Bombardier’s CS100 assembly line is seen at the company’s plant Friday, December 18, 2015 in Mirabel, Que. Boeing says a trade fight it has launched against Bombardier is meant to prevent the construction of a larger aircraft that would compete against its 737 aircraft.

Bombardier’s CS100 assembly line is seen at the company’s plant Friday, December 18, 2015 in Mirabel, Que. Boeing says a trade fight it has launched against Bombardier is meant to prevent the construction of larger aircraft that would compete against its 737.
Photo Credit: Ryan Remiorz/Canadian Press

The U.S.-Canada plane dispute: U.K. joins the fray

It began with a plan for Canada to buy 18 Super-Hornet fighter jets from Boeing as a stop-gap measure to fill a gap in Canada’s air defences.

The just revealed price tag of around $6-billion has itself raised concern in Canada, but even before that issue, Boeing launched a trade challenge against Canadian passenger jet maker Bombardier.

Back in April, the U.S. aerospace giant Boeing accused Bombardier of selling its regional jet at below cost prices thanks to Canadian federal and provincial subsidies.

Since then Canada has said it may rethink the fighter jet purchase because of the trade challenge.

In August, Boeing walked away from talks to resolve the dispute and Canada’s ambassador to Washington is quoted in the CBC saying,we don’t understand why they would be taking action on a case where [Boeing] wasn’t even competing for the business. It’s kind of strange.”

Boeing huge beneficiary of subsidies.

While Boeing has accused Bombardier of benefiting from government subsidies, many analysts have pointed out that Boeing, since its beginning, has always benefited from government handouts, much of it in the form research and development funds for various contracts from NASA and the military

Swiss Global Airlines is currently flying several of the C-series jets to great statisfation. The C-series had a very slow start with delays and cost overruns, but a deal for 75 jets to Delta Airlines in the U.S. was behind a Boeing trade complaint even though the Bombardier jet doesn’t compete with any Boeing models.
Swiss Global Airlines is currently flying several of the C-series jets to great satisfaction. The C-series had a very slow start with delays and cost overruns, but a deal for 75 jets to Delta Airlines in the U.S. was behind a Boeing trade complaint even though the Bombardier jet doesn’t compete with any Boeing models. © Ryan Remiorz/Canadian Press)

In 2013, Washington State for example granted Boeing almost 9 billion in tax breaks, which were later ruled an illegal subsidy by the World Trade Organisation.

Boeing has also long been in dispute with Airbus over subsidies.

A report in Aerospace.Com, from a 2004 European Commission report notes that between 2001-2003 Boeing has invested a mere 2.8 billion of its own money in commercial aircraft R&D compared to $9.4 billion for Airbus.

It also notes vast billions in direct and indirect government subsidies, tax avoidance, and repayment avoidance for the U.S jet maker.

U.K. joins trade dispute against U.S./Boeing

Canada’s Bombardier has a major plant in Belfast, Ireland, which employs several thousand workers. About 1,000 of those are directly involved in the C-series jet at the heart of the Boeing complaint

Because those jobs would be threatened, the U.K. has joined in the effort to convince Boeing, and the U.S Commerce department to resume talks on the issue.

Super Hornet fighter jets are shown landing on the flight deck of the USS Theodore Roosevelt aircraft carrier. Canada says it is rethinking the 6.3 billion dollar purchase of 18 of the Boeing fighters in light of Boeing’s trade complaint against Bombardier
Super Hornet fighter jets are shown landing on the flight deck of the USS Theodore Roosevelt aircraft carrier. Canada says it is rethinking the 6.3 billion dollar purchase of 18 of the Boeing fighters in light of Boeing’s trade complaint against Bombardier © Hamad I Mohammed/Reuters

Britain’s Prime Minister Teresa May has raised the issue in a phone call last month with U.S. President Trump expressing the importance of the jobs in Ireland. She will be in Canada on Monday and the Boeing issue is expected to be one of the topics.

There apparently has also been some backroom pressure from British officials on a number of levels in the U.S government.

The U.S. Commerce Department which handles the Boeing complaint is expected to release a preliminary decision on September 25, in which it may or may not include duties on the Bombardier jets.

Boeing meanwhile seems uninterested in continuing any negotiations and appears adamant on persuing the trade complaint in spite of all counter arguments.

In its original 109 page filing with the U.S International Trade Commission, Boeing alleges that if Bombardier is not challenged on the CS-100, it would be able to expand its production to build planes which would threaten Boeing’s market adding, “The U.S. industry has been the victim of this exact strategy before, as subsidies to Airbus enabled it to push McDonnell Douglas and Lockheed from the market, and capture 50 per cent global market share, destroying countless high-paying, skilled U.S. jobs in the process”,

The recent involvement of the U.K. in this Canada-U.S. issue, along with long-standing animosity between the U.S and E.U over Airbus has the potential to increase international trade tensions.

The dispute is also taking place at the same time as difficult talks between Canada and the U.S, on the North American Free Trade Agreement (NAFTA)  and that of another trade dispute between the two countries on Canadian exports of softwood lumber.

Additional information- sources

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