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Airbus-Bombardier deal complicates jet dispute

Airbus and Bombardier jets
An artist’s conception puts Bombardier’s CS100 jet alongside Airbus’ A320neo. (Airbus Illustration)

Airbus added a twist to a U.S.-Canada trade dispute by announcing a plan to partner up with Bombardier, the Boeing Co.’s Canadian rival.

The plan calls for Airbus to take on a majority stake in Bombardier’s C Series line of passenger jets, which is due to be hit by U.S. tariffs of nearly 300 percent.

Europe-based Airbus will own 50.01 percent of the C Series limited partnership, leaving Bombardier with about 31 percent and Investissement Quebec with 19 percent. The partnership’s headquarters and primary assembly line will remain in Quebec, but Airbus said it would expand C Series production to its manufacturing site in Alabama.

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U.S. officials slap 220% tariff on Canadian jets

Delta Bombardier jet
An artist’s conception shows Bombardier’s CS100 jet in Delta Air Lines’ livery. (Delta Illustration)

The U.S. Commerce Department today issued a preliminary finding that Canada’s Bombardier aircraft company was getting unfair subsidies for its CSeries jets — and laid out a plan that would more than triple the cost of the jets being bought by Delta Air Lines.

As a result of the ruling, the importers of Canadian civil aircraft with a capacity of 100 to 150 seats would have to pay a 219.63 percent tariff.

The ruling sides with Boeing, which filed a petition complaining that Bombardier’s sale of 75 CS100 jets to Delta was being subsidized by the governments of Canada as well as Britain. Bombardier is based in Montreal, but its wings are built in Northern Ireland.

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Commerce Secretary Wilbur Ross said in a statement. “The subsidization of goods by foreign governments is something that the Trump administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”

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Boeing claims edge in jet subsidy battle

Composite wing center
Boeing’s 777X composite wing center was built in Washington state after lawmakers approved tax incentives for the company. (Boeing Photo)

An appeals panel for the World Trade Organization has reversed an earlier ruling against an $8.7 billion Washington state tax incentive program that persuaded the Boeing Co. to build the 777X jet at its plant in Everett, Wash.

Boeing hailed the Sept. 4 reversal as a “significant victory” for the federal Office of the U.S. Trade Representative and the U.S. aerospace industry, and a “resounding defeat” for the European Union’s efforts to justify subsidies to Airbus.

The ruling “confirms that the tax treatment Boeing and others are receiving in Washington state is not a prohibited subsidy,” Boeing said in a statement.

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WTO rules against Boeing’s 777X tax break

Wing autoclave
A giant autoclave is ready to “cook” parts for the Boeing 777X wings. (Credit: Boeing)

In the latest chapter of a years-long legal battle, the World Trade Organization says Washington state’s tax break for production of the Boeing 777X jetliner runs counter to international trade rules.

“We expect the U.S. to respect the rules, uphold fair competition, and withdraw these subsidies without any delay,” Cecilia Malmström, the European Union’s trade commissioner, said in a statement issued after today’s ruling.

However, U.S. officials and Boeing executives signaled that the battle would continue. The fight over the tax breaks is part of a larger dispute between the Boeing Co. and its European rival, Airbus, with U.S. and EU officials in the middle.

Boeing’s general counsel, J. Michael Luttig, went so far as to claim in a statement that today’s ruling was “a complete victory for the United States, Washington state and Boeing.”

The way Luttig saw it, the WTO rejected “virtually every claim made by the EU in this case” and found that Boeing “has not received a penny of impermissible subsidies.”

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U.S. and Boeing hail WTO ruling against Airbus

Airbus A350 XWB
In today’s report, a compliance panel of the World Trade Organization found that Airbus’ A350 XWB superjumbo jet benefited from European subsidies. (Credit: Airbus)

The World Trade Organization turned up the heat on Europe’s aerospace industry today by ruling that Airbus was continuing to benefit from what’s now estimated at $22 billion in subsidies from the European Union and its member countries.

U.S. Trade Representative Michael Froman hailed the decision as a “sweeping victory” in a dispute that has been simmering for more than a decade, with the Boeing Co. cast as the principal victim of Airbus’ subsidies.

“This long-awaited decision is a victory for fair trade worldwide, and for U.S. aerospace workers in particular,” Dennis Muilenburg, Boeing’s chairman, president and CEO, said in a statement.

Both of Washington state’s U.S. senators and several House members praised the development as well.

The WTO’s latest action marks one more step toward imposing retaliatory trade sanctions that could amount to as much as $10 billion a year.

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