Published: Fri, December 22, 2017
Markets | By Terence Owen

Commerce Department sides with Boeing on CSeries tariff

Commerce Department sides with Boeing on CSeries tariff

The U.S. Commerce Department upheld on Wednesday the almost 300 per cent in duties that Bombardier will face on C Series passenger jets delivered in the U.S.

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

Boeing filed the case against its Canadian rival after Delta Air Lines (NYSE: DAL - news) ordered 75 of the C-Series planes that can seat 100-150 passengers.

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

"The C Series would not even exist at this point but for those subsidies", Boeing said, adding that the support enabled the company "to dump aircraft into the US market at absurdly low prices".

But the Commerce Department's statement on Wednesday said that Bombardier, petitioners and the government of Canada agreed that that proposed agreement "does not impact these investigations". Bombardier and Boeing argued their cases Monday before the ITC, an independent, quasi-judicial USA agency.

"There's no case here", Bombardier's Bellemare said, calling the complaint "ridiculous".

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Bombardier calls Boeing's criticism unfounded, saying that the USA company's entire case has been overtaken by events.

"Boeing's assertion that future imports from Canada threaten to cause material injury is necessarily based on just the type of "speculation and conjecture" that is prohibited under both USA and worldwide law", MacNaughton told the panel.

In October, shortly after the preliminary tariffs were announced, Boeing archrival Airbus took a majority stake in the C-Series program, announcing that the planes would be built at the Airbus plant in Mobile, Alabama. "This facility will provide USA airlines with a US -built plane thereby eliminating any possibility of harm due to imports".

Boeing says that should not negate the duties because Airbus and Bombardier would import fuselages and wings and merely be assembling in the United States.

The tariff will apply "regardless of whether they enter the United States fully or partially assembled", the Commerce Department says.

Bombardier was able to underprice the jets due to $3 billion in unfair government subsidies, Boeing says.

Bombardier also argues that Boeing and Airbus do not compete with the CSeries because their planes are larger and have more range.

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