US finalizes hefty duties in Bombardier-Boeing trade case

US finalizes hefty duties in Bombardier-Boeing trade case
© Greg Nash

The United States on Wednesday finalized steep duties against Bombardier C Series commercial jets, a move that may further inflame tensions over ongoing negotiations of the North American Free Trade Agreement (NAFTA).

The Commerce Department announced total duties of 292.21 percent — a final antidumping rate of 72.82 percent and a final countervailing duty rate of 212.39 percent — in a case brought by Chicago-based Boeing.

“This decision is based on a full and unbiased review of the facts in an open and transparent process,” said Commerce Secretary Wilbur RossWilbur Louis RossWilbur Ross ordered to give deposition in 2020 census case: report The seafood trade deficit is a diversionary tactic Wilbur Ross is wrong; the pain from the trade war is coming MORE in a statement.

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“The United States is committed to a free, fair and reciprocal trade and will always stand up for American workers and companies being harmed by unfair imports,” Ross said.

The U.S. International Trade Commission (ITC) will make a final decision early next year in the case. 

Bombardier called the U.S. decision "deeply disappointing" and said they expect the ITC to "reach the right conclusion, which is that the C Series benefits the U.S. aerospace industry, U.S. airlines and the U.S. flying public."

"Unfortunately, the Commerce Department decision is divorced from this reality and ignores long-standing business practices in the aerospace industry, including launch pricing and the financing of multi-billion dollar aircraft programs,” said Mike Nadolski, Bombardier’s vice president of communications and public affairs.

Canada vowed to fight the Commerce Department’s determination.

Chrystia Freeland, Canada’s minister of foreign affairs, said the decision to impose high duties hurts workers on both sides of the border.

"The Government of Canada is deeply troubled by the protectionist nature of Boeing’s allegations, which seek to advance its market dominance by excluding Bombardier’s C Series aircraft from the U.S. market," Freehand said.

"It is beyond all reason that Boeing could be threatened with injury in a market segment it exited over a decade ago," she said.

Canada’s government will review the final determinations to consider next steps and options for appeal, she said.

U.S. and Mexican trade officials will meet next month in Canada to continue NAFTA talks. The three countries have been struggling to update the 23-year-old pact. 

Boeing, which launched the trade case in April, is arguing that Canadian and British governments are subsidizing the plane's cost, allowing Bombardier to sell to the U.S. market at unfairly low prices.

“Today’s decision validates Boeing’s complaints regarding Bombardier’s pricing in the United States, pricing that has harmed our workforce and U.S. industry,” Boeing said in a statement.

Boeing argues that the Commerce Department investigations have already shown that Bombardier has accepted billions of dollars in illegal government subsidies to prop up its C Series program.

"The C Series would not even exist at this point but for those subsidies," the company said in a statement.

But Bombardier argues that Boeing isn’t threatened by the sales of the C Series because it doesn’t sell a 100-seat airplane to suit the needs of airlines like Delta, which ordered 75 planes in April 2016 to update its fleet.

Under a newly forged Bombardier-Airbus partnership, a new manufacturing plant will be built in Alabama, where the planes will be assembled, providing a possible avenue to avoid the hefty duty.

Delta Air Lines CEO Ed Bastian told Business Insider in a recent interview that the C Series plane is already made with at least 50 percent U.S. parts and moving its assembly to Alabama would boost that percentage up to about 60 percent. 

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