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Abu Dhabi, UAEWednesday 19 December 2018

US supports 300 per cent in duties on Bombardier following Boeing complaint

The decision, which confirms Donald Trump's defensive trade policy, could see sales of Bombardier's new plane to US carriers come to a halt

A plane flies over a Bombardier plant in Montreal, Quebec, Canada. Christinne Muschi/Reuters
A plane flies over a Bombardier plant in Montreal, Quebec, Canada. Christinne Muschi/Reuters

The US Commerce Department notched up proposed trade duties on Bombardier CSeries jets to nearly 300 per cent on Friday, affirming Boeing's complaint that the Canadian company received illegal subsidies and dumped the planes at “absurdly low” prices.

The decision underscored the defensive trade policy of US President Donald Trump, and could effectively halt sales of Bombardier’s innovative new plane to US airlines by quadrupling the cost of the jets imported to the US.

The Commerce Department proposed a 79.82 per cent antidumping duty on Friday, on top of a 219.63 per cent duty for subsidies announced last week.

The new duty follows a preliminary finding that Bombardier sold 75 CSeries jets below cost to Delta Air Lines in 2016. The total was well above the 80 per cent Boeing sought in its complaint.

The proposed duties would not take effect unless affirmed by the US International Trade Commission (ITC) early next year.

The duties are expected to heighten trade tensions between the US, Canada and Britain, where CSeries wings are made. The US, Canada and Mexico also are negotiating to modernise the North American Free Trade Agreement.

After the first duty was announced on September 26, Canada and Britain threatened to avoid buying Boeing military equipment, saying duties on the CSeries would reduce US sales and put thousands of Bombardier jobs in their countries at risk.

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Bombardier shares were last up 0.5 per cent to C$2.20 (Dh6.45). Some analysts said the muted response reflected a view that the penalties might not actually be applied.

Boeing, the world’s largest plane maker, hailed the decision and hinted at an alternative for Bombardier.

“These duties are the consequence of a conscious decision by Bombardier to violate trade law and dump their CSeries aircraft to secure a sale,” Chicago-based Boeing said in a statement.

“Bombardier always has the option of coming into full compliance with trade laws,” Boeing added.

Canada’s foreign ministry said Boeing was “manipulating the US trade remedy system” to keep the CSeries out of the country.

Canada is in “complete disagreement” with the decision and would keep raising concerns with the United States and Boeing, Foreign Minister Chrystia Freeland said in a statement.

To win its case before the ITC, Boeing must prove it was harmed by Bombardier’s sales, despite not using one of its own jets to compete for the Delta order.

Bombardier said it was confident that the ITC would find Boeing was not harmed, calling the Commerce Department decision a case of “egregious overreach.”

Delta said the decision was preliminary and it was confident the ITC “will conclude that no US manufacturer is at risk” from Bombardier’s plane.

Boeing has said the dispute was about “maintaining a level playing field” and was not an attack on Canada or Britain.

US Commerce Secretary Wilbur Ross said the decision affirmed Trump’s “America First” policy.

“We will ... do everything in our power to stand up for American companies and their workers,” Mr Ross said in a statement.

But the industry is not so simple. More than half of the purchased content of each CSeries aircraft comes from US suppliers, Bombardier has said. The plane supports an estimated 22,700 jobs and Bombardier’s aerospace division spent $2.14 billion in the United States last year, according to the company.

Boeing has said the CSeries would not exist without hundreds of millions of dollars in launch aid from the governments of Canada and Britain and a $2.5bn equity infusion from the province of Quebec and its largest pension fund in 2015.