Pontifications: Boeing complaint against Bombardier no surprise

By Scott Hamilton

May 1, 2017, © Leeham Co.: The Boeing Co. filed a complaint with the US Commerce Department and the International Trade Commission charging the Bombardier “dumping” the CSeries in the US to the detriment of Boeing and its 737.

Brazil, on behalf of Embraer, another competitor to Bombardier and the CSeries, previously filed a complaint with the World Trade Organization over similar charges that the Canadian and Quebec governments improperly subsidized BBD when they bailed out Bombardier for the CSeries.

The federal and provincial governments provided about US$1.5bn in investments in a new company that segregated the CSeries from Bombardier. A quasi-government pension fund took an investment in BBD’s rail division, also for more than US$1bn.

Neither move is a surprise.

At the time, the Canadian investments in Bombardier and the CSeries pretty much transformed the CSeries into a government program, managed by BBD.

Why not the WTO?

So far, no US complaint has been filed with the WTO. Although Boeing can urge the US government to file a complaint, it must be the government that does so—just as it was Brazil, not Embraer, to file a complaint.

“We are going through Commerce and the ITC (International Trade Commission) because this is clear case of illegal dumping. The antidumping and countervailing duty statutes are designed to address precisely this situation,” a Boeing spokesman in Washington (DC) told LNC in an email. “The WTO continues to play a key role in adjudicating international trade disputes and has an excellent record in that regard. We’ve chosen the path we’re on because we are making a dumping allegation with respect to US sales and Commerce and the ITC are the right channels for dumping cases.”

Mixed messaging

In the filing, Boeing claims it’s already been harmed by having to drop its price to sell 737-700s to United Airlines and having lost then Delta deal. One of the ramifications, Boeing claims, is the depressed or absence of progress payments needed to fund research and development for new airplanes and provide a good return to shareholders.

Boeing’s lawyers need to check with CEO Dennis Muilenburg, CFO Greg Smith and Investor Relations on this one.

The two executives and IR persist in telling Wall Street analysts and investors the 737 and 787 programs are throwing off so much cash that production rate declines of the 777 and 747-8, with their resulting loss of cash flow, don’t matter. The company can continue to spend $7bn a year in stock buybacks and upped dividends.

As for R&D spending, the CEO, CFO and IR tell the analysts and investors that any new airplane development for the 737-10 MAX and 7M7 middle of the market airplane can be done within the current levels as spending winds down on the 787, MAX and 777X programs.

These assurances from Muilenburg, the CEO, Smith, the CFO, and IR certainly make it sound like Boeing isn’t hurting for cash for product development and shareholder value.

GTF vs LEAP

UBS last week issued a research note with detailed analysis of the performance of the Pratt & Whitney GTF and the CFM LEAP 1A engines.

The analysis doesn’t recap the well-known problems with the GTF, but focuses on in-service hours, etc. The report also is about the Airbus A320neo; there are no reported issues with the Bombardier CSeries GTF.

“Our analysis indicates that average LEAP utilization is running at ~9 hours/day as compared to GTF utilization at ~7 hours/day,” writes UBS. “During the past week (week ending 4/20), we estimate daily average GTF utilization increased 4% sequentially while average LEAP utilization declined 3%. We estimate the A320neo GTF fleet experienced 1.4 out of service days on average over the last week (no out of service days for C Series) as compared to 0.6 out of service days for LEAP.

“Across the largest operators, average GTF utilization varies widely with China Southern (3-4 hours per day on average including three aircraft mostly out of service) and Spirit (5 hours per day including two aircraft out of service) at low end. IndiGo continues to utilize its GTF neo fleet at highest rate (~10 hrs/day). For LEAP, all of the largest operators are flying 8-10 hours per day,” UBS writes.

“Our analysis indicates that average LEAP utilization has improved significantly over the last couple of months to 9-10 hours/day as compared to GTF utilization that has held relatively flat at ~7 hours/day.”

74 Comments on “Pontifications: Boeing complaint against Bombardier no surprise

  1. The whole fiasco brought by Boeing is ridiculous. I have been a Boeing for a long long time flying the B747 but my faith and view of Boeing has diminished dramatically. Their action is one of a bad loser and this is like the bid for the USAF refueling tanker where Airbus won and the bid was taken to the courts as unfair. The bid was changed in favor of Boeing and they eventually won the order. This is sour grapes all over again and either Boeing stops or made to stop competition will cease to exist.

    • While I agree on Boeing issues, I would like to separate that out from an illegal award to Airbus on the A330MRT.

      There is no question that the 767 tanker lease was as fowle3d up legally as you can get.

      An RFP is a legal bid document. You can argue the merits of what is given credit for or is not all day long, but once its been submitted to the bidding parties, it becomes the contract by which the bid is assessed.

      In the case of the first bid, the USAF leadership gave credit to Airbus for areas that the credit was not allowed.

      Again, not allowed. If they had bid an A380 with its massive cargo space, that would have simply been not allowed either.

      The specification was for a minimum, no more, I assume demerits if less (I never saw the full RFP)

      They also gave credit for fuel carrying. Again, there was a minimum specification, no credit for more.

      They also waivered a parking requirement. You can’t do that legally. You can write the RFP originally doing that but you can’t change the terms once its been issued.

      You would be less than happy if your employer suddenly decided that you were going to get 40% less pay that had been agreed on for your position, and a different pilot was being given 20% more.

      If this was going to be a shootout of capability, then a Boeing 777F/T would have won the contract.

      As it was the USAF actually got exactly what they were after, that was the very lowest cost precut by under 10%.

      The USAF sold this program as a replacement for the KC135, not the KC10.

      Some of the issues also involved fuel burn. A 767 is more economical than an A330. While that does not affect direct purchase price (other than an A330 costs more) it does cost a large amount over the years in fuel use that we as taxpayers have to supply.

      So beat up Boeing for what they did, not what they did not do.

      • Are you sure about that one?
        “Some of the issues also involved fuel burn. A 767 is more economical than an A330.”
        The fuel burn on the last RFP was stacked for Boeing. More than seven touch&go maneuvers were calculated for each trip each of the new tankers would ever made. Guess what, a Cessna would burn less fuel. Why was there an additional RFP for flight simulators?

        USAF does need a replacement for the KC-135 but that does not mean a replacement on a one-to-one base. The USAF has an incredible new gas guzzler called F-35 and the area over the Pacific is rather waste. Also due to logistics to deliver personal and freight all over the world an aircraft with more capabilities would have been reasonable.

        The A330 was offered for about the price of a 767. Boeing is not able to sell a 777F for such a price.

        • The f-35 has a greater radius than the three aircraft it is replacing f-16, av-8b and the f-18 (both versions).

          As for fuel burn etc…

          “On its face, the A330 did not look like much of a bargain for the Air Force because it cost much more to build and operate than the plane it was replacing or the Boeing alternative. However, in the first, abortive round of competition with Boeing’s tanker, EADS and then-partner Northrop Grumman had convinced Air Force evaluators that by doing refueling missions differently they could benefit from buying the bigger plane. That made a certain amount of sense since bigger planes typically are more efficient per pound of payload delivered. The problem, though, was that existing, smaller tankers typically returned from refueling missions with a lot of fuel still on board, so buying a much bigger successor required the Air Force to completely change its approach to aerial refueling. That became all too apparent when the Air Force tried to apply its scenario-based warfighting model to the rival tankers and discovered that the EADS plane couldn’t accomplish some wartime missions due to basing constraints. Under pressure from Congress to keep the Northrop-EADS team in the competition, the Air Force made changes to its model that enabled the bigger plane to execute all the missions.”

          https://www.forbes.com/sites/beltway/2011/02/28/how-boeing-won-the-tanker-war/#7efe68d93d49

          • You cite Forbes just citing Boeing talking points.

            Check the logic: “[…] smaller tankers typically returned from refueling missions with a lot of fuel still on board […]”. So why did these tanker take off with too much fuel in first place? Is this just bad planning or planning with a good margin of security for other aircraft? Only about 20 KC-135 are able to be refueled out of several hundred tankers. So it is most time not possible to refuel an incoming tanker with surplus fuel of an outbound tanker. A330 MRTT was offered with UARRSI to USAF and Australian A330 are operational over Iraq since 2014 also refueling US aircraft.

            “[…]discovered that the EADS plane couldn’t accomplish some wartime missions due to basing constraints.” You may know that an A330 is able to take off from about twice as much airfields with required amount of fuel than 767-2C? Tankers are not stationed on forward positions. Tankers are stationed where the fuel is. In case of a Pacific scenario an enemy may has take out the fuel tanks at forward bases first.

            Reading early KC-X requirements before RFP these aircraft was not intended as a tanker in first place. It should have been a freighter in first place and only a part time tanker to avoid large periods of unemployment. KC-135 is a very limited freighter and did get that old due to rare usage of tanker. (For good reason UPS and FedEx ordered the 767-300 and not the smaller 767-200.)

            Finally, even with sensor fusion nobody can cheat physics. The F-35 has a range of 1,200 nm on 18,500 lbs of fuel while the F/A-18E/F has more range on 14,500 lbs of fuel.

          • Funny I didn’t know Forbes was a Boeing mouthpiece. Or the GAO for that matter.

          • “Finally, even with sensor fusion nobody can cheat physics. The F-35 has a range of 1,200 nm on 18,500 lbs of fuel while the F/A-18E/F has more range on 14,500 lbs of fuel.”

            About 700 miles more, when will that make a difference. Has the USAF ever lost a plane in transit because it couldn’t refuel it?
            Combat radius on the other hand is over 200 miles more for the F-35. Which is more relevant, refueling planes in transit or refueling in combat?

            “So it is most time not possible to refuel an incoming tanker with surplus fuel of an outbound tanker.”

            All KC-46s will be able to be refueled mid air.
            The fact remains the F-35 is not going to increase the need for tankers.

          • The difference “specifications” between the two aircraft might have a simple reason. The values for F/A-18 are combat proven and the values for A/F-35 are some kind of fictional.

            “All KC-46s will be able to be refueled mid air.” The reason is this was part of RFP and Mr. Thompson should have been aware of this and the tactical consequences. This also makes the point mude about tanker coming home with a lot of fuel.

            For sure the USAF will need far less tankers with an A/F-35 fleet. Such a thirstier fleet will burn less fuel because the US can only afford a far smaller fleet.

          • “The difference “specifications” between the two aircraft might have a simple reason. The values for F/A-18 are combat proven and the values for A/F-35 are some kind of fictional. ”

            Yeah once again the other guy is lying, it’s all BS the facts I don’t agree with! Funny how this isn’t Boeing PR about the F-18. Suddenly the numbers are trustworthy!

            “This also makes the point mude about tanker coming home with a lot of fuel.”

            Really? Any evidence of this? Perhaps it’s from experience that they simply carry more fuel than is needed in most circumstances which is why they didn’t need the extra weight and capacity of the 330! Again name an instance where a mission was scrubbed because lack of fueling.

            “Such a thirstier fleet will burn less fuel because the US can only afford a far smaller fleet.”

            Keep repeating it ad nauseum but the only evidence you offer is your belief. Any other evidence is just lies Boeing PR. (except when it fits your argument and then it’s reliable).

      • Actually you can change an RFP once its been issued. It happens all the time otherwise you would have to cancel the RFP and reissue new one. These Addenda arise when new information comes to light during the process. What you can’t do is selectively adjust stated evaluation criteria, or withhold or selectively provide information/modifications. Nor should you close spec an RFP so only one respondent meets the spec.
        What Boeing is doing is anti competitive, in the sense that they are saying since we can manufacture our legacy models for a fraction of the cost of your new design, we expect you to fully cost the development program and limited component cost against our economy of scale costs. That is ridiculous and not accepted business practice in any major capital product, as the barriers to entry would be completely insurmountable.

    • “The bid was changed in favor of Boeing and they eventually won the order…”

      You are right it was sour grapes but wrong side. The bid rules weren’t followed in the original contract in order to favor NG/EADS offering. Which is why the original contest was correctly voided.

      As for cost/performance…

      “But once the rival tankers met mandatory performance requirements the revised acquisition strategy was all about price, and there EADS faced a big challenge. First of all, the A330 typically sells for about $40 million more than Boeing’s 767, which is a huge difference in cost when multiplied by the 179 planes the Air Force was seeking to acquire in the competition. EADS would need to tap billions of dollars in subsidies to price competitively with the manufacturing costs of the smaller Boeing plane. And then there were the post-production costs — the much higher fuel burn of the A330 over a 40-year service life, and the need to modify hangars and runways to accommodate a bigger plane. The only way Airbus could defray those costs for the Air Force was to offer an even lower up-front pricetag.”

      https://www.forbes.com/sites/beltway/2011/02/28/how-boeing-won-the-tanker-war/2/#74ef94df9a54

      Yet the myth of “Airbus got cheated” continues…

      • You should know Forbes is not an aerospace publication and Loren Thompson’s Lexington Institute is sometimes labeled as “defense industry’s pay-to-play ad agency”. So guess for whom this ad you are citing is aiming for.

        “First of all, the A330 typically sells for about $40 million more than Boeing’s 767, which is a huge difference in cost when multiplied by the 179 planes the Air Force was seeking to acquire in the competition.”
        A product that sells for more money doesn’t have to be more expensive to produce. It only reflects how a product is valued by buyers.

        “And then there were the post-production costs […]”
        The A330 is still in production with about 6 aircraft a month. Spare parts for A330 on civil market will be available much longer than for the orphan 767-2C.

        “[…] the much higher fuel burn of the A330 over a 40-year service life […].
        There is a difference between pure fuel burn rate and efficiency. That’s the reason why the A330ceo is still sold for passenger transportation while the 767 could only be sold cheap as freighter.

        “, and the need to modify hangars and runways to accommodate a bigger plane.”
        Try to name one runway where a 767-2C can operate from and an A330 not. Due to the wings an A330 can take off from more runways with required fuel load than a 767-2C. Hangars are required for antique aircraft like KC-135 and not for temporary aircraft. Hangars are required for bigger checks. So how many A330 of other 1,000 aircraft flying are located inside a hangar today?

        “The only way Airbus could defray those costs for the Air Force was to offer an even lower up-front pricetag.”
        May I mention that Boeing did write off a lot of money on the KC-46 program due to a low ball offer?

        • Scott writes for Forbes.

          If the 330 is really competitive on production cost they would have offered it at a competitive price. They did not.

          “Try to name one runway where a 767-2C can operate from and an A330 not.”

          Ask the Air Force or the GAO because they were under the illusion it is fact.

          “The A330 is still in production with about 6 aircraft a month. Spare parts for A330 on civil market will be available much longer than for the orphan 767-2C. ”

          With over a 1,000 767s produced and more still being built show me how getting spares is going to be a problem? The Air Force and GAO certainly doesn’t seem to think so.

          “May I mention that Boeing did write off a lot of money on the KC-46 program due to a low ball offer?”

          And they are paying for the overrun out of their own pocket. But may I ask what does this have to do with the competition being unfair?

          “So guess for whom this ad you are citing is aiming for. ”

          Tiresome when you attack the source, it’s the sign of a weak argument.

          • @Geo

            “Tiresome when you attack the source, it’s the sign of a weak argument”.

            ROTFL!

            Many think tankers, including the heads of think tanks, are involved in various non-think tank projects such as running or consulting for businesses.

            Here is an interesting article from Politico about Loren Thompson, COO of the Virginia-based think tank Lexington Institute, and his non-think tank job:

            The 501(c)(3) Lexington Institute doesn’t disclose its donors. But Thompson said it receives contributions from defense giants Lockheed Martin, Boeing, Northrop Grumman and others, which pay Lexington to “comment on defense.” The institute brought in $2.4 million in 2009, according to its financial statements.

            Thompson also heads the for-profit defense consulting firm Source Associates, which he said offers “proprietary insights and intelligence.” A Harper’s Magazine story last April took Thompson to task for promoting his private defense clients in the public domain.

            He’s long been on the side of Boeing, which is a client. And he’s dead-set against a win by EADS, which is not among Lexington’s benefactors.

            In the first run at bidding for the tanker contract, Sen. John McCain (R-Ariz.) unearthed e-mail between Thompson and an Air Force public affairs officer in which Thompson agreed to promote tanker modernization.

            In the second go-round, after Boeing lost the competition, Rep. Norm Dicks (D-Wash.) and other House appropriators publicly fumed that Thompson received information about the Air Force’s decision before they got it.

            Here is a link to the Harper’s Magazine story mentioned above (subscription needed) written by Ken Silverstein, that calls the Lexington Institute “the defense industry’s pay-to-play ad agency.

            Based on the latest available reports, Thompson is paid a base salary of $359,000 from Lexington Institute.

            http://www.thinktankwatch.com/2012/04/on-lexington-institute-insider.html

            Loren Thompson makes a lot of money being mean

            Making fun of journalists in exchange for millions of dollars for your Washington, D.C.-area “think tanks.” It’s not bad work if you can get it.

            Loren Thompson is the Chief Operating Officer and front man for the Lexington Institute, a nonprofit advocacy group based in Arlington, Virginia that lists just eight staff and reportedly rakes in more than $2 million a year. He also heads Source Associates, a for-profit consultancy.

            Thompson is really quite mean. It’s basically his job to denounce, discredit and denigrate reporters covering the U.S. defense industry—and especially anyone writing about Lockheed Martin, the jet fighter-maker with headquarters in Maryland.

            Lockheed, America’s biggest weapons producer, is also one of Thompson’s best clients. The company’s F-35 Joint Strike Fighter—the most expensive arms development in history at more than $400 billion—is late, over-budget and riddled with design problems.

            But don’t take our word for it. In late January the Pentagon’s own testing agency released a 20-page report detailing serious flaws in the F-35’s software, sensors, weapons and radar-absorbing coating. The agency warned that the stealth jet might not be ready for combat as planned starting in 2015.

            “Even if the JSF manages to meet its 2015 deployment deadline, it could fly into combat unreliable, confused, defenseless, toothless and vulnerable,” is how we summed up the report’s findings.

            Thompson quickly responded in a column in Forbes, insisting the F-35’s negative test report “doesn’t matter.” The 60-something former Georgetown professor referred to our “unreliable, confused” line, commenting that our claim “reveals such abysmal ignorance about the status of the program that it discredits anything else the author[s] might choose to say on the subject.”

            Apparently unaware of the irony, he added a disclaimer. “Many of the companies working on the F-35 program including prime contractor Lockheed Martin contribute to my think tank.”

            No kidding.

            It’s worth noting that Thompson also defended the F-35 against critics in 2009 following some equally scathing testing reviews. He called for “confidence” in the pricey jet. “The F-35 program isn’t really all that troubled,” he wrote.

            Thompson accused critics of the $400-billion program of being lazy and ignorant. “If you don’t follow the defense business closely, then you can be excused for believing that the F-35 Joint Strike Fighter is in trouble,” he practically chuckled.

            But Thompson’s timing could not have been more hilarious. Shortly after he published his column, the JSF program nearly collapsed. “Within weeks, the [F-35] program manager had been fired,” Aviation Week reporter Bill Sweetman recalled. “Within months, outside review teams found enough nasties in the woodshed to delay the program by multiple years, and tens of billions [of dollars].”

            And we’re the ones being discredited?

            We’re not privy to the balance sheets of the Lexington Institute or Thompson’s for-profit consultancy, but we’re willing to bet that a shift in corporate funding explains the switch in positions. “I’m not going to work on a project unless somebody, somewhere, is willing to pay,” Thompson told Harper’s. “This is a business.”

            So when some unwitting reporter quotes Thompson as an “expert” or he pens a screed of his own, remember that it seems that money, and money alone, motivates Thompson’s arguments.

            When he calls a reporter “ill-mannered” or accuses them of “abysmal ignorance,” he’s just doing his job—being mean on behalf of the arms industry.

            http://warisboring.com/arms-manufacturers-pay-this-man-to-mock-journalists-2/

          • Indeed I attacked your source showing the weak points.

            The A330 was competitive on price but fuel burn calculation was altered by fictional missions with over 7 touch&go manoeuvres on average. So total costs of ownership were faked being higher for A330. Your source stated Airbus would need to make a “lower up-front pricetag” and we knew today Boeing did it. Boeing’s price did not cover the costs (~ $1.9 billion).

            I asked you about the fictional runways unable to withstand an A330 but can bear a 767 because your source was not able to name one. KC-10 and C-17 have higher MTOW than A330. You may cite GAO or USAF else your source failed again.

            The only other 767 model still in production is the 767-300F. 767-2C has a 767-200 fuselage and 767-400 cockpit and flaps. About a third of the 767-200 fleet is already scrapped and only 37 -400 were ever built.

            Another main difference is Airbus still enhances capabilities of A330. E.g. MTOW for A330MRTT offered to USAF was 233 t while a 242 t version is available today. USAF won’t see such “free” enhancements for KC-46 except US taxpayer pay for it.

          • Loren Thompson is more ridiculous than the aviationfacts bias and lies site that promotes Boeing and attacks Scott.
            Politicians would be well advised to just do the opposite of anything he promotes as a good idea.
            I can’t believe that any news organisation such as Forbes are prepared to give him the time of day.

          • Ohhhh Politico, such a reliable source.
            Never mind Harper’s! Like these people don’t have agendas.
            Regardless how evil he is…
            Where is he wrong on the tanker? Where?
            Again attack the source, try to shift the argument to the F-35.
            Cry bias.
            Again what in the article was wrong?
            As for the F-35 an awful lot of European countries are buying the lie and buying the “lie” of the F-35.
            Let me know where Harper’s stands on that one!

          • “I asked you about the fictional runways unable to withstand an A330 but can bear a 767 because your source was not able to name one. KC-10 and C-17 have higher MTOW than A330. You may cite GAO or USAF else your source failed again. ”

            Hmm I actually gave sources. Anyway tell me was weight the only factor considered? Name a source that says it was.

            “USAF won’t see such “free” enhancements for KC-46 except US taxpayer pay for it.”

            Like they paid for the overruns in the KC-46?

            “The A330 was competitive on price but fuel burn calculation was altered by fictional missions with over 7 touch&go manoeuvres on average. So total costs of ownership were faked being higher for A330.”

            Source? I mean it couldn’t be that the 330 carries around about 90,000 lbs extra weight (not counting the weight of extra fuel being carried that won’t bee needed) but again what is the source of these allegations?

            “The only other 767 model still in production is the 767-300F. 767-2C has a 767-200 fuselage and 767-400 cockpit and flaps. About a third of the 767-200 fleet is already scrapped and only 37 -400 were ever built. ”

            Again show how shortages would be a problem. Name a study that says it would be. Also I wasn’t aware that cockpit swap outs were a common need.

          • “@Geo

            “Tiresome when you attack the source, it’s the sign of a weak argument”.

            ROTFL!”

            LOL and then you proceed to ignore what was written in the article and attack the author.

            What in the article was incorrect and why was it incorrect and what are your sources and Loren Thompson being a “mean guy” isn’t evidence.

          • “Fuel. This is the biggest issue, because it’s the biggest thing that’s changed over the past few years since the last KC-X contract. We’ve all known the terms of the competitive equation between the KC-30 and KC-767. The former plane is more capable, but it costs more to buy and burns more fuel. The added capability stayed constant. The higher price tag was reduced with a very aggressive EADS bid. But fuel is the one thing EADS could do nothing about.

            Let’s look at the numbers. According to the authoritative Airline Monitor (November 2010), the average 767-300ER in US airline service burns about 1,550 gallons per block hour (Boeing’s tanker uses a smaller airframe, but more equipment, so we don’t know it’s exact burn rate). The average A330 in US airline service (-200s and -300s; the FAA doesn’t break them out, but the KC-30 too would carry more equipment) burns about 1,900 gallons per block hour. If fuel is $50/bbl, that fuel burn difference isn’t the end of the world. If you start with a base year assumption of $100/bbl, and then add the usual US Government fuel cost inflation factor for a 30 year life span, multiply it times X hundreds of flight hours per year times 179 aircraft, you get a fuel-related operating cost difference wide enough to drive a truck through. The EADS up-front price discount would have been dwarfed by this huge fuel cost divergence.

            Everyone was wrong about this contract. Most analysts, commentators, politicians, and industry officials thought EADS would win. I was leaning in that direction too. Many analysts, myself included, also thought KC-X wasn’t executable. But if my fuel price thesis is correct, and the Air Force’s formula clearly shows a significant cost differential that isn’t outweighed by the KC-30’s superior capacity, then EADS might not have the grounds for any kind of sustainable protest. Both sides checked all 372 pass/fail requirement boxes, but that fuel expense change made one bid much more expensive. This would explain the Air Force’s confidence about its decision. And Northrop Grumman will have been proven correct – the tanker RfP was indeed a price shootout, or at least an operating costs shootout. Higher fuel prices eliminated any doubt about which way it would go.

            As usual, Mad Men’s Don Draper said it best, “I hate to break it to you, but there is no big lie. There is no system. The universe is indifferent.” You can blame conspiracies, protectionism, or politics. KC-X probably came down to mere fuel prices. We see this dynamic in the commercial jetliner world too. High fuel prices helped the 777-300ER drive the thirstier A340-600 to an early grave. The higher fuel got, the less Airbus could do about it by discounting their less efficient product. However, Boeing now runs the risk of watching its baseline 737NG lose orders to the A320 neo. Even with a discounted sticker price, the lower fuel burn product will win. High fuel prices are a terrifying and neutral competitive arbitrator.”

            “Frugality. This is the second biggest change (after fuel prices) since the last KC-X contract. FY 2008 saw a DoD procurement funding peak of $165 billion. The FY 2012 request (with OCO) is $128 billion. It’s headed downward. A few years ago, buying a more capable system had its charms, and the KC-30 offers an impressive additional lift capability. But today, everyone is focused on fighting the deficit, and frugal is the new mantra.”

            “European politicians remain clueless about KC-X. Following the contract award, several European politicians and observers blamed the Boeing win on US protectionism. German Foreign Minister Raider Bruederle darkly warned of “possible further steps and consequences.” They did this on a knee-jerk basis, without any attention to jetliner economics or US defense budget trends or the red state/blue state dynamic behind US tanker politics. My March 2010 letter detailed this annoying phenomenon. I regret to report that European politicos are still doing it again. Then again, many US politicians choose to remain ignorant about foreign countries. Why should European politicians be any different?”

            Apparently this isn’t limited to politicians…

            http://www.richardaboulafia.com/shownote.asp?id=334

            I do look forward to hearing how the author is a Boeing shill and nothing about points in the article!

          • Thanks Geo, eventually this whole “tanker story” is more clear to me.

            Wonder how an “350-800” equivalent would have performed as a tanker of the future?

          • O’Keefe, another Boeing shill!

            “EADS said the Air Force had found that Boeing’s bid was 8.8 percent lower than its own after various adjustments were made.
            Continue reading the main story

            Sean O’Keefe, the chief executive of EADS’s North American subsidiary, said the bid rules were “not optimum” for the company, which offered a larger plane. But he said EADS knew that before it bid, and the Air Force evaluation was “handled exactly by the rules.”

            Ralph D. Crosby Jr., chairman of the EADS unit, said the choice came down to the lowest price and not extra features, like the Airbus plane’s more advanced avionics and its ability to carry more cargo.”

            http://www.nytimes.com/2011/03/05/business/global/05tanker.html

          • Geo,
            Now you’ve done it! You’ve cited Richard Aboulafia! Some panties around here will be wadded extra tight.

          • @Geo

            ROTFL!”

            LOL and then you proceed to ignore what was written in the article and attack the author.

            What in the article was incorrect and why was it incorrect and what are your sources and Loren Thompson being a “mean guy” isn’t evidence.

            You’re just backpeddling. The good doctor seems to be using every peddling skill he has in order to advance the interests of his clients — Boeing, LM etc. Thus, he’s much less of an analyst and much more like someone who’s lobbying and influence peddling on behalf of his clients.

            Here’s just one example:

            The following is from Robert Block, Vice President of Communications for SpaceX in response to this post from contributor Loren Thompson.

            One of the oldest tactics in Washington is repeating a falsehood in a voice of deep conviction often enough that it eventually becomes the conventional wisdom. Loren Thompson, who masquerades as an independent, disinterested party, apparently believes in this approach.

            Repeating the distortions, innuendo and outright lies from his first blog post, Thompson — a paid consultant for big aerospace companies — is trying to sow doubt about SpaceX’s Falcon 9 launch vehicle and Dragon spacecraft to make it seem that NASA is somehow betting the farm on an unproven company. However, while SpaceX is currently the provider furthest along in the NASA effort to develop cargo and crew capabilities to serve the International Space Station (ISS), there are many others. NASA has a diversified portfolio of players, including the Boeing Co. and Orbital Sciences Corp. And in fact, SpaceX supports competition, which we believe is good for the entire industry, the taxpayer and the country.

            Thompson seems to relish in going on about how SpaceX has missed its schedule, yet fails to acknowledge slips of major government developments like the now defunct Constellation moon program and the fact that it was costing NASA an order of magnitude more money for a program that was falling many years behind schedule before it was finally cancelled. Even the Space Shuttle, about to be retired after 30 years of service, was itself three years late to the launch pad, and that was after Shuttle main engines blew up on their test stands.

            Thompson has referred to past test flights as “catastrophic failures.” In spite of the fact that there was nothing catastrophic about them, test flights are designed to uncover problems, similar to Boeing’s first Delta IV-Heavy test in 2004 which lost its payload and failed to reach its intended orbit because sensors shut down its three main engines prematurely. Lessons learned from these flights are then applied to subsequent flights. It’s a practice that is considered part of sound rocket development. In fact, data from every Falcon 1 launch was used to make our two Falcon 9 flights a huge success, which is even more remarkable when you consider that 50% of new rocket designs fail in their first launches.

            Finally, Thompson claims SpaceX is busting its budget. This is completely untrue. Commercial providers only get paid a fixed sum of money when they meet performance-based milestones. By contrast, the Orion capsule, made by Thompson’s benefactors at Lockheed Martin, has already cost upwards of $5 billion, and is still many years and billions of dollars from completion. Compare that to the mere $300 million that NASA has spent to get the Dragon test flight on the Falcon 9 last December.

            Thompson’s most frequent editorial campaigns have been undertaken on behalf of industry stalwarts such as Boeing, Lockheed and Pratt and Whitney, against the Northrop Grumman/EADS tanker proposal and in opposition to GE and Rolls Royce’s alternative F-35 engine. Most recently, he’s decided to take on the “non-traditional” commercial space industry and has targeted SpaceX.

            Why? His expressed reason in his articles is that he is just a concerned citizen, worried that NASA should not be gambling away its future. Given his client list and intentional distortions, somehow this excuse rings hollow.

            Subterfuge is defined as the use of deceit in order to achieve one’s goal. So why does Thompson choose this tactic? As SpaceX continues to advance and even Boeing has a commercial spacecraft in development, it becomes more difficult to defend Lockheed Martin’s multi-billion dollar Orion capsule. One day Orion might be able to take astronauts to space, but at the moment no one can even say how much it will cost, when it will fly, where it will fly or even on which launch vehicle.

            Loren Thompson is entitled to his opinions, but distinguished publications such as Forbes and its readers should not confuse subterfuge with news commentary.

            https://www.forbes.com/sites/beltway/2011/06/03/spacex-loren-thompsons-deceit/#4ee7f3d6740a

          • @Mike Bohnet

            Agree or disagree with him, at least Richard Abloulafia is a well respected analyst. Loren Thompson is neither well respected nor is he a real analyst.

            While Richard Aboulafia IMO tends to be rather US-centric in his analyses and in his conclusions, his pontificating can be both provocative and illuminating, which typically makes for more interesting reading.

  2. Boeing seem to have too many messages out there at present, there are 4 core messages I can see and they are all at odds with each other

    1 to investors, we are doing well and are a sure fire bet into the middle future with associated FCF claims and buybacks and dividends

    2 to employees, Airbus is serious (unfair) competition and you guys are going to have to bear the brunt of that

    3 to states, we need the tax breaks as we are hurting, and whatever you offer I can get better elsewhere

    4 to govt/ general public, we suffer from unfair competition and something should be done about it

    I am sure I could have added to this and made it a bit more polished but you get my drift. Boeing management are a bit like those friends you have that tell you too much about themselves, you know where everything is fantastic and awful all at the same time. This becomes very wearing over time. Please contrast the bleating that comes out of Chicago with the limited utterings by the Airbus senior management. When the Airbus CFO said something foolish last year he was managed very quickly, otherwise they tend to have their ‘message’ far more contained.

    • Very apt comments sowerbob. Could it be that Boeing hasnt really succeed with WTO complaints thats it gone nuclear with the dumping complaint, after all Bombardier is a long time Canadian government poodle

  3. There is something indecent about the comments and positions of management at Boeing. In fact, what appears in the public space of discussion are autistic findings. Organization made too big to see and hear what it does, their leaders behave like amateurs, in little boys in short pants, where the cry, the complaint, the anger, the confrontation, the offense, the excess, and Comedy, become serious, responsible, professional words. Is there someone close to giving them a slap so they wake up and they watch what they’ve become?

  4. Scott, I’ll give you a hypothetical analogy that would actually easily support BA’s CSeries position and complaint. Muilenberg’s driving to work from his home in the Chicago suburbs one morning. He crosses (after properly stopping, of course) an unguarded, double track railroad crossing, and his new 2017 Cadillac Escalade (built in Arlington, Texas) is pretty substantially clipped by a Canadian National backing locomotive hidden from view by a BNSF standing train on the first unguarded track. When it comes time for settlement negotiations or court time, CN and its lawyers don’t get to argue “hey, Muilenburg’s a wealthy guy, he can take it”. A substantial tort’s been committed–irregardless of Muilinburg’s wealth and income, and CN decides, rightfully, they better quickly settle.

    • Poor analogy – not least because in an anti-dumping case the complainant needs to be able to show significant harm.

      • They were harmed by having to price against a failing business, bailed out price dumper!

        • When Bombardier tried to market the CSeries at “market” pricing as the first test vechicles rolled of the production floor, both Boeing and Airbus quickly dropped their prices to just above cost to severely undercut the cost saving for the lower fuel burn that CS promised. Is monopolistic and anticompetitive. Bombardier is a threat to Boeing/Airbus in the sense that unless the high barriers to entry are maintained as other manufacturers and state subsidized players in China, Russia, India, Turkey, Japan and Korea attempt to develop planes.

  5. So what I read into this is someone throwing a tantrum, you are interfering with out buying back our own stocks, gad, you are forcing us, I say forcing us to give up research and product. You cant expect us to make the shareholders wait, you simply can’t.

    Maybe if they put your money where you mouth was and had done both the research and crated products people would want to buy your stock as its highly valued by underlying strength of good products and sales and ongoing research and development and not a shell game?

    And threatening someone with leaving to get 8 billion dollar tax cut is not extortion and illegal?

  6. Mr. Hamilton,

    The following statement that you made in your post is not true according to the WTO website. Like most of the people posting on your website, you seem to be failing to distinguish between subsidy cases, and dumping cases, which the WTO does distinguish between, with each falling under a different part of WTO agreements, with different procedures for redress set forth.

    “So far, no US complaint has been filed with the WTO. Although Boeing can urge the US government to file a complaint, it must be the government that does so—just as it was Brazil, not Embraer, to file a complaint.”

    The following quotes are from the WTO website at this link.

    https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm

    “If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. Is this unfair competition? Opinions differ, but many governments take action against dumping in order to defend their domestic industries. The WTO agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping — it disciplines anti-dumping actions, and it is often called the “Anti-Dumping Agreement”. (This focus only on the reaction to dumping contrasts with the approach of the Subsidies and Countervailing Measures Agreement.)”

    “GATT (Article 6) allows countries to take action against dumping. The Anti-Dumping Agreement clarifies and expands Article 6, and the two operate together. They allow countries to act in a way that would normally break the GATT principles of binding a tariff and not discriminating between trading partners — typically anti-dumping action means charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the “normal value” or to remove the injury to domestic industry in the importing country.”

    “The agreement says member countries must inform the Committee on Anti-Dumping Practices about all preliminary and final anti-dumping actions, promptly and in detail. They must also report on all investigations twice a year. When differences arise, members are encouraged to consult each other. They can also use the WTO’s dispute settlement procedure.”

    Some key points from the above quotes.

    1) The WTO definition of dumping centers on selling in an export market at prices below those charged in the “home market”, it says nothing about subsidies or selling below cost. Subsidies are dealt with as subsidy cases, which are different, and pursued differently.

    2) The WTO does not, repeat does not, take initial actions on dumping cases (not to be confused with subsidy cases), WTO agreements instead regulate how governments, repeat, governments, can or cannot react to allegations of dumping.

    “The WTO agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping ………. (This focus only on the reaction to dumping contrasts with the approach of the Subsidies and Countervailing Measures Agreement.)”

    3) Other than setting forth rules that governments must follow when investigating and deciding dumping cases, the WTO becomes involved in disputes between governments regarding dumping actions, only if a member submits a dispute with another member to the WTO’s dispute settlement procedure. This will happen only if a member government has first launched a dumping investigation or imposed dumping penalties.

    “When differences arise, members are encouraged to consult each other. They can also use the WTO’s dispute settlement procedure.”

    In a subsidy (not dumping) case such as Brazil pursued on behalf on Embraer, member governments have the option of submitting a case directly to the WTO dispute resolution procedure (unlike in dumping cases where the WTO “does not pass judgement”); however, they still have the option of launching their own investigation and charging a duty based the results. When reading the following it is important to keep in mind that according to the WTO, subsidies are different than dumping.

    “This agreement does two things: it disciplines the use of subsidies, and it regulates the actions countries can take to counter the effects of subsidies. It says a country can use the WTO’s dispute settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effects. Or the country can launch its own investigation and ultimately charge extra duty (known as “countervailing duty”) on subsidized imports that are found to be hurting domestic producers.”

    • @AP: I asked Boeing why it hadn’t filed a complaint with the WTO. The answer was only governments could. Boeing did not address all the other stuff in your Comment.

      • From the website of the United States International Trade commission at the following link.

        https://www.usitc.gov/press_room/usad.htm

        “Finding: The USITC determines (1) whether an industry in the United States is materially injured or threatened with material injury, or (2) whether the establishment of an industry in the United States is materially retarded, by reason of imports that the Department of Commerce has determined to be sold in the United States at less than fair value or subsidized.

        If the USITC determination is affirmative, the Secretary of Commerce issues an antidumping order (in a dumping investigation) or a countervailing duty order (in a subsidy investigation), which is enforced by the U.S. Customs Service. If the USITC determination is negative, no antidumping duty or countervailing duty orders will be issued. If the USITC makes a finding of negligibility, the investigation regarding those imports will be terminated.

        USITC determinations may be appealed to the U.S. Court of International Trade in New York City, or, in cases involving Canada and/or Mexico, to a binational panel under the auspices of the North American Free Trade Agreement. (For further information on antidumping investigations, see section 731 et seq. of the Tariff Act of 1930, 19 U.S.C. 1673 et seq. For further information on countervailing duty investigations, see section 701 et seq. of the Tariff Act of 1930, 19 U.S.C. 1671 et seq.)”

        • What I thought was interesting about the above excerpt from the US ITC website was that the ITC (a US government agency) says that it has the authority to undertake either antidumping or subsidy investigations and direct US Customs Service to collect penalties if it decides that they are in order. There is not a single mention of the WTO. Appeals go to the US Court of International Trade (this has 9 judges appointed by the US President) or in cases involving Canada and Mexico, as long as the US remains a party to NAFTA, to a bi-national NAFTA panel.

          Note that the references for details on antidumping investigations and subsidy (countervailing duty) investigations are to different sections of the U.S. Code for each type of investigation.

  7. Scott,

    The way that I read the response you quoted from Boeing, the following part of their response is saying that they pursued the dumping complaint with the US Commerce Department and the ITC (a US federal government agency) because that is the correct (“right”) channel for pursuing a dumping case involving sales in the United States, which is one of the issues I was raising.

    “We’ve chosen the path we’re on because we are making a dumping allegation with respect to US sales and Commerce and the ITC are the right channels for dumping cases.”

    Saying it is the right channel isn’t the same as saying it is the only allowed channel, but I don’t see how what I am reading on the WTO website, including the quotes in my previous post in this thread, can be construed in any other way than to say that the WTO allows governments to pursue dumping cases and impose dumping penalties if they follow WTO rules, and will try to help resolve disputes between members about dumping cases, but does not itself impose dumping penalties or get involved in dumping cases unless a member submits a dumping case to the WTO’s dispute settlement process, and that this is different from the procedures set forth for subsidy (note the last word before this note was subsidy, not dumping) cases.

    Which is likely to be the more reliable and accurate source, the WTO website, or a Boeing spokesman? My vote would go to the WTO website, unless your source at Boeing was a lawyer or someone who specializes in trade issues, as opposed to someone with an engineering or public relations background.

    • You done a good job Robert in giving us a more detailed picture. Obviously its a bit soon to have all the details from the main players- even Boeing may be treading on ground it knows little about and doesnt want to get caught out saying things it would later have to walk away from

      • Think Boeing has the Delta fleet decisions in the back of their mind?

        • Hello Anton,

          I am not sure which Delta Fleet decisions you are referring to, but my experience with executives of large U.S. Corporations (as to opposed to those of a small or large family owned business or small or medium start ups) is that they are not impulsive and do not do things out of emotion, but that they do play hardball. They study the chess board very carefully and think through all the likely reactions of their opponents before making a move, especially a large move. They analyze and re-analyze their spreadsheets before committing to a course of action – like Boeing analyzing and re-analyzing the possible configurations of a new aircraft. Everything is analyzed, over-analyzed , and then over-analyzed again. I am not saying their final decisions are always correct or good, but that they are very deliberate and lots of contingency analysis has gone into them. I am sure that Boeing spent many hours thinking about the advantages vs. disadvantages of filing their dumping complaint, and how customers and competitors would likely react. I think that they are a lot smarter than most of the comment posters here here give them credit for.

          Could they possibly be sending the following message to Airbus and Delta in the upcoming Delta narrow body RFP: you know that we know how much Airbus has charged Lufthansa and other European customers for the A321 neo, and that we will find out the price that Delta was offered if Delta decides to select the A321 neo. If a Delta purchases the A321 neo at a price less than that which has generally been charged European customers – you know what will be coming.

          Since Boeing will be in its home market, it can offer low ball pricing (just enough to significantly undercut those paid by European customers for the A321 neo) without worrying about being subject to dumping allegations, as long as it doesn’t offer lower prices to non-US customers.

          • Hi AP-Robert. I am thinking of the single aisles predominantly. It could land up being potential launches for the MAX10/(7M7) or new winged A(321)/322 and be important for both companies?

            Delta have 53 B737-900ER’s and 63 A321CEO’s on order (mainly 757 replacements), wont be surprized if we see changes here? Guess the replacement of the 58 B767-300ER’s (21 x 400ER’s) the most tricky for Delta? (A combination of 787-9’s/7M7’s and 330-700’s/322’s if they want to bat on both sides?). Then the A330-900 becomes “redundant” with 350-900’s least affected?

            This is know real speculation, and thinking long term, a fleet of CS100/300’s, 737MAX8’s, 321NEO’s (LR-XL/New wing), 7M7’s, 787-9’s, 350-900’s and 777-300ER’s (777-8s?) could nearly be a “dream fleet”.

            Not sure if the twin aisles could come into play/”(be legal”) with swaps etc in a tender process where the actual price of aircraft could actually become a grey zone? I won’t be surprized if an “A330-800 Lite” (-700?) could land up being in the offering “mixes”.

            In anyway, good luck to Delta.

  8. What if Boeing was wrong? Why not Comac? The Chinese government is paying down costs. Through other aircraft leasing companies, the Chinese government is financing purchases of C919. The Chinese government is in charge of selling prices. Tomorrow, when Chinese government aircraft will be sold on US territory, what will Boeing’s reaction be? Why not scream now?

    • Why expend your ‘commercial capital’ on a plane that has negligible sales outside China – I think there is only 10 to an airline in Thailand.

      • Because long term. Think not about the C919 but the C929, C939 and so on — the C919 is merely the opening salvo.

        • For many years Boeing effectively had a monopoly. Now they are cry babies? If their product is the best and competitively priced airlines will buy it.

          Its’ the same Board that did not want to spend additional money on the MAX10 undercarriage and offer industry a lame-duck, band-aid, PR driven aircraft that US airlines must feel obliged to buy. Will probably cry foul play if Delta for example orders A321NEO’s or other?

          Wonder at what price did they sell the MAX8’s to SpiceJet?

  9. I’ve spent the last couple of days wondering what Canadá can do about this. Any WTO or whatever case will take forever and it appears that by claiming BBD are dumping Boeing short circuitos the system anyway. I wonder through if Trump hasn’t shown them the solución, don’t call it trade, call it security or safety.

    Imagine if Ottowa refuses to accept FAA certificación of the 737 MAX on the grounds that the 737 design is too old to grandfather further and “dangerous” by today’s standards? Australia’s CASA would probably follow suite, or be hung by the press. EU leaders are facing a nationalist popularist swing and need to show some teeth on trade issues if they don’t want to be overran. Bannning “dangerous” old tech US aircraft might be just the thing, esp as they didn’t start it. A back door deal límits C500 to 160 seats and Airbus concentrate on over 160. Not a likely scenario I know but we live in strange times, and Canadá might be getting sick of this. If US policies on trade don’t change they will need to make a stand sometime.

    • In spite of the great sympathy that Bombardier exhibits with aviation lovers, the data and the facts should be worth more:
      – Commercial aviation is not a contest of elegance, if it were Concorde would have been a memorable success;
      – The Bombardier family, the controlling group, prized grandiose dreams that strayed from reality, but were not penalized for it (yet);
      – Many other industries, certainly less glamorous than aviation, felt the weight of American anti-dumping actions;
      – It is a reasonable assumption that the sale to Delta Airliners below the cost of production is proven, in which case the attempt to distort the market from their will to bear losses would be evident;
      – It is also reasonable to suppose that only with illegal state subsidies could it be possible for a company weakened by the great international competition, as well as for its repeated errors, to allow such sales below the cost of production;
      – Boeing, competing with an outdated product (737-600) won some and lost other major sales. Low acquisition cost is important, but it’s not all. The projected cost for fuels, costs of changes and many others enter into the equation of the airlines;
      – I clearly realize that Bombardier has invested an excessive amount in the development of a niche product, most likely with high marginal production costs. As for the expectation of an advantage in the operating costs, the projected oil crude of not much more than 60 USD withdraws of the C-Series its great trump of sale.
      But none of this matters because of Boeing’s treachery …

  10. The Canadian/Quebec government should make a deal with Lockheed Martin such that the Canadian government’s investment in Bombardier is taken off their hands, and in return, the Canadian government will continue with their original $16 Billion dollar F-35 contract (while canceling the Boeing Super Hornet deal). Assuming that the deal works in Lockheed Martin’s favor. Bombardier stays afloat without a government bailout and Lockheed gets to sell more of the F-35.

  11. See below for an explanation of the difference between dumping and subsidies excerpted from “Chapter 6: Fair Market Value”, of the U.S International Trade Administration’s Antidumping Procedure Manual, which can be found at the following link. Note that the International Trade Administration, which is an agency of the U.S. Commerce Department, is different from the U.S. International Trade Commission, which is an independent quasi-judicial agency.

    http://enforcement.trade.gov/admanual/index.html

    “Also, many people tend to confuse dumping and subsidies, mistakenly seeing them as a single phenomenon. The two are, in fact, distinct – one involves the pricing behavior of individual firms, while the other stems from the decisions of governments to provide preferential assistance to exporters or specific industries. While a foreign government’s decision to provide export subsidies or to protect its domestic market may create conditions conducive to dumping, a finding of dumping will ultimately turn solely on the pricing decisions of the firm in the two markets. Other U.S. trade laws, such as the countervailing duty law, are available to address more directly the trade-distortive actions of foreign governments.”

    • Chapter 29 of the USITA Antidumping Manual titled “International Agreements”, contains a discussion of how USITA and USITC antidumping actions are, and are not, constrained by the WTO agreements.

      • What happens if a conflict between U.S. Law and precedents and WTO agreements or precedents arise in a USITA proceeding? According to the following excerpt from Chapter 29 of the USITA Antidumping Manual, in the event of such a conflict, US law and precedents would prevail over WTO agreements and precedents.

        E. The relationship between the WTO Agreement and U.S. Law

        “At the conclusion of various rounds of GATT trade agreement negotiations, the United States agreed to make changes to its laws, as needed, to conform with the agreements that were concluded. These changes were implemented through legislation, such as the URAA, and
        through subsequent amendments to administrative regulations. As a matter of U.S. law, theURAA defines the relationship between the WTO Agreement and U.S. law. Specifically,section 102(a)(1) of the URAA provides: “No provision of any of the Uruguay Rounds Agreements, nor the application of any such provision to any person or circumstance, that is
        inconsistent with any law of the United States shall have effect.” In other words, as a matter of U.S. law, U.S. laws prevail even if they are inconsistent with a provision of the AD Agreement. In Department proceedings, parties may make legal arguments premised upon alleged inconsistencies between U.S. law and the WTO Agreement. As a general matter, in our administrative determinations, we do not engage in interpretation of WTO provisions because our determinations must be based on U.S. law and our own regulations and precedent.”

  12. Most messages here are still in the first two of a total of five stages of Grief and Loss (denial, anger, bargaining, depression, and acceptance).

  13. You mean like the first 787 or so 787’s they sold?

    • Wonder if the American Tax Payer knows they contributing to the development of the 777X for what seems to be for the ME and other non-US airlines?

  14. To my knowledge, aerospace has not been excluded from NAFTA.

    Why is Boeing going through Commerce and the International Trade Commission? Shouldn’t it be handled by NAFTA panels instead?

    • Under NAFTA, anti-dumping complaints are still handled by the country is which the dumping is alleged to have occurred, according to its anti-dumping laws. The quotes below are from the U.S. Customs and Border Protection website at the following link.

      https://www.cbp.gov/trade/nafta/guide-customs-procedures/effect-nafta/en-antidumping

      “Under the NAFTA, Canada, Mexico and the United States retain the right to apply their antidumping and countervailing duty laws to goods imported from another NAFTA country.”

      Although initial complaints and determinations are still handled by the country is which the dumping is alleged to have occurred, NAFTA did set up a process by which the final determination reached by the country is which the dumping is alleged to have occurred can be reviewed by a bi-national panel.

      “The Agreement also establishes a mechanism for independent bi-national panels to review final antidumping and countervailing duty determinations by administrative authorities in each country. Private parties wishing to contest an administrative decision respecting goods of a NAFTA country may request that a panel be established. In such cases, the panel process will substitute for domestic judicial review in the country where the administrative decision was made.

      A binational panel will decide whether the antidumping or countervailing determination was made in accordance with the domestic law of the importing country.”

      • Since the Canada – US free trade agmt, and later NAFTA, no antidumping and countervailing duties was ever applied (to my knowledge).

        Everything went thru some NAFTA processes. (Softwood lumber did not as it is excluded from NAFTA)

  15. Here is a link to a notice of final determination issued by the Canadian Border Services agency in a dumping case against U.S. Gypsum board suppliers on 12-15-16.

    http://www.cbsa-asfc.gc.ca/sima-lmsi/i-e/gb2016/gb2016-nf-eng.html

    Here is a link to a Canadian International Trade Tribunal order issued 9-9-15 renewing dumping penalties against U.S. potato producers.

    http://www.citt-tcce.gc.ca/en/node/7441

    Both the Canadian Border Services Agency and Canadian International Trade Tribunal are Canadian government bodies, not NAFTA bodies.

    I had thought that the excerpt that I posted in a previous message from the NAFTA website explained in plain English that Canada, Mexico, and the United States did not cede jurisdiction for dumping investigations to NAFTA. I have included this excerpt again below. Do you disagree that this is what this excerpt plainly states? I am not trying to be sarcastic or rude, I just genuinely don’t understand how this quote leaves any ambiguity about the issue, but open to listening to different interpretations of it.

    “Under the NAFTA, Canada, Mexico and the United States retain the right to apply their antidumping and countervailing duty laws to goods imported from another NAFTA country.”

    Can you provide me with a link to documents from an initial dumping investigation, as opposed to an appeal of an initial investigation, that was handled by NAFTA? Since these types of investigative reports are put in the public record once completed, they should be easy enough to find if they exist. I would be surprised if any such thing existed, but very interested to see if it did. I am talking about original agency documents, not press reports, which I have sadly discovered in recent days are often written by people who don’t even understand the difference between dumping and subsidies, and who make statements about the jurisdiction of agencies that 10 minutes of study of the agencies’ website will show are not true. Can you post an excerpt of the part of the NAFTA agreement that allows jurisdiction over initial dumping investigations if you are aware of such a section?

    • Ex Military Engr,

      Following is a list of antidumping (A) and countervailing duty investigations (C) initiated by the U.S. against Canada since 1-1-2000, copied from the U.S. ITA Enforcement and Compliance Division website at the link below. NAFTA was signed by US President Clinton on 12-8-93, and went into effect, at least in the US, on 1-1-94. To my understanding, not a single one of these cases went “thru some NAFTA processes”. Agree or disagree?

      Of these investigations, only the ones on Citric Acid and Salts, Hard Red Spring Wheat, Carbon and Alloy Steel Wire, Softwood Lumber Products, and Supercalendered Paper resulted in duty orders, so it is not the case the U.S, complainants always get what they want.

      http://enforcement.trade.gov/stats/inv-initiations-2000-current.html

      A-122-850 Canada Live Swine
      A-122-849 Canada Ready-to-Cook Kosher Chicken A-122-853 Canada Citric Acid and Citrate Salts A-122-856 Canada Iron Mechanical Transfer Drive Components
      C-122-848 Canada Hard Red Spring Wheat
      A-122-847 Canada Hard Red Spring Wheat
      C-122-846 Canada Durum Wheat
      A-122-852 Canada Liquid Sulfur Dioxide
      C-122-851 Canada Live Swine
      A-122-835 Canada Anhydrous Sodium Sulfate C-122-841 Canada Carbon and Alloy Steel Wire Rod A-122-840 Canada Carbon and Alloy Steel Wire
      C-122-839 Canada Softwood Lumber Products A-122-838 Canada Softwood Lumber Products
      A-122-837 Canada Greenhouse Tomatoes
      A-122-836 Canada Live Processed Blue Mussels
      C-122-854 Canada Supercalendered Paper

    • The quote below is from Chapter 29 of the US ITA Enforcement and Compliance Division Anti Dumping Manual, which can be found at the following link.

      http://ia.ita.doc.gov/admanual/

      My understanding of this quote and the rest of Chapter 29, is that NAFTA has established a process by which bi-national panels can review the anti-dumping decisions of member countries, but that the initial complaint is investigated and decided upon by the country in which dumping is alleged to have occurred.

      “Chapter 19 of NAFTA concerns review and dispute settlement related to AD and CVD determinations. Under Chapter 19 of the NAFTA, an interested party may request that a binational panel review a NAFTA country’s final determination in an AD or CVD administrative proceeding that involves imports from another NAFTA country. In the United States this can replace review by the Court of International Trade.

      The bi-national panels consist of five individuals drawn from a roster, established by the three countries and composed of judges or former judges “to the extent practicable” and trade experts. Each panel must include at least one lawyer because the chair must be a lawyer. Each government involved in a dispute can select two panelists and together select the fifth panelist. The agreement also provides for selection of the fifth panelist by lot if the two governments cannot reach a consensus on the fifth panelist.

      The panels are supposed to determine whether a determination by an administering authority was in accordance with the AD or CVD law of the importing country. In other words, a panel reviewing a U.S. action against imports from Mexico or Canada will determine whether the actions taken by the Department or the ITC, as appropriate, were consistent with U.S. law. The panel review process is designed to take no more than 315 days.”

  16. The following question that just occurred to me. Under U.S. anti-dumping law what is the “home market” of an airplane that comes off the Airbus assembly line in the U.S. state of Alabama? The United States? The European Union?

    • @AP: The Mobile planes are “Made in the USA.” They’d even qualify for US ExIm Bank support, should ExIm ever get back in business. Isn’t that ironic…

  17. http://business.financialpost.com/fp-comment/kevin-libin-bombardier-played-hard-to-get-but-the-federal-liberals-were-determined-to-hand-it-money-it-didnt-need

    is interesting. Fits the pattern of government manipulation, which is especially prevalent in the People’s State of Quebec, but also in Brazil and the US.

    Look at WA state tax treatment, federal purchasing preferences/favouritism in the US, taxpayer funding of R&D in all countries, taxpayer funding of schools in all countries (many Embraer engineers were taught by Americans and/or Canadians in a school in San Paulo, etc.

    Companies would be better off just getting better instead of whining.

    But poor leadership continues, witness Bell helicopter company blabbering buzz-speak like “innovation is in our DNA”.

    • Keith: “pattern of government manipulation, which is especially prevalent in the People’s State of Quebec”

      How about Ontario Keith, where governments actually lost Billions (not repayable loans here) in the auto bailouts. (for guys that do little R&D here)

  18. Here’s Bombardier’s public response to Boeing allegations:

    http://www.theglobeandmail.com/report-on-business/rob-commentary/boeings-protectionist-push-would-be-felt-by-consumers-and-carriers-across-the-world/article34887431/

    From the article:

    “As a starting point, Boeing alleges Bombardier sold C Series aircraft for $19.6-million (U.S.) apiece. This is wrong. It is nothing more than a back-of-the-envelope guess that is millions of dollars off the mark. In fact, buried in Boeing’s filing, it discloses that this alleged “price” is based on an affidavit from a Boeing executive, with no firsthand knowledge of any price actually paid for any C Series aircraft.

    Boeing also suggests that Bombardier sold the C Series to Delta at an unusual discount. This is wrong and it is ironic given that Boeing famously sold hundreds of its new 787 aircraft at steep discounts, including planes sold into Canada.

    Boeing also incorrectly claims that its aircraft compete directly with the C Series. Boeing’s claim is contradicted by the company’s own executives, who publicly stated that their 737 Max family does not include an aircraft that actually competes with the C Series model selected by Delta. Indeed, Boeing did not even participate in the competition at Delta.

    Airlines base purchasing decisions on a number of factors, including superior design. For Delta, the C Series’s superior design was a critical factor. As Delta’s then-CEO said after the selection, “Let’s be blunt about it – Bombardier created a better piece of technology than the other guys.”

    • “Boeing did not even participate in the competition at Delta”

      Boeing did participate. They tried to sell Delta some used Boeing 717s.

      • Sort of a “Thanks for coming out” type of gesture?

  19. In some circles, Boeing seems to lose some credibility with this complaint:

    https://www.flightglobal.com/news/articles/opinion-boeings-cseries-trade-complaint-lacks-cred-436886/

    From the article:
    “Boeing attempts to embellish these facts with absurd claims, such as an unfounded accusation that Bombardier sold the 75 CS100s to Delta for $19.6 million each. Such a price would have caused it to book a forward-loss provision of $930 million, rather than $500 million”

    And:

    http://aviationweek.com/commercial-aviation/opinion-why-boeing-s-charge-bombardier-dumping-doesn-t-add

    From the article:

    “All told, Boeing lost $305.23 million on the 16 aircraft (787) delivered to Air Canada, although deferred production losses on the program as a whole are much greater, peaking at nearly $29 billion in the first quarter of 2016.”
    “Boeing argues that C Series jets “compete directly with American-made B737-700 and 737 MAX 7 jets.” This, too, is as disingenuous as Boeing’s complaint that Delta Air Lines bought jets below Bombardier’s cost of production. In fact, the model that Bombardier sold to Delta was the CS100, which competes with exactly nothing that Boeing builds—and which contains very substantial U.S. content.”
    “The WTO in 2011 established that Boeing received $3-4 billion in local, state and federal aid in support of every one of its current commercial programs. Boeing’s position: “As an unsubsidized commercial enterprise…”
    “The reaction to Boeing’s petition against Bombardier across much of the aerospace industry has been sharply negative.”
    “…the possible cost of picking this particular fight, which seems to make no sense whatsoever. For example, Delta is preparing to issue a request for proposals for a large order for Airbus 320neo and Boeing 737MAX models. Some industry observers believe Boeing’s petition may diminish its bargaining leverage. And what of the appearance of such blatant hypocrisy that could tarnish Boeing’s otherwise sterling reputation?”

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