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Bombardier ruling: Q&A

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Bombardier has won a trade case in the United States, overturning a decision to impose damaging tariffs on imports of its C-Series aircraft.In December, the US Commerce Department ruled the UK and Canada had given unfair subsidies to Bombardier to help it build the aircraft.But in a surprise ruling, the US International Trade Commission (ITC) rejected the complaint brought by Boeing.We look at the case.Why did Boeing bring the case?The case relates to a major order for Bombardier from the US airline Delta for 75 C-Series aircraft.

Boeing complained to the US Commerce Department that they had been sold at “absurdly low prices” in violation of trade law and this was made possible by unfair subsidies to Bombardier from the British and Canadian governments. Bombardier has received £135m in UK aid, almost all of it a loan towards a new C-Series wing factory in Belfast which opened in 2013. About 50 companies in the UK supply Bombardier with parts for the C-Series.

How did Bombardier and the UK react?The UK government sided with Bombardier. The company employs about 4,000 people in Northern Ireland. Its main factories are in constituencies held by the Democratic Unionist Party (DUP), who have a confidence-and-supply deal keeping Theresa May in power. The prime minister lobbied President Donald Trump on Bombardier’s behalf, but the government resisted trade union calls to cancel defence contracts with Boeing. Bombardier said Boeing never lost out in the Delta order as it does not make the small size of plane requested. Some analysts wondered if Boeing was simply out to damage a competitor.

What had the US Commerce Department decided?Following an investigation last year, it made a final ruling on 20 December.It recommended an import tariff of 292% be added to the price of each C-Series plane sold in America. US Commerce Secretary Wilbur Ross said: “The United States will always stand up for American workers and companies being harmed by unfair imports.”

Had jobs been at risk?Cost over-runs on the C-Series almost bankrupted Bombardier. Orders have been sluggish and the fear was tariffs would damage sales prospects in America and have a knock-on impact on jobs.

The stakes were arguably made higher because Bombardier is the biggest manufacturing company in Northern Ireland and is important to its economy.However, even before its victory at the US ITC, Bombardier was hopeful for the future after Airbus announced it would acquire a controlling stake in the C-Series and promised to boost its fortunes.
Source: BBC News

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

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