Bombardier Belfast is Northern Ireland’s largest manufacturer and has an estimated supply chain of 800 companies across the UK and Ireland. The wings for Bombardier’s C-Series jets are made at Shorts Brothers in Belfast using technology that has been described as a tremendous innovation in the world of aerospace.
In April 2017, rival aerospace company Boeing issued a petition to the United States Department of Commerce, asking for duties to be imposed on the Bombardier C-Series aircraft in the United States. Following investigation, the Department of Commerce issued a determination on 20 December 2017, setting a final combined tariff of 292%.
Against expectations, on 26 January 2018, the International Trade Commission determined that a U.S. industry is not materially injured or threatened with material injury by the C-Series imports and that no antidumping or countervailing duty orders will be issued.
Boeing alleged that Bombardier sold its planes in the US at an unfairly low price, made possible by heavy and prohibited subsidies from the Canadian and UK Governments, thus harming Boeing. Evidence to this inquiry, however, suggested that Boeing does not build aircraft that are comparable with the C-Series and that Boeing has suffered no harm as a result of Bombardier’s success in securing a deal with US airline Delta.
Boeing’s complaint against Bombardier was not founded on a genuine threat of existing unfair competition; it was a cynical attempt to prevent an innovative rival with a competitive edge from entering into the US market. We welcome the determination by the International Trade Commission that C-Series imports do not harm, or threaten to harm, the US domestic industry. This is, in our view, the correct determination and vindicates the clear evidence we heard that Boeing has suffered no harm.
A coordinated effort was made on behalf of Bombardier by the UK and Canadian Governments, trade unions, local politicians and others. These efforts may have contributed, directly or indirectly, to the ITC determining in Bombardier’s favour. It is possible, however, that Boeing will appeal the decision or raise further complaints against Bombardier in the future. Unless Boeing confirm that it respects the ITC’s decision and will not appeal it, we recommend that the UK Government undertake a review of all contracts held with Boeing.
In October 2017, it was announced that Airbus, a European aerospace company, intended to buy a controlling stake in the C-Series Aircraft Limited Partnership. The hope is that, with the threat of tariffs lifted, Bombardier will expand its operations and thrive. In the absence of an Executive, we recommend that the UK Government work with Bombardier, Invest NI and the Department for the Economy to ensure the Airbus venture produces the best possible outcome for workers in Northern Ireland.
Some stakeholders have suggested that Boeing’s complaint could provide the company, and the US Administration, with a dangerous precedent that could be a threat to other sectors. The Minister for Energy and Industry and others told us they believed Boeing’s complaint was a test case.
The International Trade Commission has not published information on whether it considered subsides from the UK and Canadian Governments to be prohibited or not. The Government should no longer assume that Repayable Launch Investments are low-risk and will always be considered as compliant. The Government should conduct an audit of all Repayable Investment Loan provisions or similar it has made to UK companies. Risk assessments should be then conducted particularly where companies have significant business in the US market.
7 February 2018