Bombardier plant in Belfast at risk from trade dispute with US
An international trade dispute between Bombardier and Boeing shows trade is not so easy. Could it be a taste of things to come post-Brexit?
A trade dispute between US company Boeing and Canadian company Bombardier could force the closure of Bombardier’s plant in Belfast, which primarily manufactures aircraft wings and employs 4,500 people. Although the dispute was raised in May, the news has hit the headlines again following the confirmation by Downing Street that Theresa May raised the issue with US president Donald Trump in a phone call last Tuesday. The Times reports the prime minister asked the president to intervene following pressure from the Democratic Unionist Party (DUP), which the Tories have a “confidence and supply” agreement with after losing their majority in June’s election.
In May, the US Commerce Department gave the go-ahead to an anti-dumping investigation following claims by Boeing of Bombardier’s pricing for its CSeries aircraft. As the BBC reports, the US aircraft manufacturer has accused its Canadian rival of “price dumping” after agreeing to sell 75 aircraft for nearly $14m below their cost price. This, Boeing argues, helped Bombardier win a contract to supply US airline Delta with up to 125 aircraft. The US company also claims that Bombardier received illegal state aid, which allowed it to sell its planes at a much lower cost. The company received investment from the Quebec state government to complete the CSeries in October. Bombardier also received a £113m loan from the UK government for its new CSeries plane.
In addition to the prime minister’s call, The Times reports business secretary Greg Clark also visited Boeing’s office in Chicago to plead with executives to drop the case. A government spokesman said: “this is a commercial matter but the UK government is working tirelessly to safeguard Bombardier’s operations and its highly skilled workers in Belfast”. He added the government’s priority was to “encourage Boeing to drop its case and seek a negotiated settlement with Bombardier”.
The dispute highlights the difficulties in international trade as the UK seeks to leave the biggest trading bloc in the world. In its report, the Financial Times suggests there’s “no clear reason” for the prime minister’s intervention other than “seeking his help in persuading US officials or Boeing to back off the investigation”.
But with Trump’s “America First” rhetoric, the government’s pleas may prove futile. Indeed, as The Times reports, industry sources believe it is this rhetoric that encouraged Boeing to take action in the first place. In a statement following the launch of the investigation, Boeing said it welcomed the decision “to investigate Bombardier’s illegal and unfair business practices that pose significant harm to America’s aerospace industry and thousands of good-paying aerospace jobs”.
And in a statement released yesterday, Boeing said “we believe that global trade only works if everyone plays by the same rules of the road, and that’s a principle that ultimately creates the greatest value for Canada, the UK, the US and our aerospace industry”. With Brexit negotiations underway, the UK is still trying to figure out how it can achieve the deep trade deal it wants with the EU at the same time as walking away from the very institutions that ensure all those involved “play by the same rules”. The EU has said this is “simply impossible” and Boeing’s statement suggests the same.
Meanwhile, the BBC reports Bombardier as describing the allegations as “absurd” and that the investments “comply with the laws and regulations in the jurisdictions where we do business”.
The Canadian government has also been putting pressure on Boeing to drop its complaints but as the Globe and Mail reports, the US company has refused. An initial ruling by the International Trade Commission is expected on September 25. Industry figures expect it to rule in Boeing’s favour, which could lead to punitive tariffs being put on Bombardier’s aircraft.
It turns out that international trade is not so easy.
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