Trade Ruling Sets Up Debate Over Boeing 'Harm' -- Update

By Doug Cameron Features Dow Jones Newswires

U.S. trade officials on Friday ruled that Bombardier Inc. unfairly discounted sales of a new jetliner, setting up a battle as to whether Boeing Co. suffered any harm from competing with its Canadian rival.

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The Commerce Department ruled in favor of a complaint from Boeing and said it would add an 80% tariff to imports of Canadian jets carrying 100 to 150 passengers, hitting the new Bombardier CSeries jet. The department last week slapped a proposed 220% duty on aircraft imports including the CSeries after finding the Canadian company received unfair government subsidies.

Boeing launched the complaint against Bombardier earlier this year but has been widely criticized by much of the global aerospace industry as it also receives government subsidies and has discounted prices of its own aircraft to secure sales.

An independent U.S. trade body still has to rule on whether Boeing suffered any harm from Bombardier's tactics when the Canadian company won a big sale of 75 CSeries jets last year to Delta Air Lines Inc. and unsuccessfully bid to sell planes to United Continental Holdings Inc. Boeing claims it had to lower its own price to win the United deal.

Delta, which reports earnings next week, has said it is confident the proposed tariffs will be rejected because no U.S. companies produce aircraft the same size as the Bombardier jet. The Canadian company also has refuted Boeing's claim about the price agreed with Delta.

Canada attacked the decision Friday. "Boeing is manipulating the U.S. trade remedy system to prevent Bombardier's new aircraft, the CSeries, from entering the U.S. market, despite Boeing's admission that it does not compete with the CSeries," foreign minister Chrystia Freeland said in a statement.

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The twin Commerce Department rulings have inflamed a simmering trade spat with Canada, with the U.K. also criticizing Boeing's stance. Bombardier has a large aerospace plant in Northern Ireland. Canada and the U.K. also have said the issue threatens future military purchases from Boeing.

Boeing on Friday gave no indication of backing off.

"This determination confirms that, as Boeing alleged in its petition, Bombardier dumped its aircraft into the U.S. market at absurdly low prices," the company said in a statement.

Analysts said Boeing has pursued the case in an effort to prevent future expansion by Bombardier into larger aircraft that would compete more directly with its own jets.

A final decision on any U.S. duty is expected next year. Canada and Bombardier have both refuted the allegations. A spokesman for Bombardier couldn't be immediately reached for comment on the latest decision.

The World Trade Organization this week opened a separate front on Bombardier, convening a panel on Brazil's complaint that the jet maker received illegal subsidies, harming rival Embraer SA, which makes similar-sized aircraft.

Bombardier said it is in full compliance with trade rules, adding that Canada plans to defend the company and the country's aerospace industry in the matter. The WTO has been the usual venue for complaints about aerospace subsidies, including a long-running spat involving Boeing and Airbus.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

October 06, 2017 15:14 ET (19:14 GMT)