US to decide whether deserves Bombardier to be taxed

Global Business

US to decide whether deserves Bombardier to be taxed

In just a few days, the U.S. International Trade Commission is expected to announce its decision on a tax of nearly 300 percent slapped last year on a Canadian-made plane from Bombardier.

Ottawa has accused Washington of protectionism, in a dispute that may threaten the ongoing NAFTA renegotiation talks.

CGTN’s Roee Ruttenberg reports.

Bombardier is the biggest Canadian plane maker. The C Series is its latest mid-range jet for commercial airlines. The company hopes to sell them in the U.S in direct competition with Boeing’s 737-7 MAX series.

The American aerospace giant has accused its smaller Canadian rival of foul play.

Boeing says the Canadian – and British – governments are unfairly subsidizing the C Series, parts of which are made in North Ireland. The accusation, prompting an angry response across the Atlantic.

“We have a long term partnership with Boeing in various aspects of government,” British Prime Minister Theresa May said. “This is not the sort of behavior we expect form a long term partner, and it undermines that partnership.”

But Bombardier didn’t take it sitting down, claiming the British allegations are completely inaccurate.

“The investment that we received for the C Series from the UK government, from the UK and Northern Ireland governments, was in the form of repayable launch investments and grants,” Haley Dunne, Director of Public Affairs, Bombardier Belfast said. “They were important to launching the program and contributing to us developing this technology and developing this program here in Northern Ireland which is so important to the local economy.”

But the U.S. Department of Commerce agreed with Boeing. Over the last several months, it imposed duties of nearly 300 percent on imports of the C-Series in the U.S. making it roughly the same price as the Boeing jet.

By the end of this month, an American bipartisan trade commission is expected to uphold the decision.

Bombardier – and Canada – may appeal to a panel of judges under Chapter 19 of NAFTA, the North American Free Trade Agreement as long as Chapter 19 remains part of that deal, currently being renegotiated.

The U.S. wants to scrap Chapter 19, because Ottawa has long used it – successfully – to fight American duties on products like timber.

Canadian trade advisers have called keeping Chapter 19 a red line. No deal without it.

In Canada, and in Northern Ireland, where Bombardier is among the biggest employers, workers have been protesting the American taxes. They accuse Boeing of trying to create a government-sanctioned monopoly.

Boeing says it’s just trying to level the playing field. It says Bombardier is selling the planes for millions of dollars below cost. The U.S. International Trade Commission will decide who’s right.

Simon Lester talks about NAFTA renegotiations

CGTN’s Rachelle Akuffo spoke with Simon Lester, Trade Policy Analyst at the Cato Institute about the future of NAFTA.