing as a result of the dispute.
The decision could also put at risk some of Bombardier’s 28,000 aerospace jobs, including those at its Belfast operations. The Northern Ireland facility makes wings for several of the company’s aircraft including the C Series, and employs 4,500 people. About 1,000 work on the C Series.
Michael Fallon, UK defence secretary, issued a stark warning to Boeing that its stance could prevent it winning lucrative defence contracts in the future.
“We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicopters, and they will also be bidding for other defence work and this kind of behaviour clearly could jeopardise our future relationship with Boeing,” said Sir Michael.
Theresa May, UK prime minister, has ordered ministers and Britain’s ambassador to the US to mount a five-month campaign to persuade Boeing to drop its complaint against Bombardier.
Chrystia Freeland, Canada’s foreign minister, said the proposed US tariffs were “clearly aimed at eliminating Bombardier’s C Series aircraft from the US market”.
She added Ottawa would raise the issue “at the highest levels” with the US, and pledged to “defend Canadian companies and Canadian workers against unfair and costly protectionism”.
Washington’s ruling is a severe setback to Bombardier, which has twice been bailed out by Canadian federal and provincial authorities after spending billions of dollars more than expected on developing the C Series.
The Canadian aircraft maker has not found a new customer for the aircraft since its contentious sale of 75 C Series jets to Atlanta-based Delta Air Lines last year for $5.6bn, which triggered Boeing’s complaint to the US authorities.
Bombardier condemned the US ruling, saying that “the magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programmes”.
“Looking beyond today’s and next month’s preliminary decisions, the International Trade Commission will determine next year whether Boeing suffered any injury from the C Series,” added the company.
It argued that its US rival had suffered no harm, since Boeing did not compete with Bombardier for the Delta deal and “years ago abandoned the market the C Series serves”.
Wilbur Ross, US secretary of commerce, said part of the reason for the preliminary decision was down to Bombardier’s failure to co-operate with Washington’s investigation.
“What that means is that the evidence we have to rely on is evidence not coming from Bombardier but evidence being proposed by Boeing and other outside parties,” he added.
Mr Ross said the US government was “not necessarily” targeting Bombardier’s Northern Irish factory but added “if you’re building wings for a plane that doesn’t get built, that’s a problem”.
Canada’s federal government in February pledged C$372.5m to Bombardier to finance two aerospace development projects, including the C Series. Separately, Quebec provincial authorities invested $1bn for a 49.5 per cent stake in the C Series programme.
Bombardier’s C Series wing production line in Belfast, which was opened in 2013 at a cost of more £500m, received grants and loans from the UK government totalling £134m.
UK trade unions have demanded that the British government take action against Boeing and the US commerce department. “Today’s decision in favour of Boeing’s allegations of anti-competitive pricing poses a direct and very serious threat to the 4,500 Bombardier jobs in Belfast and many more dependent on them across our service sector and in the wider supply chain,” said Jimmy Kelly, regional secretary of the Unite union.
Additional reporting by George Parker and Robert Wright in London and Ben Bland in Hong Kong
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