Published: Fri, May 19, 2017
Worldwide | By Gretchen Simon

Canada warns it may cancel US jet buy over Bombardier probe

Canada warns it may cancel US jet buy over Bombardier probe

Canadian Foreign Minister Chrystia Freeland said the government "strongly disagrees" with the department's decision and added it is now reviewing current military procurement that relates to Boeing.

Boeing argued at a hearing in Washington on Thursday that duties should be imposed on Bombardier's new larger CSeries passenger aircraft, insisting it receives Canadian government subsidies that give it an advantage internationally.

The Commerce probe, which was expected, parallels an investigation by the U.S. International Trade Commission into Boeing's allegations that Bombardier sold 75 CSeries planes to Delta Air Lines Inc DAL.N a year ago at a price well below cost.

Boeing has petitioned the U.S. Commerce Department and the U.S. International Trade Commission to investigate subsidies of Bombardier's CSeries aircraft.

Mnuchin was testifying before the Senate Banking, Housing and Urban Affairs Committee - his first appearance before that committee since being sworn in.

Boeing vice-president Raymond Conner said the sale of cheap, subsidized planes to Delta Air Lines helped build momentum for Bombardier to enter a new market.

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The move adds to existing trade tensions between the USA and Canada, centered on the lumber and dairy industries.

Bombardier has made it clear that its true goal is to grab half the worldwide market share for 100-to-150-seat aircraft, according to Boeing, which argues its rival has received an unfair head start from Canadian taxpayers. A preliminary determination on the petition is expected by June 12.

Boeing filed a complaint last month charging Bombardier was marketing its CSeries passenger jets in the United States for less than it costs to produce them, which could undercut sales of Boeing 737 passenger jets. She also hinted that Ottawa might take action against the USA company.

It complains that Bombardier has received more than US$3 billion in government subsidies so far that have allowed it to engage in "predatory pricing".

Bombardier has called for the case to be dismissed and said its planes don't compete directly with the Boeing aircraft. "If this is a case of David vs. Goliath, Boeing has cast itself in the wrong role".

Delta last year placed an order for 75 CSeries jets, providing the program with a marquee customer after years of sluggish sales.

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