WASHINGTON May 17 U.S. government officials on
Thursday are set to begin investigating Boeing Co's
unfair trade claims against Canadian rival Bombardier,
a two-track action that could lead to U.S. duties on
Bombardier's new jetliner and also pits Boeing against Delta Air
The U.S. Commerce Department is poised to announce the
launch of its investigation. U.S. International Trade Commission
(USITC) staff will hear testimony from both companies and from
Bombardier customer Delta in the case.
Boeing alleges that Bombardier's new 100-150 seat CSeries
jetliners are being dumped below cost in the U.S. market, and
are unfairly subsidized by Canadian taxpayers. The new Canadian
aircraft competes with Boeing's 737-700 and 737 MAX 7 jets.
Delta agreed last year to buy dozens of CSeries planes at a
price that Boeing says was well below Bombardier's cost.
The case has increased trade tensions between the United
States and Canada - along with disputes over Canadian softwood
lumber and U.S. milk protein products - as both countries
prepare for a possible renegotiation of the North American Free
Trade Agreement under the "America First" trade policy of U.S.
President Donald Trump.
The Commerce Department is expected to proceed with the
antidumping and antisubsidy claims, trade lawyers and experts
"Commerce is going to go forward, there’s no doubt about
it," said William Perry, a Seattle-based trade lawyer and a
former USITC staff attorney.
The investigation is the latest to hit Bombardier after
Brazil launched a trade dispute against Canada at the World
Trade Organization, similarly alleging unfair competition.
Brazilian officials welcomed the U.S. probe as support to
the South America country's claim that Canada's support for
Bombardier's CSeries undercuts the market for commercial jets
made by Brazilian rival Embraer.
A Commerce Department investigation into Boeing's claims
could be cut short if the USITC rejects it in a vote expected on
June 12. If the trade body allows the probe to continue, the
Commerce Department would then need to determine any preliminary
anti-subsidy duties by around July 22, with a deadline for
preliminary anti-dumping duties around Oct. 3.
The Commerce Department last month began collecting duties
averaging 20 percent on imports of Canadian softwood lumber,
saying that the product's origin from public land amounted to an
unfair government subsidy.
Boeing said in its petition that Bombardier, determined to
win a key order from Delta after losing a competition at United
Airlines, had offered its planes to the airline at an
"absurdly low" $19.6 million each, well below what it described
as the aircraft’s production cost of $33.2 million.
Boeing's similarly sized 737-700 model has a current list
price of $82.4 million, with the new 737-MAX 7 priced at $92.2
million. Sales discounts from list prices are typically 40
percent to 50 percent in the industry.
In April 2016, Bombardier won the Delta order, its biggest
yet, for 75 CS100 jets, worth an estimated $5.6 billion based on
the list price of about $71.8 million.
In its complaint against Bombardier, Boeing argued that the
CSeries program would not exist without hundreds of millions of
dollars in launch aid from the governments of Canada, Quebec and
Britain, or a $2.5 billion equity infusion from Quebec and its
largest pension fund in 2015.
If Commerce's investigation finds that duties on the
Bombardier aircraft are warranted, those would likely be imposed
on Delta. Representatives for the airline are scheduled to
appear at Thursday's hearing to oppose Boeing's call for duties.
"Delta is no pushover," said Gary Hufbauer, a senior fellow
and trade expert at the Peterson Institute for International
Economics, said of the Atlanta-based carrier. "They'll have the
Georgia delegation behind them, and likely a lot of others in
(Additional reporting by Alwyn Scott in Seattle, Tim Hepher in
Paris, David Ljunggren in Ottawa, Allison Lampert in Montreal
and Alonso Soto in Brasilia; Writing by David Lawder; Editing by
Bill Rigby and Leslie Adler)