Canada warns it may cancel US jet buy over Bombardier probe

Canada's government warned Thursday it could cancel a planned US$2 billion purchase of 18 Super Hornet fighter jets from Boeing Co. because of U.S. Department of Commerce anti-dumping investigations against Canadian plane maker Bombardier.

Foreign Minister Chrystia Freeland issued the threat in a statement about Boeing's complaint against Bombardier.

"Canada is reviewing current military procurement that relates to Boeing," Freeland said.

Boeing argued at a hearing in Washington on Thursday that duties should be imposed on Bombardier's new larger CSeries passenger aircraft, insisting it receives Canadian government subsidies that give it an advantage internationally.

Freeland said Boeing's petition is "clearly aimed at blocking Bombardier's new aircraft, the CSeries aircraft, from entering the U.S. market." She said the government strongly disagrees with the Commerce Department's decision to initiate anti-dumping and countervailing duty investigations.

The threat comes amid increasing trade disputes between Canada and the U.S. and on the same day the Trump administration formally told Congress that it intends to renegotiate the North American Free Trade Agreement.

Chicago-based Boeing has petitioned the U.S. Commerce Department and the U.S. International Trade Commission to investigate subsidies of Montreal-based Bombardier's CSeries aircraft. Boeing said Bombardier has received more than US$3 billion in government subsidies so far that have allowed Bombardier to engage in "predatory pricing."

Brazil has also launched a formal complaint to the World Trade Organization over Canadian subsidies to Bombardier. Sao Paolo-based Embraer is a fierce rival of Bombardier's.

The Quebec government invested US$1 billion in exchange for a 49.5 percent stake in the CSeries last year. Canada's federal government also recently provided a US$275 million loan to Bombardier, which struggled to win orders for its new medium-size plane. But Bombardier won a 75-plane order for the CSeries from U.S.-based Delta Air Lines in 2016. Bombardier said its planes never competed with Boeing in the sale to Delta.

The Canadian government said late last year it would enter into discussions with the U.S. and Boeing on buying 18 Super Hornet jet fighters from Boeing on an interim basis and hold an open competition to buy more planes over the next five years.

Canada remains part of Lockheed Martin's F-35 Joint Strike Fighter program.