Daily Management Review

US Boeing declares air war to Canadian Bombardier


10/17/2017


The Trump administration is ready to defend the interests of national producers at all costs. The country raised import duties on the liners of the Canadian company Bombardier by 219%. The leaders of Canada and Britain called on the US to abolish restrictive measures that could endanger 5,000 Bombardier employees. Otherwise, both countries are ready to refuse orders for Boeing military aircraft.



@realDonaldTrump
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The trade dispute between Bombardier and Boeing has reached the heads of the states. US President Donald Trump and Canadian Prime Minister Justin Trudeau discussed the issue during the latter's visit to Washington.

Earlier, Ottawa suspended negotiations with the US corporation about the purchase of 18 fourth-generation fighter-bombers CF-18 Super Hornet. It was assumed that these aircraft should be delivered to the Canadian Air Force to update the outdated park.

The main reason for the cancellation was a major contract with Delta Air Lines carrier, which Bombardier literally intercepted from Boeing in 2016, offering the airline its aircraft at a record low price. As American Boeing later noted, the Canadian manufacturer offered Delta Air Lines to buy CSeries aircraft with a capacity of 100-150 passengers at a price of $ 19.6 million per vessel. At that, the American corporation believes that full cost of production of one liner amounts to $ 33.2 million. Boeing models in the same segment are much more expensive on the market. Thus, the catalog price of the competing model Boeing 737-700 is $ 83.4 million, and the new 737-MAX 7 - $ 92.2 million.

The contract between Delta Air Lines and Bombardier was concluded for 125 airliners, the first deliveries were planned in 2018. After such a dumping Boeing appealed to the US Department of Commerce with a request to deal with this situation. The US authorities have commenced an investigation into Bombardier.

In September, the United States Department of Commerce announced introduction of compensation duties (CVD) for Bombardier aircraft at a rate of 219.63%. The Canadian company said that they "categorically disagree with the decision of the US Department of Commerce." This is "an example of blatant excess of the law and its misuse," Bombardier is confident.

The air corporation’s concern is shared by the authorities of Canada and Great Britain, whose territories host the company’s production capacities. So, British Prime Minister Theresa May expressed her support for Trudeau and even tried to raise the issue in a telephone conversation with Trump, stressing that this trade dispute could eventually lead to job losses both in Canada and in Northern Ireland, where the plant Bombardier employs 5 thousand people.

Trudeau tried to discuss this issue in talks with Trump on October 11 during talks on the North American Free Trade Agreement (NAFTA), however, to no avail.

Previously, Trump said he wants to review the 1992 agreement on the North American free trade zone between Canada, the United States and Mexico. In his view, the United States has lost more than a quarter of jobs in industry because of NAFTA.

Negotiations on the possibility of preserving NAFTA are not easy. Following the meeting with Trudeau, Trump said he was ready to go on bilateral trade deals with Canada or Mexico, if negotiations fail. "It is absolutely possible that we will not be able to agree with someone, but in the meantime we will agree individually," Trump said. "I think it will work well for both the US and Canada, and for Mexico," he added.

As for Bombardier, Trump avoids to publicly state his position. However, a possible cancellation of duties was mentioned neither after telephone conversations with Teresa May nor after a meeting with Trudeau. This allows the media to assume that Trump intends to defend Boeing's position on this issue. "This is a dangerous moment for Boeing," The Washington Post quoted Richard Aboulafia, an analyst of the aerospace industry group Teal. The American analyst called the American concern’s actions "self-inflicted wounds" and warned about reputational risks and the danger of spoiling the company's business relations with the Canadian military and with Delta.

source: washingtonpost.com






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