Thousands of British jobs are safe as Bombardier wins its trade dispute with the U.S. over proposals to impose 292% tariffs on UK-built planes
- Boeing had complained that Bombardier was dumping its planes on U.S. market
- US International Trade Commission (ITC) threw out Chicago-based giant's case
- C series wings produced in Belfast will now not face tariffs, safeguarding jobss
Aircraft manufacturer Bombardier has won its case against United States proposals to impose tariffs of 292% on its imports to America in a move which should safeguard thousands of jobs in Belfast.
The US International Trade Commission (ITC) said rival manufacturer Boeing did not suffer injury from Atlanta-based Delta Airlines' order of Bombardier's C Series passenger jets.
The ITC had been expected to side with Boeing, which accused Bombardier of selling the planes below cost in the American market.
Boeing could 'turn off' Britain's attack helicopters if UK sparks trade war as May warns punitive US tariffs on Bombardier are 'not the actions of a partner'
- British Prime Minster Theresa May has condemned Boeing after the dispute with Canadian firm Bombardier
- It comes as UK and US are on the brink of a trade war after Britain threatened to end contracts with Boeing
- But an army expert warned that the US company Boeing could simply 'turn off' the UK's attack helicopters
Boeing could 'turn off' Britain's attack helicopters if the UK takes revenge for punitive US tariffs on Bombardier that threaten thousands of jobs, it was claimed today.
The two countries are on the brink of a trade war after the UK threatened to end its military contracts with the US aerospace company Boeing.
Theresa May again condemned Boeing's bid to impose a tariff of 220 per cent on imports of C-Series aircraft built by Bombardier into America today. The Canadian firm employs around 4,000 people in Northern Ireland.
'This is not the kind of behaviour we expect from a long-term partner and it undermines that partnership,' the PM said during a speech at the Bank of England.
However, military experts have warned that the US defence giant could respond by simply deactivating aircraft it has supplied to the UK.
British Prime Minster Theresa May condemned Boeing after the dispute with Canadian firm Bombardier (pictured) threatened the loss of thousands of jobs in the UK
Giving a speech at the Bank of England today, Theresa May again condemned Boeing's bid to impose a tariff of 220 per cent on imports of C-Series aircraft built by Bombardier into America
A former four-star officer told The Times: 'Boeing owns the data. You buy the data.
'You rely on the original equipment manufacturer for the key to the data, servicing and upgrades. They can turn the fleet off.'
The Ministry of Defence is planning on purchasing 50 Apache AH-64E helicopters and nine P-8 maritime patrol aircraft - which are built by Boeing - from the US government. The department already uses around 60 Chinook helicopters.
Defence Secretary Sir Michael Fallon yesterday backed Mrs May and warned Boeing the company could be cut out of UK defence contracts worth billions.
The US ruling - an embarrassment for Mrs May, who personally lobbied President Donald Trump over the dispute - marked a setback to hopes of a swift UK-US trade deal after Brexit.
And the threat to 14,000 jobs in Northern Ireland - where Bombardier, a Canadian firm, makes wings for its planes - puts a strain on Mrs May's Commons power-sharing deal with the Democratic Unionist Party.
Last night she said she was 'bitterly disappointed' by the US decision, which it is feared will kill off the C-Series programme.
The Prime Minister said: 'I will be doing everything I can to ensure the future of Bombardier in Northern Ireland is guaranteed and protected.
'We have had a long-term partnership with Boeing, worked with Boeing over the years, and I think this is no way to operate in terms of such a long-term partnership. That long-term partnership is being undermined by this behaviour by Boeing.'
But Labour said the government should not be making threats to the US.
Shadow International Trade Secretary Barry Gardiner said: 'Theresa May tried to avert this dispute when she spoke with President Trump weeks ago.
'Clearly she was less persuasive than she led us to believe. But her ineffective pleas have now been compounded by the Defence Secretary's bumbling aggression.
'The correct way to resolve this trade dispute is not to threaten Boeing that future ‘significant defence contracts’ are in jeopardy, it is to use the rules that are already in place in the global trading system through the WTO.'
Mrs May spoke to DUP leader Arlene Foster and Michelle O'Neill, Sinn Fein's leader in Northern Ireland, on the phone last night in an attempt to limit the damage.
The Defence Secretary led the backlash against Boeing, which has defence contracts with the UK worth around £8billion.
Sir Michael said: 'This is not the behaviour we expect from Boeing and it could indeed jeopardise our future relationship with them.
'Boeing wants and we want a long-term partnership, but that has to be two-way. Boeing stand to gain a lot of British defence spending.
'We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicopters and they will also be bidding for other defence work, and this kind of behaviour clearly could jeopardise our future relationship.'
The Ministry of Defence said: 'Boeing's position in this case is unjustified and not what we expect of a long-term partner to the UK. Whilst this will not affect our existing programmes, these actions could undermine our future relationship and programmes.'
Foreign Secretary Boris Johnson added: 'I hope it can be resolved speedily and obviously we're very disappointed by the result. We will be looking at what we can do to ensure free and fair trade to make sure that Bombardier gets a fair crack of the whip and first suck of the saucepan.'
Boeing said it understood the Government's concerns about jobs in Belfast (pictured, the Bombardier factory in the city), but claimed Bombardier was not playing by accepted international trading rules
A Bombardier employee was seen working on a C-Series and Theresa May has said she is concerned the trade dispute will kill off the programme
The Ministry of Defence in planning on purchasing 50 Apache AH-64E helicopters (pictured) which are made by Boeing
The Ministry of Defence in planning on purchasing 50 Apache AH-64E helicopters and already operates around 60 Chinooks (pictured)
Boeing said it understood the Government's concerns about jobs in Belfast, but claimed Bombardier was not playing by accepted international trading rules.
DUP leader Mrs Foster said the US ruling was 'very disappointing' but added it was not the end of the process. A final decision on the tariff will be made in February.
Labour leader Jeremy Corbyn urged the Government to stand up to the US President, telling his party conference in Brighton: 'If the special relationship means anything, it must mean that we can say to Washington: that way is the wrong way.'
Ross Murdoch, of the GMB union, said: 'This is a hammer blow to Belfast. Theresa May has been asleep at the wheel when she could and should have been fighting to protect these workers. It's high time she woke up.'
Canadian prime minister Justin Trudeau warned that he could abandon plans to buy Boeing's F-18 Super Hornet fighter jets for the country's air force.
Why HAS Trump let Britain down? ALEX BRUMMER says no one could have guessed the President would turn his fire on US's closest Anglo-Saxon allies
By Alex Brummer for the Daily Mail
Donald Trump's protectionist stance looks likely to be the biggest threat to open trade of modern times
When President Trump declared he would put America first and protect US manufacturing from cheap foreign competition, everyone imagined he was referring to the dumping of goods in the country by China, and the cars, steel and consumer products swamping the US from Mexico.
No one could have guessed he would turn his fire on two of America's closest Anglo-Saxon allies – Canada and the UK. After all the US already has a big open trade deal with Canada known as the North America Free Trade Agreement.
And it has wooed Theresa May's government with a pledge to reverse Barack Obama's threat to send the UK to the back of the queue for any post-Brexit free-trade deal. But as we have learnt, Trump is nothing if not unpredictable.
This week his administration, via the US Department of Commerce, imposed an astonishing 220 per cent duty on a major order from Delta Air Lines for the Canadian plane manufacturer Bombardier's C-Series short-haul passenger jet to be partly built in Belfast. Trump's decision was made in the face of passionate pleas from Canadian Premier Justin Trudeau and Mrs May not to punish Bombardier.
At the heart of the dispute is the vexed issue of subsidies. Every government in the Western world provides assistance to plane makers to help cover the enormous research, development and engineering costs required when building new generations of aircraft.
Seattle-based Boeing claims that the cash injected into Bombardier C-Series is over the top and amounts to 'dumping' by Canada and the UK.
There are dozens of ways in which aircraft manufacturers are assisted by their governments. Boeing itself receives development support both from the US government and the city of Seattle and Washington state where its main factories are located. It charges premium prices to the Pentagon for military aircraft and receives cheap finance from the US Export-Import Bank, the country's official export credit agency.
Boeing and Toulouse-based Airbus are in almost permanent combat at the World Trade Organisation over the scale of the hidden subsidies to vast aircraft and engine deals.
One of the major curiosities about Boeing's complaint against Bombardier is that it currently doesn't have an off-the-shelf short-haul aircraft to fulfil the needs of Delta on domestic US flights. So the world's biggest aircraft maker does not even have any skin in the game.
Furthermore, the 220 per cent tariff could actually damage US manufacturing since the engines which will power Bombardier's C-Series are made by US engineering colossus Pratt & Whitney. The imposition of the new duty is by no means the last word in the dispute. The matter will now go to the US International Trade Commission which will rule on whether the duty is justified.
Even if it were to find against Bombardier, the matter could be referred to the World Trade Organisation.
The difficulty for Bombardier is that keeping production lines in Northern Ireland and Canada open while the dispute trundles through the appeals process would be hugely costly.
Bombardier's great hope may lie in China where the company is currently in negotiations with several regional carriers about buying the C-Series plane.
Indeed, it may well have been the possibility of Boeing being frozen out of the lucrative Chinese market which made it so determined to throw a spanner in the works of the Delta sale.
Whatever happens, the dramatic action by the US Department of Commerce cannot help but seriously damage Anglo-American trade relations and the ambitions of Liam Fox and the UK's post-Brexit team of trade negotiators to forge a major free trade deal with the US.
The United States talks up free trade at every opportunity it has.
Yet Trump's protectionist stance looks likely to be the biggest threat to open trade of modern times.
The US International Trade Commission (ITC) said rival manufacturer Boeing did not suffer injury from Delta Airlines' order of Bombardier's C Series passenger jets (file pic)
The C Series wings are produced in the Northern Irish capital where workers reacted with jubilation to the news.
Bombardier said in a statement: 'Today's decision is a victory for innovation, competition, and the rule of law.
'It is also a victory for US airlines and the US travelling public. The C Series is the most innovative and efficient new aircraft in a generation.
'Its development and production represent thousands of jobs in the United States, Canada, and the United Kingdom.'
Theresa May tweeted: 'I welcome this decision, which is good news for British industry. Bombardier and its innovative workforce play a vital role in the Northern Ireland economy.'
Business Minister Greg Clark said the ruling was 'excellent news'.
Bombardier (logo pic) said in a statement: 'Today's decision is a victory for innovation, competition, and the rule of law'
Unite assistant general secretary Steve Turner said: 'Bombardier workers in Northern Ireland and throughout the supply chain in UK will be breathing a huge sigh of relief that the International Trade Commission has seen through Boeing's baseless complaint.'
He went on: 'When the going got tough Unite did not throw the towel in, our members and shop stewards redoubled their efforts in bringing pressure to bear on politicians in Washington, Westminster, Brussels and Northern Ireland.
'The C Series is a world beating aircraft made by world class workers. There can be no backsliding from the US government on this decision.
'Unite looks forward to continuing to work with Bombardier to secure future sales and investment to ensure a bright future for Northern Ireland workers and the thousands across the UK in the supply chain.'
Susan Fitzgerald, Unite regional officer for the union's membership at Bombardier in Northern Ireland, said: 'When the story is told of this dispute it will be one of how, in the absence of a genuine effort by politicians and the UK Government, workers themselves had to take the fight on.'
She added: 'Bombardier itself now must reiterate its commitment to the Northern Ireland workforce and end the outsourcing of jobs to low-cost centres.'
Theresa May, pic in Davos on January 25, tweeted: 'I welcome this decision, which is good news for British industry'
TUC General Secretary Frances O'Grady said: 'This is great news for thousands of Bombardier workers, as well as workers in their supply chain.
'But we must not be complacent. The Trump administration has shown it wants to shut down Britain's ability to support good jobs in strategic industries.
'If the Government keeps pursuing its bad Brexit strategy, we will be left isolated outside the single market. And that will clear the way for Trump to use trade negotiations to attack our right to support important industries.
'To get the best Brexit for working people, the Government must keep single market membership on the negotiating table.' Airbus notches win over rival Boeing with Bombardier deal
The European plane maker reached an unusual, no-cost deal with Canada's Bombardier that sent Airbus shares up Tuesday, boosts both companies' prospects in Asia and should save thousands of Bombardier jobs from Quebec to Northern Ireland.
It could also help Bombardier avoid heavy U.S. duties that had helped push the Canadian company near bankruptcy. The announcement late Monday gives Airbus a majority stake in Bombardier's C Series passenger jets, and some C Series planes will now be built at an Airbus plant in Mobile, Alabama.
FILE - In this June 18 2015 file photo, vapour forms across the wings of an Airbus A380 as it performs a demonstration flight at the Paris Air Show, Le Bourget airport, north of Paris. Airbus shares have risen thanks to an unusual no-cost deal with Canada's Bombardier that has angered U.S. rival Boeing. (AP Photo/Francois Mori, File)
Boeing called it a questionable deal by two state-subsidized competitors.
It is a rare bright spot for Airbus, which is currently facing growing legal troubles stemming from corruption investigations in Britain, France and Austria. Airbus shares rose 4.8 percent on Tuesday in Paris to close at 80.79 Euros.
Airbus CEO Tom Enders sought to assure investors that the Bombardier deal will save money for both companies by combining supply chains and production. He argued that it will improve the appeal for C Series jets, which have struggled for customers.
"This puts us in an excellent position ... with no cost, with no risk," Enders said of the deal. He added it will allow Airbus to expand activities in China and "strengthen our global industrial footprint."
While Airbus rejected a deal with Bombardier three years ago, Enders said Airbus is feeling more confident now in the C Series jets and its own ability to take on another production line.
The move comes after the U.S. Commerce Department imposed harsh duties on Bombardier, accusing it of selling C Series planes in America below cost and receiving government subsidies.
The Commerce Department announced it would impose an 80 percent duty on top of duties of nearly 220 percent. The case was a win for Boeing, which brought the complaint.
Airbus - in a long-running trade battle with Boeing Co. - argues that the U.S. company receives illegal tax breaks that act like subsidies and hurt competition.
Delta Air Lines last year announced an order for 75 C Series planes - with a sticker price $5.6 billion, although airlines routinely get big discounts - and an option for 50 more. Delta CEO Ed Bastian said last week that his airline would never pay the proposed U.S. duties, but he expressed confidence that somehow Delta would get the planes even if deliveries scheduled to start next year were delayed.
The C Series planes, at 100 to 150 seats, are bigger than so-called regional jets but smaller than the popular Boeing 737 and Airbus A320. The niche size and questions about Bombardier's ability to compete against bigger rivals had cast a shadow over sales.
The deal with Airbus "looks like an intelligent move by Bombardier to save a struggling program," said Cowen and Co. analyst Cai von Rumohr. He said the bigger Airbus supply chain and its low-cost assembly factory in Alabama could produce cost savings while avoiding U.S. tariffs.
Officials and unions in Northern Ireland cautiously welcomed the Airbus-Bombardier deal. Bombardier employs more than 4,000 people at its Belfast factories.
Davy Thompson, regional officer of the Unite union, called it a "welcome development - one that gives breathing space to the C Series itself and which we anticipate should safeguard the future of C Series production jobs in Belfast for the foreseeable future."
However, Ross Murdoch of union GMB warned that "This deal is liable to further scrutiny from the U.S. administration that may see it as an attempt to dodge their trade tariffs. ... GMB hopes both Bombardier and Airbus have taken cast iron legal advice to ensure they don't get rid of one legal challenge only to open themselves up to another."
The Airbus acquisition will be subject to Canadian government review. Airbus will acquire a 50.01 percent interest in C Series Aircraft Limited Partnership, which manufactures and sells the plane. It will not pay anything for the stake, a recognition that the unit will see sales increase merely by virtue of being part of the Airbus group.
Bombardier will own 31 percent and the Quebec government's investment agency will hold 19 percent.
Airbus is not assuming any debt as part of the deal and it has an option to buy out Bombardier after 7 1/2 years and the Quebec government in 2023.
___
Rob Gillies in Toronto, Danica Kirka in London and David Koenig in Dallas contributed to this report.
Bombardier president and CEO Alain Bellemare, left, and president Canada and chief operating officer of North America for Airbus Helicopters Romain Trapp shake hands during a press conference in Montreal on Monday, Oct. 16, 2017. Canadian plane maker Bombardier has a sold a majority stake in its C Series passenger jet business to European aerospace giant Airbus. (Paul Chiasson/The Canadian Press via AP)
Bombardier president and CEO Alain Bellemare, left, and president Canada and chief operating officer of North America for Airbus Helicopters Romain Trapp speak to the media during a press conference in Montreal on Monday, Oct. 16, 2017. Canadian plane maker Bombardier has a sold a majority stake in its C Series passenger jet business to European aerospace giant Airbus. (Paul Chiasson/The Canadian Press via AP)
FILE - In this Feb. 27, 2015 file photo, Airbus Group CEO Tom Enders speaks to journalists during the Airbus Group press conference on the 2014 annual results in Munich. Airbus shares have risen thanks to an unusual no-cost deal with Canada's Bombardier that has angered U.S. rival Boeing. (AP Photo/Kerstin
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