Canada-based Bombardier just won a major trade case. Boeing had accused the aerospace giant of accepting billions in "unfair" Canadian government subsidies, subsidies that allowed Bombardier to undercut its rivals "” read: Boeing "” on price. The U.S. International Trade Commission (ITC) disagreed. The government agency, which can act against unfair trade practices, ruled that Boeing was not harmed by Bombardier"™s prices. Bombardier called that decision "a victory for innovation, competition, and the rule of law."
1. What"™s the story behind this dispute?
The disagreement centers on Bombardier"™s C series "” a new generation of airplanes more technologically advanced and fuel-efficient than its rivals. Bombardier spent over $6 billion bringing the aircraft to market. The C series also received backing from Canadian politicians who ponied up more than $1 billion in taxpayer funds to support the program.
Boeing argues that these handouts were illegal. The company further contends that this support allowed for the C series to be dumped into the U.S. market, "harm[ing] American workers and the aerospace industry they support." Boeing eventually filed a trade complaint with the U.S. Commerce Department.
2. Why is the ruling significant?
The Commerce Department sided with Boeing and handed Bombardier a hefty fine. This meant that any U.S. airline buying the C series would pay a 300 percent penalty on each airplane purchased. The result? Higher costs for the airline or outright cancellation of pending C series orders. The ITC"™s decision ends these prospects.
It also eases pressure on the British government. The reason? Jobs. Bombardier employs over 4,000 workers in Northern Ireland alone and is the region"™s largest manufacturing employer. A further 20,000 jobs across the United Kingdom are linked to Bombardier"™s supply chain.
3. How has the Trump administration responded?
Following the ITC"™s decision, U.S. Commerce Secretary Wilbur Ross said the outcome "shows how robust our system of checks and balances is." But that"™s quite different from his previous comments. When Commerce initially ruled against Bombardier, Ross hailed it as an affirmation of President Trump"™s "America first" policy. In a statement he noted, "We will ."‰."‰. do everything in our power to stand up for American companies and their workers”…