Thursday, 12 October 2017

Boeing V Bombardier - Trade War Looms

Photo Reuters 

The battle between the US aviation giant Boeing and the much smaller Canadian manufacturer Bombardier continues to rumble on with almost alarming ferocity.

The Canadian Prime Minister, Justin Trudeau, in Washington for US-Canada trade talks, warned his US counterpart, President Donald Trump he would block Canadian armed forces from buying Boeing aircraft if the US Government presses ahead with its outrageous plans to slap duties and tariffs of 300 percent on Bombardier C Series aeroplanes.

The battle has been bubbling up for some time and many see it as a key ingredient to start a trade war between the North American neighbours. It's already caused consternation and possible trading hostilities between the US and the UK, where the Canadian manufacturer employs some 4000 people making wings for the C Series jets at the former Shorts Brothers factory in Northern Ireland.

Mr Trudeau met Trump at the White House this week for discussions on the North American Free Trade Agreement and confirmed he raised “directly” the Bombardier issue. “I highlighted to the president how we disagree vehemently with Commerce’s decision to bring in countervailing and anti-dumping duties against Bombardier, that we feel this is not something that is warranted and quite frankly something that we look very negatively upon,” The Canadian Prime Minister said after the meeting.


“The attempts by Boeing to put tens of thousands of aerospace workers out of work across Canada is not something we look on positively.” the talks he said, were not easy and Mr Trudeau added that he informed Trump he would prevent future Canadian government orders from Boeing. “I certainly mentioned that this was a block to us making any military procurements from Boeing,” he said.

Back in September, British Prime Minister, Theresa May expressed her concern over the possible implementation of taxes and fees to import duties on C Series aircraft, saying she had called President Trump to express her displeasure,  "is not the sort of behavior we expect from a long-term partner" and that it "undermines that partnership."

The defence secretary Sir Michael Fallon went a little further, saying "This is not the behaviour we expect from Boeing and it could indeed jeopardise our future relationship with them...Boeing wants and we want a long-term partnership, but that has to be two-way. Boeing stand to gain a lot of British defence spending."

"We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicopters and they will also be bidding for other defence work, and this kind of behaviour clearly could jeopardise our future relationship."   

The Ministry of Defence said: "Boeing's position, in this case, is unjustified and not what we expect of a long-term partner to the UK. Whilst this will not affect our existing programmes, these actions could undermine our future relationship and programmes."

Foreign Secretary Boris Johnson added: "I hope it can be resolved speedily and obviously we're very disappointed by the result. We will be looking at what we can do to ensure free and fair trade to make sure that Bombardier gets a fair crack of the whip and first suck of the saucepan."

Some media commentators in the US see the moves by Boeing to instigate protectionist measures as a political move by the company to appease the US President. "The first thing that Trump did when he took office was tweeted at them [Boeing]  it was an attack. He went after Air Force One, saying 'Cancel Order' simultaneously he threatened to impose a 45% tariff on Chinese imports, which would have closed out their biggest export market by retaliation.  At the same time, he criticised their F14 Super Hornet as a piece of junk" Said Richard Aboulafia of the Teal Group during a Check 6 podcast, adding, "Frankly I think they've reacted, by doing everything they can to help him pander to his economic nationalist base."

Delta, who have a massive order for the C Series jets said the carrier would not foot the bill of the proposed tariff but would get the planes "at the agreed contractual price".

Two of the biggest orders out of three for Boeings 737 MAX aircraft come from Canadian airlines and it would be relatively easy for the Canadian's to slap import taxes on these aircraft to match or exceed the ones that are to be potentially imposed upon the C Series aircraft. 

Boeing have repeatedly ignored our requests for a comment or details of exacatly home many aircraft orders they claim to have lost out on to Bombardier. 




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