WASHINGTON (Reuters) – Boeing Co and Bombardier Inc battled on Monday over the US automaker's claim that its Canadian rival used billions of dollars in illegal government subsidies and unloaded its newest aircraft in the United States. below the cost.
Boeing said Bombardier had hurt its ability to sell 737 in the US market in a heated hearing by the United States International Trade Commission (ITC), one of the final steps in a bitter trade dispute that will end in February.
Bombardier argued that Boeing's large order book 737 shows that there has been no adverse impact from its CSeries jet.
"Boeing is making a big buck, and with a delay of orders of 737 years in the future, there are no signs of difficulty on the horizon," Bombardier representative Peter Lichtenbaum said in opening remarks.
If ITC teams up with Boeing, as it has done so far, it could prevent US airlines from using Bombardier's CSeries jet by imposing tariffs of nearly 300 percent, one of the largest ever imposed for a market economy. said Boeing. .
The US Department of Commerce UU You must complete the proposed duties on Monday or Tuesday.
If Bombardier wins, Boeing, based in Chicago, says its smaller 737 model could face disloyal CSeries competition for decades.
Canada's ambassador to the United States, David MacNaughton, warned that a positive finding of material damage to Boeing by the ITC could present a possible violation of the agreements of the World Trade Organization and provoke a formal complaint with the group global commercial
"Boeing's claim that Canada's future imports threaten to cause material injury is necessarily based on the kind of 'speculation and conjecture' that is prohibited by both the United States and international law. "said MacNaughton to the panel.
Earlier this month, Canada abandoned its plans to buy 18 Boeing Super Hornet fighters, underscoring Ottawa's outrage over the business challenge. Boeing said it considers all potential risks before deciding to launch its commercial case.
The case is due to a sale in April 2016 of 75 CSeries aircraft to Delta Air Lines Inc. Boeing states that Delta paid $ 20 million per aircraft, well below an estimated cost of $ 33 million and what Bombardier Charge in Canada.
"A single large order, such as the sale of Bombardier to Delta, takes years of demand out of the market, in this industry, if we lose a sale, it goes forever." These are years of production loss and deliveries for Boeing, years of work lost for our employees and years of work lost to our suppliers in the US, "said Boeing executive VP Kevin McAllister.
European aircraft manufacturer Airbus SE, which is buying a controlling stake in the CSeries program and has a competing aircraft, has said it could move production from CSeries to a factory in Alabama, so it's a US product.
Boeing says it should not deny tariffs because Airbus and Bombardier would import fuselages and wings and simply be assembling in the United States.
But Bombardier argues that Boeing's case is against the total importation of aircraft, not parts, so it does not apply to imports of wings, fuselages and other parts. Bombardier says that more than half of the value of CSeries content comes from the United States, including the Pratt & Whitney engines.
Boeing says the Delta agreement was a market definition because other airlines will demand the same low price and the planes will be in service for decades.
All aircraft are initially sold below cost because airlines are taking a risk on a new airplane model and initial development costs are high, Bombardier says. The cost decreases over time as the factory produces more aircraft and improves manufacturing.
The US aircraft manufacturer UU He said that Bombardier did not cooperate in a US investigation. UU Who provided information about prices to the United States.
Bombardier said it delivered the Delta sales contract, but can not accurately estimate the cost and price of those aircraft because they are being built and delivered in the coming years.
Boeing says the CSeries would not exist without hundreds of millions of dollars in launch aid from the governments of Canada and Great Britain and a capital injection of $ 1 billion from the province of Quebec.
Such subsidies are not prohibited because they are market-based investments or repayable loans, Bombardier said.
Bombardier also argues that Boeing and Airbus do not compete with the CSeries because their aircraft are larger and have more range. The most direct competitors of CSeries are smaller jets made by Embraer Mitsubishi.
CSeries poses no threat to the US aerospace industry UU Because its construction at the Airbus factory in Alabama would create jobs in the United States. UU And it would generate billions of dollars in business for US aerospace companies. UU., Bombardier said.
Reports by Alwyn Scott in New York and Alana Wise in Washington