US trade panel sides with Bombardier, strikes out 300% tariffs

A U.S. International Trade Commission panel struck down 300 percent tariffs against narrow-body Canadian jetliners, siding with Montreal-based jetmaker Bombardier in a contentious trade dispute between the United States and Canada.

The unanimous decision by the four-member panel is a significant blow to Chicago-based aerospace giant Boeing and gives an unexpected boost to Airbus, Boeing’s closest commercial competitor in the U.S. commercial airline market.

It also removes a sticking point in relations between the United States and Canada at a time when officials from the two countries are meeting in Montreal to renegotiate the North American Free Trade Agreement, which covers the United States, Canada and Mexico.

By voting in Bombardier’s favor, judges have certified that they do not believe Boeing’s business has been materially harmed by Bombardier’s trade practices, a key qualifier for imposing tariffs.

The ruling comes as a growing number of U.S. companies file complaints against overseas rivals, hopeful to win support from the Trump administration.

The fight over imported jets stemmed from a $5 billion deal struck between Bombardier and Atlanta-based Delta Air Lines in 2016 for 75 CS100 commercial airplanes and has since grown into a multi-country trade dispute entangling French and Brazilian aerospace firms.

Boeing argues that Bombardier’s deal with Delta is a violation of U.S. trade laws against “dumping,” a term that refers to selling products abroad at a lower price than they would be sold at home. Boeing also alleges that Bombardier is propped up by unfair government subsidies that allow it to undercut foreign competitors. Bombardier has countered that Boeing benefits from subsidies in the United States, including federal contracts and tax breaks from state governments.

Whether the Bombardier planes are direct competitors with Boeing planes was a key question in Friday’s ruling. Boeing argues that Bombardier’s C Series planes compete with its 737 MAX 7, a narrow-body commercial jetliner, something Bombardier denies.

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Canadian and British officials reacted sharply to the news, accusing Boeing of pursuing protectionist measures for its financial benefit.

The dispute heated up late last year when the U.S. Commerce Department issued preliminary rulings in Boeing’s favor, levying 300 percent tariffs on jets imported from Canada.

Aerospace experts were surprised by the size of the tariff, which effectively quadrupled the price that airlines such as Delta would have to pay when they acquire new CS100 model planes.

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The Canadian government has already retaliated against Boeing.

In its arguments before the trade commission, Boeing’s lawyers cast doubt on the idea that Airbus will set up an Alabama-based production line, arguing that the company could change its plans.

oeing later revealed in December that it is pursuing a joint venture with Brazilian aerospace firm Embraer, a close competitor with Bombardier in the market for smaller commercial jets. The two companies have not announced a finalized deal yet.