U.S. aerospace giant Boeing has scored a major victory against Canadian rival Bombardier after Washington’s decision Tuesday to impose punitive duties of up to 220 per cent on the latter’s jets, but the dogfight is just beginning.
The Commerce Department decided on Tuesday to impose countervailing duties on Bombardier’s CSeries jets sold in the U.S., agreeing with Boeing’s position that the Canadian government unfairly subsidizes the company to build them. That could put major deals like the one with Delta last year to buy up to 125 of the jets in doubt, and bring more repercussions on all sides.
The list price of the Bombardier-Delta deal was $6 billion, although the airline likely paid much less for buying jets in such great volume.
Bombardier has numerous avenues of appeal, including the U.S. Court of International Trade, NAFTA and even the World Trade Organization.
Tuesday’s decision is also just one fight between the two companies. Other related rulings are expected, included one anti-dumping complaint from Boeing that’s expected next week, and a major one expected in the spring to determine how much Boeing’s business has actually been harmed by the alleged subsidies.
Proving that its business was harmed by the Bombardier-Delta deal will be hard, Dan Pearson of the Cato Institute said, because Boeing didn’t have any suitable jets to bid on the deal at the time.
“This (ITC case) cannot be a slam dunk,” the former ITC chairman said. “I’m having a hard time figuring out how Boeing was harmed by this.”
His colleague Dan Ikenson at the libertarian think-tank agrees, saying: “I can’t understand their claim of injury …. They don’t even make these damned planes.”
He also noted the irony of Boeing suing anyone over government assistance — when it’s the No. 1 recipient of government support through the U.S. Export-Import Bank, referred to jokingly in Washington as, “the Bank of Boeing.”
“Boeing is very much at the trough,” Ikenson said.
It’s not yet clear what avenue Canada will choose to focus on in its appeal, but if the initial ruling is upheld, the duties that make the jets more than three times as expensive would be due as soon as Bombardier starts delivering the jets to Delta, which isn’t expected to happen until next spring.
Most analysts expected Boeing to prevail, but not for the duty imposed to be so harsh: Boeing itself had only lobbied the government to impose a duty of 80 per cent on the Bombardier jets, not the…