The United States Department of Commerce upheld a preliminary decision and hit Bombardier Inc. with a slightly reduced 292.31 per cent tariff on Wednesday after it concluded the Montreal-based company had been dumping its CSeries aircraft into the U.S. market and had received unfair government subsidies.
The Department of Commerce’s final investigation found that Bombardier had sold CSeries jets to U.S. carrier Delta Air Lines Ltd. at 79.82 per cent less than fair value and that the company had received unfair subsidies at a rate of 212.39 per cent — slightly less than the preliminary rate it had calculated of 219.63 per cent.
In October, the Department of Commerce had hit Bombardier with a 79.82 per cent anti-dumping duty and 220 per cent duty over its use of countervailing subsidies.
Foreign Affairs Minister Chrystia Freeland slammed Boeing’s complaint, saying the government will “defend Canadian companies and workers against protectionism.”
“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 CSeries aircraft from the U.S. market,” Freeland said in a statement.
“It is beyond all reason that Boeing could be threatened with injury in a market segment it exited over a decade ago.”
Boeing Co., which launched the petition over the sale of 75 CSeries aircraft to Delta, said the decision validates its complaint.
Bombardier’s vice president of communications, Mike Nadolski, said it was “divorced from reality and ignores long-standing business practices in the aerospace industry.”
“We are deeply disappointed that the Commerce Department did not take this opportunity to rectify its past errors,” Nadolski said.
“The fact is that the CSeries simply does not threaten Boeing. Boeing did not compete in the Delta campaign.”
Boeing accused Bombardier of embarking on “an aggressive campaign to dump its CSeries aircraft in the United States” and of offering the new jet to Delta at an “absurdly low price.”
While the duty is substantial, it is not necessarily final. The Commerce Department’s decision could be overturned if the United States International Trade Commission finds that Boeing did not suffer material injury as a result of the Delta sale. The commission’s final decision is expected on Feb. 1.
U.S. Commerce Secretary Wilbur Ross said in a statement that the decision was “based on a full and unbiased review of the facts in an open and transparent process.”
“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 decision comes two days after David MacNaughton, Canada’s ambassador to Washington, urged ITC tribunal not to impose duties on Bombardier planes, arguing that potential duties were illegitimate, that the CSeries does not compete with similar-sized Boeing jets, and that duties would ultimately hurt the U.S. as Bombardier provides 23,000 jobs in nine states. Boeing argued that public subsidies given to Bombardier have allowed it to survive and creep into potential markets.
“Boeing makes the best airplanes in the world. But we can’t compete with companies funded and backed by governments,” Boeing Commercial Airplanes president and chief executive officer Kevin McAllister told the tribunal.
Earlier this month, the Canadian government confirmed it had ditched plans to buy 18 Super Hornets from Boeing, opting instead to purchase 18 second-hand F-18s from Australia. The government also launched a program to buy up to $19-billion worth of new fighter jets, which included a provision that appear to be aimed at Boeing in that “any bidder that is responsible for harm to Canada’s economic interests will be at a distinct disadvantage.”