Sept. 18, 2017, © Leeham Co.: The US Department of Commerce is due next Monday to hand down its preliminary decision on whether to impose tariffs on Bombardier’s C Series sold to Delta Air Lines.
The price dumping complaint, filed by Boeing earlier this year, cleared the US International Trade Commission on a 5-0 vote. The ITC found probable cause (my words) to proceed with the complaint. From there, investigation shifted to the DOC.
The details are complex and need not be recapped here. What is important are the next steps, assuming—as widely expected—DOC sides with Boeing.
Two weeks ago, it was revealed Boeing walked away from negotiations with the Canadian government to resolve the issue. Last week, it was revealed UK Prime Minister Theresa May talked with President Donald Trump about the complaint. More discussions are to follow.
It may be noteworthy, if accurate, that Boeing may be coming back to the table. See the last paragraph in this Sept. 12 article from The Global and Mail.
One industry observer wrote that the UK is coming to the table too little, too late. This is a totally uninformed position. LNC has known since July something was up with the UK, which is a purchaser of Boeing military goods. In fact, it was announced at the Paris Air Show agreed to purchase 50 Apache helicopters.
I don’t know the current status of this deal, but just raising the issue, as did the Ulster Unionist Party of Northern Ireland, has all kinds of implications. It was suggested to me in July that the UK (and May specifically) was gearing up and the UK could potentially cancel Boeing contracts or otherwise act.
Why is the involvement of the Ulster Unionist Party important?
The C Series wings are produced at Bombardier’s Northern Ireland factory and it is the biggest employer in this perpetually depressed area. These are also high-paying jobs.
More to the point, May barely survived a June snap election. She remained in office through forming a coalition government. The swing political party? The Democratic Unionist Party
If May is unsuccessful in getting Boeing, somehow, to drop this complaint, could the DUP bolt, in which case the May government collapses? Does Boeing want to be responsible for this? Does Donald Trump want to lose a kindred spirit?
The scenarios are ripe for the imagination.
Irrespective of the politics, here are the possibilities of what’s next, on the assumption that no settlement is reached in the next week and Commerce rules in Boeing’s favor next Monday.
Trump vowed to withdraw from NAFTA, or at least renegotiate its terms. He can sign an executive order withdrawing from NAFTA. Withdrawal would moot an appeal to NAFTA, but there is a line of thinking that Congress must ratify the withdrawal because of treaty obligations. Whether Congress would go along is questionable. In the meantime, NAFTA continues.
This case is far from over if a settlement of some kind isn’t reached. If it continues, it will remain fodder for the media (and enrichment for the lawyers) for years to come.