Published: Sat, October 07, 2017
Markets | By Rosalie Gross

Commerce levies additional 80 percent preliminary AD duty on Bombardier

Commerce levies additional 80 percent preliminary AD duty on Bombardier

Bombardier is now facing a proposed 300% duty on its exports of planes to the US.

The new duty is in addition to a preliminary countervailing tariff of nearly 220 per cent that the US government announced last week, bringing the total USA duties imposed on the CSeries to almost 300 per cent.

The 80-percent duty would apply to medium-range aircraft with 100 to 150 seats, the Commerce Department said on Friday.

The measures also "put at risk the nearly 23,000 that depend on Bombardier and its suppliers".

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The move follows complaints by Boeing that Canadian-owned Bombardier, which employs more than 4,000 people in Belfast, had dumped its C Series jets at "absurdly low" prices.

Rival ATR, the market leader in turboprops, has also secured a provisional order for 50 ATR 72-600 aircraft, worth over $1.3 billion at list price, from Indigo, India's biggest airline by market share.

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The duties are in response to a complaint from US competitor, Boeing, that accused Quebec-based Bombardier of selling 75 of its new CSeries jets to Delta Air Lines at below production cost to gain market share and that the government subsidized the project.

"The United States is committed to a free trade, fair and reciprocal with Canada, but this does not correspond to our idea of a business relationship which is working properly", said the secretary of Commerce, and Wilbur Ross.

The U.S. jetmaker alleges the CSeries would not exist without hundreds of millions of dollars in launch aid from the governments of Canada and Britain, or a $2.5 billion equity infusion from the province of Quebec and its largest pension fund in 2015.

The decision is expected to heighten trade tensions which flared last week after the U.S. announced a preliminary duty of almost 220% for subsidies Bombardier received, which was well above the 80% duty Boeing sought in its complaint. The chair of the International Trade Committee this week wrote to the secretary of state for greater clarity on the Bombardier situation, asking whether the decision suggests the USA "is taking a more protectionist stance to international trade".

A final decision on any US duty is expected next year.

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. "Going forward, the C Series program will generate more than $30 billion in business for US suppliers and support more than 22,700 jobs in the United States".

Canadian Prime Minister Justin Trudeau is scheduled to meet with US President Donald Trump on Wednesday to discuss these trade irritants as a fourth round of NAFTA talks kick off in a Washington suburb.

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