Canada files WTO complaint vs US over Boeing C Series trade complaint

Jan. 10, 2018, © Leeham Co.: Canada upped the ante in the Boeing-Bombardier C Series trade complaint today by filing one of its own against the US with the World Trade Organization.

This filing comes on the eve of the US International Trade Commission (ITC) staff report, due Friday, on whether Boeing was “harmed” by Bombardier’s near-miss in selling the CS100 to United Airlines and an order in 2016 by Delta Air Lines for 75+50 CS100s, with an option to covert some of the orders to the larger CS300.

The US Commerce Department concluded Canada, the province of Quebec and the United Kingdom illegally subsidized the C Series program. Commerce also concluded BBD “dumped” the C Series in the US with the Delta order and attempted to do so with the United competition.

Commerce levied tariffs of about 292% for any C Series imported from Canada.

The Canadian complaint with the WTO challenges the DOC’s action and the pending decision, due next month, by the ITC. The move was expected, but generally thought would occur after the ITC ruled. ITC is expected to support Commerce’s conclusions.

Staff report

LNC expects the staff report will be a predictor of how the ITC will rule. The Commission has five members. It sent the Boeing complaint to Commerce on a 5-0 vote.

Although Commerce and ITC are two distinct agencies (often confused as both being part of the Commerce Department), observers believe the ITC will endorse Commerce’s decision.

A hint of the direction may have come from a Jan. 4 filing at the ITC:

Bombardier’s response to the below question (originally sent on December 20, 2017) was incomplete because the requested information was not submitted. The Commission is providing a second opportunity to explain or remedy the response. Please respond with an explanation or remedy no later than the 11:00 am on Monday, January 8, 2018.

Please provide the annual value (in USD) of aircraft parts for 100‐ to 150‐seat LCA projected to be imported into the United States by the CSALP through 2022. Please separate into imports from Canada and imports from all other countries and provide a list of the type of parts contained therein. If exact projections are unavailable, please provide estimates based on Bombardier’s experience at its Mirabel facility.

The first paragraph may be crucial. Commerce determined that BBD failed to respond to questions and, under the policy of “All Facts Available,” determined Bombardier was guilty of dumping the C Series into the US with the Delta deal below cost.

(The industry practice and history, including from Boeing, is that early airplanes in a new airplane program invariably are built, sold and delivered below cost before the learning curve makes the program profitable.)

The ITC question above suggests a similar path may be emerging at the ITC.

William Perry, a trade attorney with the Seattle law firm of Harris Bricken who previously worked at the ITC and Commerce, said failure to answer questions was a “fatal error” by Bombardier. He is not involved in the current case.

Filing has no affect on ITC

Reacting to the Bombardier complaint with the WTO, Perry provided this information to LNC:

In truth a filing at the WTO, does not have any direct effect on the case.  The complaint will start up a litigation dispute at the WTO between the US and Canada, but getting an answer from a Dispute Resolution Committee will literally take years.  By the time the WTO issues its actual opinion, the time for annual reviews will come up.

Also, the WTO has no power to literally tell the Commerce Department and the ITC what to do, never mind actually interfere in an ongoing proceeding.  It takes years to litigate WTO cases and at the end of them, for example, if the US government is determined to be in violation, the remedy is that Canada would have the right to retaliate against the US using trade restrictions, but only after the litigation is truly ended, which again takes years.

The Canadians in their complaint focus on the Counter Vailing Duties but do not focus on Bombardier’s failure to respond in the Antidumping Case.  The WTO will affirm Commerce on that decision.

With regards to critical circumstances and the imposition on duties 90 days prior to the preliminary determinations, the ITC has yet to rule and often respondents can win on critical circumstances at the ITC.  I have won several cases at the ITC on critical circumstances.

More importantly, at the ITC a critical circumstances decision is focused on stockpiling, where importers have imported large quantities of subject merchandise before the Preliminary determination and the stockpiled imports would seriously undermine the remedial effect of any AD and CVD orders issued.

But in this case, there have been no imports of Civil Aircraft.  That is supposedly months away, so critical circumstances should be dead at the ITC.

80 Comments on “Canada files WTO complaint vs US over Boeing C Series trade complaint

  1. Oh dear, it’s getting messier.

    This is simply for the satisfaction of tweaking the USA’s nose. AFAIK the USA hasn’t payed any notice at all to the WTO’s decisions when they’ve lost previous disputes.

  2. I guess I am confused.

    It seems a remedy to failure to supply information is open until Jan 8.

    Did BBD fail to supply that?

    • You mean the cost of the planes it has not built or delivered yet? No because they make airplanes and not time machines.

      • Are you saying Bombardier doesn’t know how to estimate their manufacturing costs before they build their planes and that they instead need a time machine? No wonder the Canadian government had to bail them out.

        • The ITC was not asking for estimates. If they estimate too low, and its wrong there are ramifications WTO law SPECIFICALLY states dumping cannot be found until sales and deliveries have occurred . So by any global standard the ITC and USTC is showing they are a kangaroo court. We have seen Boeing reverse massive losses on 787 to cash+ yet people still seem to have trouble comprehending this. The estimate would have been + or – 25% at best in this stage of the program.

          • “If exact projections are unavailable, please provide estimates based on Bombardier’s experience at its Mirabel facility”

            Estimations seem fair.

          • Hello Mark from Toronto,

            Regarding: “WTO law SPECIFICALLY states dumping cannot be found until sales and deliveries have occurred.”

            The USDOC’s final determination in their part of the investigation (i.e. had dumping or disallowed subsidies occurred) was that sales had occurred during the period of investigation for the dumping case, i.e 4-1-16 to 3-31-17. See for instance, the following excerpts from the USDOC’s Issues and Decision Memorandum for the dumping case, dated 12-18-17. This may be found on the USDOC – USITA Access website (posting date 12-20-17), for which a user account and login are required.

            “Comment 2: Whether Sales or Likely Sales Occurred During the POI

            Bombardier’s Case Brief
            􀁸 The Department must terminate the investigation or issue a negative determination because: (1) no sale of subject merchandise occurred during the POI; (2) the final determination should not be based on a “likely sale; and (3) the aircraft in question are outside the scope of the investigation.”

            “Delta’s Case Brief
            􀁸 The Department should not consider the purchase agreement as the date of sale because purchase agreements covering large civil aircraft do not establish the material terms of sale.”

            “Department’s Position:
            We disagree with Bombardier’s and Delta’s assertion that there is no sales transaction to be examined during the POI. Bombardier’s and Delta’s argument is based on the proposition that invoice date is the appropriate date of sale and, because Bombardier did not issue an invoice for the subject aircraft during the POI, there is no sale for the Department to examine during the POI. Bombardier’s date of sale argument focuses on invoiced transactions, whereas the statute and legislative history make clear that the Department may also consider in its investigation whether the merchandise under consideration is likely to be sold at less than fair value.
            Therefore, the issue of whether Bombardier made a completed sale during the POI is not dispositive of the issue of whether the investigation should proceed to the final phase, or whether Bombardier made sales or likely sales of merchandise under investigation during the POI. Similarly, the issue of whether aircraft industry purchase agreements are subject to change is not
            dispositive of whether Bombardier made sales or likely sales of merchandise under investigation during the POI.

            Section 733(b) of the Act, states that at the preliminary determination of an investigation, the Department:

            shall make a determination, based upon the information available to it at the time of the determination, of whether there is a basis to believe or suspect that the merchandise is being sold, or is likely to be sold at less than fair value.

            Similarly, section 735(a) of the Act states the following:

            Within 75 days after the date of its preliminary determination under section 733(b) {of the Act, the Department} shall make a final determination of whether the subject merchandise is being, or is likely to be, sold in the United States at less than
            its fair value.

            Section 772 of the Act defines export price and constructed export price as the price at which merchandise under consideration is first sold or agreed to be sold. Section 773(a)(1)(B) of the Act states that normal value is the price at which:

            the foreign like product is first sold (or, in the absence of a sale, offered for sale) for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as the export price or constructed export price.

            Legislative history describes the reason for amending the countervailing duty law, along the lines of what already existed in the antidumping duty law, to make clear that the Department could initiate countervailing duty cases and render determinations in situations where actual importation had not yet occurred but a sale for importation had been completed or was
            imminent. The House Report explained that “{a}ntidumping law has, since its inception, applied not only to imports, but to sales or likely sales. This report additionally explained that the amendment (including the phrase “or sold (or likely to be sold) for importation” in section 701(a) of the Act) was “particularly important in cases involving large capital equipment, where
            loss of a single sale can cause immediate economic harm and where it may be impossible to offer meaningful relief if the investigation is not initiated until after importation takes place.”

            “Attachment 1 to the Department’s July 10, 2017 clarification letter contained information from Bombardier’s website. The attachment included a “Program Status Report” for Bombardier’s
            subject C Series aircraft, dated March 31, 2017, which indicated, inter alia, that U.S. customer, Delta, ordered 75 CS100 aircraft and home market customer Air Canada ordered 45 CS100
            aircraft from Bombardier. Furthermore, on August 16, 2017, the Department issued a letter to Bombardier that addressed Bombardier’s claims that the Department’s requests for information remained unclear, and provided additional clarification to assist Bombardier in fully responding to the AD Questionnaire. The August 16, 2017, letter emphasized that “{i}n press releases dated April 28, 2016, and June 28, 2016, Bombardier announced ‘firm orders’ from {Delta} for 75 CS100 aircraft and from Air Canada for 45 CS300 aircraft.” The letter further indicated that Bombardier also reported these firm orders in its 2016 financial statement. The Department instructed Bombardier to provide complete responses to sections B and C of the Department’s AD Questionnaire based on these firm orders.These firm orders are evidence of a sale, or, at a minimum, a likely U.S. sale, of merchandise under investigation. Hence,
            Bombardier was given ample notice that the instant investigation encompassed likely sales, not just invoiced sales.”

            Can you provide me with a reference to the exact part of WTO law that you believe “SPECIFICALLY states dumping cannot be found until sales and deliveries”. The following definition of dumping, taken from the WTO website talks about sales but says nothing about deliveries. As I pointed out above, the USDOC was of the opinion that Bombardier’s announcement in press relapses and its audited financial statements of firm C-Series sales to Delta and Air Canada mean that firm sales to these customers had occurred. If this is not the case, then Bombardier investors certainly have a major securities fraud case against Bombardier for claiming that firm sales had occurred when there where actually only tentative non-binding sales agreements.

            “Dumping is, in general, a situation of international price discrimination, where the price of a product when sold in the importing country is less than the price of that product in the market of the exporting country. Thus, in the simplest of cases, one identifies dumping simply by comparing prices in two markets.”

            “Two alternatives are provided for the determination of normal value if sales in the exporting country market are not an appropriate basis. These are (a) the price at which the product is sold to a third country; and (b) the “constructed value” of the product, which is calculated on the basis of the cost of production, plus selling, general, and administrative expenses, and profits.”


        • Airplanes are a very complex product to built, the first one are very costly and the price go down as the production is tweak, to be optimal an assembly line need about 200 planes, then you know the exact cost, nobody in that industry, even Boeing wouldn’t be able to sell a plane at the factory cost of the fist units.

          So far Bombardier as deliver only 8 CS100.

          So to give a real estimate of a plane that will be built in 2 years, yes one could ask for a time machine, the Cserie is a brand new program, not just an old plane with new pylons and engines.

    • Hello Transworld,

      Regarding: “It seems a remedy to failure to supply information is open until Jan 8.

      Did BBD fail to supply that?”

      So far no reply has shown up in the USITC public docket, but that doesn’t mean much since such a reply would probably not be visible in the public docket.

      If Bombardier follows their pattern from the anti-dumping case, they will have submitted on the day of the deadline at the last minute a claim to not understand what the USITC is asking them for. See the excerpts below from the USDOC’s Issues and Decision Memorandum for its Anti-Dumping investigation, which was posted on the USDOC/USITA Access website on 12-20-17.

      From page 8.

      “Bombardier Withheld Information That Had Been Requested, Failed to Provide Information by the Deadlines Established by the Department, and Significantly Impeded the Investigation.

      As an initial matter, it is uncontested that Bombardier failed to provide the information requested by the Department. On the date that its sections B and C questionnaire response was due, Bombardier filed a submission that contained none of the requested home market and U.S. sales data and related information but instead contained Bombardier’s claim that sections B and C of the AD questionnaire, as amended by the Department, remained so unclear that Bombardier could not reasonably be expected to provide the requested data. Similarly, on the date that Bombardier’s response to section D of the questionnaire was due—approximately three weeks after the Department issued its revised section D questionnaire—Bombardier filed a submission that contained none of the requested cost data and related information, but instead contained its newly raised claim that the section D questionnaire remained so unclear that Bombardier could not reasonably be expected to provide the requested data. We disagree with Bombardier’s rationale for why the Department should not apply adverse facts available.”

      From page 11.

      “After the Department clarified the sales reporting requirement, Bombardier claimed that it remained confused about the terms “sales” and “contract sales,” and sought further clarification regarding these terms. The Department issued a second clarification letter to Bombardier that
      addressed Bombardier’s claims of continued confusion regarding the Department’s request for information. This second clarification letter preceded the due date for Bombardier’s sections B and C response by more than one week, and during that time Bombardier did not notify the
      Department that it remained confused as to the Department’s reporting requirements. Rather, Bombardier waited until the due date for its questionnaire response to file a non-responsive questionnaire response again claiming confusion which precluded it from responding.

      Fourth, Bombardier could have provided information requested in section D of the questionnaire. The Department clearly requested information within Bombardier’s control. Specifically, the Department instructed Bombardier to report the actual cost of aircraft produced and completed
      during the POI regardless of the market in which they were sold, as adjusted to account for physical differences between those aircraft and the aircraft subject to its home-market and U.S. sales agreements. However, Bombardier elected not to provide this information.

      Fifth, not only did the Department take reasonable steps to provide assistance to Bombardier within the meaning of 782(c)(1) of the Act, but it granted numerous extensions of the time for Bombardier to provide the requested information and a second opportunity to submit that
      information. The Department issued the initial AD Questionnaire to Bombardier on June 12,2017, and issued the revised section D questionnaire to Bombardier on June 29, 2017. Bombardier’s deficiency questionnaire, which required Bombardier to respond in full to all these
      sections of the AD Questionnaire, was due on August 23, 2017. Thus, Bombardier had 72 days to respond in full to sections A, B, and C of the Department’s AD Questionnaire, and 55 days to respond the Department’s revised section D questionnaire. The record indicates that Bombardier
      significantly impeded and delayed this proceeding through its use of extension requests without notifying the Department that it continued to view the Department’s requests for information as unclear and without ultimately providing the requested information.”

      • For anyone who may be interested in what type of questions were in the sections A, B, C and D of the USDOC dumping questionnaire, here are the section summaries from pages G-1 and G-2 of the questionnaire, which was posted on the USDOC/USITA Access website on 6-9-17.

        “Section A requests information about your organization and accounting practices, and general information regarding sales of the merchandise under investigation.

        Section B requests information about your home market, or where appropriate, a third country market, including a sales list and other information necessary for us to calculate the normal value of the merchandise.

        Section C requests information about the United States market, including a sales list and other data necessary to calculate the price in or to the United States market.

        Section D requests information about the cost of production of merchandise sold in the foreign market and the constructed value of merchandise sold in or to the United States, which may be required in connection with the calculation of normal value.

        Section E requests information about further manufacturing or assembly in the United States prior to delivery to unaffiliated United States customers.”

        Here is how USDOC summarized Bombardier’s questionnaire response on page 13 of the dumping case issues and decision memorandum.

        “However, Bombardier’s responses to sections B, C, and D of the Department’s questionnaire consist solely of arguments regarding
        why: (1) there were no sales of aircraft made during POI; (2) the material terms of the purchase agreement between the Bombardier and Delta purchase agreement have not been established, and (3) the Department should terminate the investigation or issue a negative determination. Bombardier failed to provide the information requested in the questionnaire that the Department needed to perform its margin calculation. In particular, Bombardier failed to respond to portions of the section A questionnaire with information regarding its contract sales, and failed to provide any of the information required in sections B, C, and D of the questionnaire. Bombardier’s submission of non-responsive information and argument, regardless of its page length, does not demonstrate that Bombardier put forth its maximum effort to provide the Department with full and complete answers to all inquiries in an investigation.

        Second, Bombardier did not demonstrate that it put forth its maximum effort to suggest an alternative form or manner of providing the requested information. Bombardier’s proposal— termination of the investigation or issuance of negative determination—is not an alternative form of reporting and is contrary to the statutory intent of section 735(a)(1) of the Act, which provides the domestic industry relief from sales or likely sales of merchandise under investigation. To
        demonstrate “one’s maximum effort,” Bombardier should, at a minimum, have suggested possible alternative reporting methodologies for providing information requested by the Department. Instead, Bombardier chose to rely on its arguments that the Department should
        terminate the investigation, issue a negative determination, or the petitioner should refile the petition after aircraft were invoiced by Bombardier.

        Third, record evidence indicates that it was reasonable to expect that “more forthcoming responses should have been made” by Bombardier, and, therefore, it is reasonable to conclude that Bombardier failed to act to the best of its ability to provide requested information. For example, the Department’s revised section D questionnaire instructed Bombardier to report costs using its cost records for each specific CS100 and CS300 aircraft produced and completed prior to the end of the POI, and to make appropriate adjustments to those costs. These instructions both explicitly directed Bombardier to use existing cost data covering the POI, and allowed
        Bombardier flexibility to adjust those costs using a reasonable methodology. Bombardier never attempted to do as instructed. The Department’s sections B and C questionnaire instructed Bombardier to report information regarding its sales agreements covering U.S.-market sales of 75 CS100 aircraft and home-market sales of 45 CS300 sales that were reflected in its 2016 financial statement. Bombardier provided none of this requested information in response to the Department’s repeated requests. Significantly, as the petitioner notes, Bombardier professed its willingness to cooperate with the Department “only with respect to its ‘no sale’ argument.”

        • Having watch courts in action, its the one area that they get really ticked off at.

          Information requested is mandatory.

          To waffle is to bring the wrath down on your head.

          It seems insane that no one in BBD was versed in US law and the consequences.

          • Agree, if BBD didn’t adhere they c….d in their own porridge.

            I dealt with Canadian lawyers, maybe something else going on here. Give BA enough rope and they hang them selves?

          • I can’t believe that would be true.

            Its kind of universal aspect.

            If your car does not have an engine in it , its not going anywhere.

            Kind of a Universal truth .

            If the Prosecuting attorney withholds evidence, their case gets thrown out. You can’t hold back secrets (nor can the defense)

            If its going to be entered in court, both side have a right to it.

            In this case data required was not provided.

            While I don’t agree with the case, the fact is they bent over backward in their terms to ensure that BBD knew it had to and what was required.

            BBD has then resorted to hair splitting when its a California Redwood to be dealt with.

            Hair splitting can come in a decision, but in the evidence and disclosure it does not and its fatal to attempt to be cute at that stage.

            Having seen it laid out I can track it, I have been involved in enough of that stuff to understand it.

            You simply do not go there, its beyond stupid. Malfeasance come sot mind.

            I would expect that form a court appointed attorney who is a crud lawyer, at this level I am speechless.

          • Hello Transworld and Anton,

            If Bombardier’s lawyers are actually law school graduates, and not people who never went to law school who are impersonating lawyers, then I think it is inconceivable that they did not know that they were playing with dynamite that was almost certain to blow up in their face, especially in regards to waiting until submission deadlines to state their confusion and request clarifications. The only conceivable explanations I can think of for their course of action, if they are not fake lawyers, is that they knew the information that USDOC was requesting would lead USDOC to calculate a dumping margin even higher than what Boeing calculated, and did not want to admit that this is why they did not want to, and would not, submit the requested data, or that they were stalling for time while waiting for something else to possibly happen, perhaps the hoped for conclusion of talks that were then going on with Boeing regarding Boeing taking a stake in the C-Series program.

          • I’m not familiar with us laws and practices, will all those informations remains confidential or they would be public?

            Would Boeing have access to those data?

            In that industry, pricing is very confidential and highly strategic, disclosure of those informations would be very damaging to a small constructor like Bombardier.

          • Hello Tom,

            Regarding: “I’m not familiar with us laws and practices, will all those informations remains confidential or they would be public?”

            Below are some comments that address your question from William Perry, the same trade lawyer whose comments Mr. Hamilton included in the present post, that are from a prior post by Mr. Hamilton on October 30, 2017.

            “According to Commerce, Bombardier only submitted arguments in response to sections B through D of the questionnaire,” Perry writes. “It did not provide the facts to support those arguments. Under US AD law, however, Commerce Department decisions and respondent’s arguments have to be based on the facts on the Administrative Record. When there are no facts, Commerce will use All Facts Available.”

            Perry continued, “Through intermediaries, I have been told that Bombardier refused to release that information to Commerce because of fear it would be released to Boeing. If that is true, it reveals the failure of Bombardier’s outside lawyers to discuss how Commerce Department Administrative Protective Orders work in AD and CVD cases. Under US AD and CVD law, only outside counsel, not Boeing’s inside counsel, are granted access to Bombardier information and if those outside lawyers reveal that information to Boeing, they can be disbarred. Trade counsel in the US take very seriously the APO requirements under the US AD and CVD Law. In addition, Bombardier’s outside counsel has had access to Boeing’s confidential information under Administrative Protective at the US International Trade Commission so there is simply no sympathy for Bombardier’s arguments”

            “And, Perry says, Canada and the United Kingdom have identical laws that would hammer a respondent refusing to answer questions from their governments in an anti-dumping case.

            This makes it highly unlikely that US Commerce Secretary Wilbur Ross or President Trump will negotiate a settlement, he said—something he thought was a possible outcome before the DOC’s decisions were handed down.”

            Below is an excerpt from the document that outside attorneys must sign to gain access to confidential information.

            “I hereby apply for disclosure to me, subject to the APO issued in the above-captioned investigation, all BPI properly disclosed pursuant to section 207.7 of the Commissions rules, for the purpose of representing an interested party in the investigation and filing comments on the BPI so disclosed. l agree to be bound by the provisions of the APO and section 207.7.

            lll. Sanctions and other actions for breach of the APO.

            l acknowledge that, pursuant to section 20’/.7(d) of the Commission‘s rules, breach of the APO may subject
            me to:
            (1) Disbarment from practice in any capacity before the Commission along with my partners, associates, employer, and employees, for up to seven years following publication of a determination that the order has been breached;
            (2) Referral to the United States Attorney;
            (3) In the case of an attorney, accountant, or other professional. referral to the ethics panel of the appropriate professional association;
            (4) Such other administrative sanctions as the Commission determines to be appropriate, including public release of or striking from the record any information or briefs submitted by, or on behalf of, me or the party l represent, denial of further access to business proprietary information in the current or any future investigations before the Commission, and issuance of a public or private letter of reprimand; and
            (5) Such other actions, including but not limited to, a warning letter, as the Commission determines to be appropriate.

            IV. Oath
            l declare under penalty of perjury that the foregoing is true and correct.

          • At the moment it looks like the duties will be imposed?

            I have read that DAL can’t cancel the order, is this a case of “Force Majeure”? Or, will DAL have to make a plan X to take delivery of the aircraft outside the US through a DAL-Newco company and lease it to airlines with operating basis outside the US.

            DAL for example has interests in Grupo Aeromexico, or maybe one of the Air France/KLM partnership airlines such as HOP, Transavia, JOON could be interested?

      • Hello Transworld,

        An update regarding: “It seems a remedy to failure to supply information is open until Jan 8.

        Did BBD fail to supply that?”

        Bombardier did submit a response on 1-8-18. I was skimming through the USITC staff report which was posted on their EDIS website today, 1-12-18, and found the following on page E-4.

        “Source: Table C-1; petition, exhibit 44; Boeing’s post hearing brief, attachment A, pp. 88-89; Bombardier’s response to Commission’s January 4, 2018 question regarding imported parts (EDIS document 633199);”

        The actual responses from Boeing and Bombardier are redacted from the public version of the report. Searching on the EDIS site for document number 633199, I found that it was a confidential document officially received at 1:09 PM 0n 1-8-2018 with title “January 8, 2018 email from counsel for Bombardier in response to Commission question on imported parts”.

        Either Bombardier has learned from past mistakes, or had a different strategy (lets try to not default!) for this portion of the case?

  3. Parts cost per plane for each of 2018, 2019, 2020, 2021 & 2022 I can sort of understand (& would show the cost reduction curve)

    Aggregate total for parts imported into the US for each of these years – without a time machine you may as well throw a dice or draw cards.

    • The trade commission is not asking about the price BBD will sell airplanes in 2022, they are asking the price the sold their airplanes in the US between 4/1/16 to 3/1/17 and compare that sale price with the price BBD sold their airplane in their home market or where appropriate, other markets so that the trade commission can understand BBD’s pricing and whether it deviated from its pricing structure in a way designed to harm the US domestic industry.

      Boeing has estimated based on public records that BBD underpriced its airplanes to Delta by $10M USD per plane compared to other comparable sales and BBD’s cost of production. BBD chose to not respond and engaged in a semantic exercise that because no airplane was delivered, no harm had been realized. Rather then provide information, they stalled and waited until the last minute on several occasions to seek clarification of the DOC’s request for information.

      In the Canada WTO complaint, Canada takes issue with the US trade commission’s methods and administrative procedures and claims that they are not WTO compliant. Underscoring this disagreement is that the dispute is governed by NAFTA. I do not know if a NAFTA dispute removes it from the venue of the WTO. It seems to me that alleging the US has created and followed non-complaint procedures when other prior litigants haven’t addressed similar concerns means that the complaint’s is raising invalid claims.

      However, by appealing to the WTO prior to a final order by the ITC, Canada can seek to stay the execution of the final order until the WTO dispute is resolved. Also, Canada can amend their WTO trade dispute to cover grievance that are not merely procedural.

      The US is a member of the WTO and is subject to Tariffs and countervailing duties if the US ignores the WTO. Therefore, all members of the WTO take the WTO’s ruling seriously.

      I totally get that trade disputes are mostly dumb. I had an economics professor that said that if a foreign company wants to give away some of its GDP to your country to enter your market, you should let them because its a good deal for you to buy things less then they are really worth and a bad deal for them to sell them for less then it cost them to make. But somewhere along the way all these countries agreed to these dumb rules, so here we are.

      However, we are dealing with accounting rules, and economic predictions, and reasonable extrapolation based on prior input purchase and output sales and those things are all quantifiable during the subject period without distorting the space-time continuum or random chance.

      • The argument your professor made (penultimate paragraph) is one I’ve also heard from economists and one which seems misguided to me as it can only be valid in a special case where the transaction in question has no bearing (in the country where the purchaser resides) outside said transaction. As soon as the future and industry/enterprise/community/individual etc. (rather than just country aggregate) impacts are considered (ie in the real world) it must almost always fall apart. Where profit is the objective there is no (and should not be any) free lunch.

      • Hello Garrett,

        Regarding : “The trade commission is not asking about the price BBD will sell airplanes in 2022, they are asking the price the sold their airplanes in the US between 4/1/16 to 3/1/17 and compare that sale price with the price BBD sold their airplane in their home market or where appropriate, other markets…”.

        You are confusing the now concluded USDOC/USITA phase of the investigation which was charged with determining whether dumping or disallowed subsidies had occurred within precisely defined periods of investigation prior to the investigation, with the USITC proceedings, now in their final phase, charged with determining ” whether an industry
        in the United States is materially injured or threatened with material
        injury, or the establishment of an industry in the United States is
        materially retarded, by reason of imports of 100- to 150-seat large civil
        aircraft from Canada, ..”. The last quote is from the USITC Federal Register scheduling notice which may be found at the following link.

        Assessing whether an industry is “threatened with material injury”, pretty much requires asking questions about what will or might happen in the future, as the USITC did in the letter Mr. Hamilton quoted from in his post, and as the USITC did at their final phase hearing.

        From the letter quoted by Mr. Hamiton in his post:

        “Please provide the annual value (in USD) of aircraft parts for 100‐ to 150‐seat LCA projected to be imported into the United States by the CSALP through 2022.”

        From page 5 of the Boeing post conference brief that Mr. Hamilton posted a link to a week or two ago.

        Ouestion from Chairman Sehmidtlein

        “2. So I {want to} go back to this question of imminence and I {want to} careful that we separate the discussion of injury and when the injury is occurring from this question of when the imports may occur. S0 I feel like it’s been a little bit conflated at points. But the question about Whether or not there are going to be subject imports from Canada
        imminently exceeding the negligibility standard, if we accept, for the sake of argument, that the Delta planes are going to be built in Alabama, and they’re not going to be imported from Canada, regardless of the outcome of this case. Let’s say we accept that for the sake of argument. What is the substantial evidence that there will be other imports from Canada that will imminently exceed the threshold, the negligibility
        threshold? So if you take Delta off the table, what do you point to‘?(Tr. at 119:16 120:6)”

        Start of Boeing’s Answer

        “The statute states that the Commission “shall not treat imports as negligible if it determines that there is a potential that imports from {a subject country} will imminently account for more than 3 percent of the volume of all such merchandise imported into the United States. . . .”2l The Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act (“URAA”) explains that, in threat of material injury analyses, the Commission is to “examine ‘actual’ as well as ‘potential’ import volumes.” Thus, the question before the Commission is whether there is a “potential” that l00-to 150-seat LCA from Canada will imminently account for more than 3% of the total volume of imports.”

        • Thanks, very informative, forgot how lawyers can play with words. The 3% of imports (amongst others) a killer for BBD.

          Boeing is clearly paying the time game that in 5 years from now BA and EMB can build a new 2-3 seat aircraft for the US market to compete with the CS300/(500)?

          But this could blow up in BA’s face in many ways. BBD/AB could respond with a 155 seat “CS500” (in 3 years?) which will hurt the MAX8. AB could offer a lower MTOW A319Neo to US airlines. Or, even develop an A319X using the CS300 PW1524G engines?

          • Hello Anton,

            Regarding: “The 3% of imports (amongst others) a killer for BBD.”

            My thinking is that the 3% negligibility standard is more a worry for Boeing than it is Bombardier. If Bombardier were to sign a legally binding pledge that no C-Series aircraft would be sent to the US from Canada for 5 years or 10 years, it might be hard for the USITC, which I believe takes it work very seriously, to conclude that there was an imminent threat that C-Series aircraft from Canada would imminently account for 3% or more of subject merchandise imports into the US. One commissioner tried to draw such a statement from Bombardier in the USITC final phase hearing (see below). This would require Bombardier and its legal team to behave as a competent and rational legal team trying to minimize the chance of having tariffs levied against them, aggressively and skillfully seizing every opportunity to lower the temperature in the dispute, rather than as an infuriated and enraged group of people making sure not to miss any opportunity to insult, enrage and infuriate the US regulators who have the power to make their life miserable. While such a statement would make life more difficult for Boeing’s legal team, there would still remain the issues of injury, if any, from the United C-Series vs. 737 competition and the Delta sale, and issues of whether aircraft produced in Alabama, if any, would count as partially or fully or partially assemble aircraft from Canada.

            Question Number 19 from Section IV of the Bombardier USITC final phase post-hearing brief follows (see pages 20 and 21).

            “Commissioner Broadbent: If there’s a potential that Bombardier’s Canadian exports to Delta will occur within the next several years as planned, then subject imports are not negligible for purposes of threat. Given that Bombardier’s brief has argued that these deliveries will not occur, can you provide stronger evidence to this effect in your post hearing brief? Could we get sworn statements from Bombardier? That would be helpful.”

            Bombardier provided a response to this question in their post hearing brief, but I think that redactions in the public version make it difficult to judge if Commissioner Broadbent fully got what he wanted.

          • Thanks AP. Not that it will make a difference, is the 3% on imports only (A319’s/E195’s) or does it also include locally manufactured aircraft with 100-150 seats?

          • Hello Anton,

            Regarding: ” is the 3% on imports only (A319’s/E195’s) or does it also include locally manufactured aircraft with 100-150 seats?”

            See the excerpt below from pages II-42 and II-43 of the USITC Anti-Dumping and Countervailing Duty Handbook, which may be found at the link after the excerpt. While reading this excerpt, I realized that since there were no imports from Canada (as opposed to sales) during the dumping and subsidy periods of investigation in 2016 and 2017, it may be the case that in order for Boeing to be successful in their case, the USITC must find that “there is a potential” that subject imports from Canada “will imminently account for more than 3 percent” of subject imports. If Bombardier would like to win their case, they might be well advised to cut the asking for clarifications on deadline dates act, and if they have not already done so, provide the exact and precise sworn statement regarding future Canada to US exports that Commissioner Broadbent tried to draw out of them at the USITC final phase hearing (see my previous post above for Commissioner Broadbent’s question and request).

            “Negligible Imports

            The statute requires that an investigation be terminated without an injury determination if imports of the subject merchandise are found to be negligible. Negligible imports are generally defined in the Act as imports from a country of merchandise corresponding to a domestic like product where such imports account for less than 3 percent of the volume of all such merchandise imported into the United States in the most recent 12‐month period for which data are available that precedes the filing of the petition or the initiation of the investigation. However, if there are imports of such merchandise from a number of countries subject to investigations initiated on the same day that individually account for less than 3 percent of the total volume of the subject merchandise, and if the imports from those countries collectively account for more than 7 percent of the volume of all such merchandise imported into the United States during the applicable 12‐month period, then imports from such countries are
            deemed not to be negligible.

            The Commission is directed not to treat imports as negligible in the context of a threat analysis if it determines that “there is a potential” that imports from a country that individually accounts for less than 3 percent of the total volume of the subject merchandise during the applicable 12‐month period “will imminently account for more than 3 percent” of such volume
            or that the aggregate volume of imports from all countries that individually meet the 3‐percent standard for negligibility “will imminently exceed 7 percent” of such volume. In countervailing
            duty investigations involving imports from developing countries, the Commission is to substitute “4 percent” and “9 percent” standards, respectively, for the “3 percent” and “7 percent” standards described above.”


          • Thanks, never say never but think the writing on the wall for the C-Series in the US for at least the next 5 years?

          • The 737-7 max and the 319 neo are dead ducks, almost no sale, those plane are to heavy and the operating cost by seat are off scale, that why Bombardier built the Cserie, cause they knew that a good and lighter product would have a niche, now going against the 737-8 max and the 320 neo, that would be suicide.

            The max8 will be tough to hurt, so far more than 4000 planes sold, the production line is full for a long time.

            The CS100 and CS300 got together 372 planes sold, I can not believe that Boeing feels threatened by such a small number.

          • Firstly, I think the MAX8 has killed the 7 and the 320N the 319N.

            The larger aircraft are good if you can fill the seats, there is however still a significant requirement for aircraft between an E-190 and MAX8/A320.

          • Just had a quick look at AA’s fleet again. Operates 780 single aisles (excluding E-Jets). Outstanding order of 200 (100 x MAX 8 and 100 x 321NEO’s).

            So leaves a deficit of >550 single aisles over a period of time, so lots in play for AB and BA here. An NMA could potential pick-up a significant number of these depends what it gels out to be.

            The UA single aisle “deficit” around 400.

            Difficult to estimate DAL’s requirements due to CS situation, but if the 75 CS100’s is taken out of the formula and the 100+100 A31NEO’s are included the Delta deficit around 350.

            If my numbers are right the US big 3 needs to order an additional 1000+ short to medium haul aircraft over the next 5-15 years.

            An NMA could get a significant percentage of these as could the 321LR+ and “322”.

            If the CS1/3’s remains out of the formula it could be worth for AB to look at improvements to the A320 such wing tweaks like adding a downward blade (also be used on “standard” A321N).

            There is a lower MTOW A320 model (~74T) available, maybe look at optimization (engines, OEW?) where airlines don’t need range of more than 2500Nm.

            …and/or, there could be enough interest in a slightly bigger 320″+” (+3 rows), with a “standard” A320 MTOW of 79T. With the tweaked wings and second generation PW-GTF’s range should still be around 3000Nm.

        • AP, after reading things in the link and others many times over the most crucial for me that keeps on repeating itself is “from Canada”. How is that defined, designed, fuselage build, or what?

          If Airbus engineers in France designs an CS200 (120 seats), fuselage build in China, wings in Ireland, engines in the US and assembled in Canada and all components shipped to Mobile for final assembly, test flights/certification is in the US, called the A312, where is this aircraft from?

          • p.s. A 3 row stretch of the CS100 (“CS200”-120 seats-A312) and 4 row stretch of the CS300 (“CS400”-150 seats-A314) designated as above could actually be very competent aircraft?

  4. In the end Canada will file a chapter 19 complaint through NAFTA and if NAFTA does then Airbus will file a complaint to the EU and retaliation will occur against Boeing so who knows where this pandoras box end.

  5. Mark, Canada also took notice that the US is probably pulling out of NAFTA shortly. Negotiations happen to be scheduled for Jan 20-28, in Montreal of all places. The treaty is a much bigger deal than the C-series train wreck of silliness, but the full court press is going to be on for the next few weeks I think as far as lobbyists/foreign affairs/commerce ministers/directors are concerned.

    (I don’t endorse the following but for those who want to know/see how ‘the other side’ might frame things it’s an interesting perspective.)

    • Read the links, etc. Trump has to appear to be appealing to his base (on some days.) Most days he tows a nervous party’s line. He won’t want to influence the stock market negatively. It is possibly conceivable that a renegotiation of NAFTA will somehow appease all the groups involved in this ridiculous row, excepting the bullies (BA) who started it.

      • I think we need to amend that to Mafia, not bullies.

        Its business man, pay up or we break your leg, burn your house down.

        Nothing personal you understand.

        Oddly, the enforces do have a code. If they are told to break your leg, they break your leg and don’t beat you up further.

        After all, they aren’t thugs. (grin)

  6. Delta ordered 75 out of all 125 firm orders for CS100. From a mathematical point of view the average price for CS100 has to close to the price Delta would have to pay.

    It is reasonable that price for CS100 is lower than for the bigger CS300. It is very common that bulk orders get massive discount. As it us common that in first years of aircraft production costs for aircraft are higher than price paid by costumers.

  7. So whats left for US airlines in the 100-150 seat class. E-190/95-E2’s, SSJ100, MAX7 and 319NEO.

    Airlines lost their apatite for the A391N and MAX7. If the CS gets “blacklisted” in the US BA could just create an opportunity for the 319N in the US.

    The MAX7 has an MTOW of 80T (MAX8, 82T), AB could potentially offer an A319 with 71T MTOW (-4.5T fuel) with 24KLb LEAP-A’s which should still be good for a range of 2500-2800Nm?

    Obviously assembled at Mobile. Type commonality with the growing number of 321’s (AA, DAL) should not be underestimated in the bigger scheme of things.

    MTOW of the CS300 (68T) and E-195E2 (62T).

    • And Airbus has been flying its A319Neo for a while now. Unlike the 737Max that is not even flying yet. And Southwest just pushed back their 737Max7 deliveries (will they ever take them). So, that leaves WestJet of Canada as the only “interested” buyer. I wonder how low they sold to WestJet just to prove some point to Canada, the CSeries hoem market (see, even in Canada airlines prefer the 737Max7 Maybe?). Well, yeah, that’s the only place in the world where anyone wants the 737MAx7, seems suspicious…
      But yeah, Airbus could totally take over the US market with the A319Neo. It’s ready to go. If the CSeries is blocked from the US, it’s Embraer or A319Neo… And based on the fact that so many earlines are getting rid of their E190s, I’d think Airbus could still go for the kill. To me, if you roll this all back, the best action from Boeing would’ve been to let Bombardier continue to struggle making 40 CSeries PER YEAR (third year in making them and there will only be 40 built in 2018). by the time they build 100 PER YEAR, it will be 2023 and things will have changed by then. Oh well, let’s see what happens next. To me, the more this drags on, the more trouble Boeing creates at every step of the way.

      • Sorry: I meant “The 737Max7 is not flying yet”. THE MAX7. Obviously, even AirCanada has their 737-Max8 already flying.

  8. Is this about the CS-series complaint only or a build up to something else? Just read about the US “stumpage” fee on imports of Canadian softwood lumbar. A number of commonalities to the CS-case. See in link below table.

  9. Reaction from the US. Trade Representative Robert Lighthizer, following Canada’s WTO complaint:
    “Canada’s claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade.”
    Interesting comment; I thought the reverse situation was more the reality….

  10. How much money is on Southwest’s ‘deferred’ 700Max order actually being a conversion, but not happening AFTER this issue has been decided?

    • yep, those 2 Max7 sales are highly suspicious. Kept only for Boeing to prove that maybe someone wants it. And from the biggest 737-only airlines in exchange of some candy. I’m sure the contracts have lots of language and hidden handshakes to say “no worries, you can switch to Max8” at a really good price wink wink

      • Anton:

        I take this as solely Boeing vs the rest of the trade disputes.

        Those get to be their own major players.

        It does not always go the US way.

        We had a mine in Canada blow open its containment ponds and pollute an Alaskan salmon river with heavy metals.

        Unfortunately Canada resisted our past efforts at becoming one country so we have these disputes.

        Otherwise we would be one big happy country!

        • I am (unfortunately) aware of the mine incident. One big happy family is good but could be boring and counter productive.

          Working in a company with senior management from US, Canada, Germany, Russia, Africa (all colors). As you can imagine, it has it’s moments, end result 99+% of the times good.

          • I think that is what is the shame of this.

            I have encountered wonderful Canadians and I have encounter jerks.

            Oddly (grin) its the same on this side of the border.

            We have a lot more in common that we have against each other.

            Sadly, through a quirk of an otherwise pretty amazing g document, we have someone who is mentally deficient as President . He met the criteria to be so, he can talk and he is over 42 years old and the powers that be help us, a US born citizen.

            Scott: That is fully supported by the documentation in his court cases. Frequent referrals to I don’t remember or, that’s what the lawyer do, I just sign the stuff.
            His complete contradiction of his own stand in the FISA case of the ping pong of agreeing with the last statement at the so called Immigration talks.
            I can fully invoke Tillerson.

  11. Can someone just ask what Swiss payed for their CS100’s and compare it to the Delta purchase and go from there?

  12. A simpler solution for all is for Airbus to launch a new plane called the A315.
    Bombardier then stops selling the C-Series in the US.
    Delta places an order for the A315 to replace the CS100 orders, at the original price.

    • when you’re fighting the government (who can do whatever they want and act berzerk like we all feel they are doing in this case), that is a lost cause. Some lawyer will come online and say “blablabla, this is the same plane, needs redesign of X %, trying to circumvent the rules, blablabla” and point to some book. While ignoring what Boeing and everyone else is doing which is selling their first planes below cost. I mean, do I need to say 787 again and it’s 30B hole always pushed forward? If they decide to kill you, the justice is on their side.

      • My summary, BA needs to kill the CS300 and so the C-series. An CS500 could seriously weaken the MAX8, the only real survivor of the 737 family.

        If this happen they will be forced to build an NSA and not he NMA which they want to give AB a serious blow with. That’s why they are falling over their feet to get EMB involved to fast track the development of an CS300/500 equivalent?

        • Layman:

          BBD got itself into trouble being cute, this is not going to cut it.

          Made in US C Series opens a whole new aspect and that I assume would be run through the process as well.

  13. One thing is for certain, Boeing has done a great job messing up US-Canadian relationships.

    And closer to home, antagonized DAL and others that are/were interested in the CS-series.

      • I think you give to much credit to the term Government.

        I think a Circus with an excessive number of clowns (rich ones but clowns) is more in order.

  14. If this claim succeeds BA must remember that AB could do similar if BA gets in bed with EMB, Irkut or Comac with aircraft that competes wit AB products in the US or somewhere else. All 3 these companies products are heavily subsidized by their respective Governments.

    • In order to invoke this, it has to be done under US law.

      Airbus may not be able to invo9ke as they are not US register company.

      Another area to look into maybe.

      Could Airbus be a co defendant presenting evidence on the other side there is no 150 seat and lower market?

      IT gets like 3D chess.

  15. Once again dear Scott, you come back for a third time with this comment: « fatal error by Bombardier ». The reality is more complex than this truncated legal-administrative view. There is something annoying to claim indirectly that Bombardier’s management is doing in amateurism. What appears in what you raise, however, is the substantive rush raised by Canada in its request for an investigation against the United States. Obviously, other countries will follow in order to kill Trump’s political protectionism. Moreover, in aviation, on the horizon, already points the potential of a Boeing-tax, a tariff barrier imposed by countries for US abuse of the rules of trade. Because the Boeing case is a case study, a case that crystallizes the American infantile arrogance, how to find another name prettier than this expression Taxe-Boeing, a tax to balance the arbitrary, the withdrawal, for do not be weak and resigned. Thus, Canada could apply a Boeing tax to any US product financed by any government aid, calculated from the facts identified in the news of the false news …

    • @Scarlet: “Fatal error” comes from a trade lawyer. This won’t be the last time it comes up, so deal with it.

      • Lord knows I am not a lawyer (or maybe thank god or the powers that be) but even I get the fatal error part.

        Putting emotional spin on this is useless, this is the cold calculated specifies of law.

        You continue to mistake Law for Justice.

        they are usually mutual exclusive.

        Having been in the steam rollers path more than once, I found out you can scram and holler all you want how unfair it is.

        I have survived by getting out of the way.

  16. Note that the WTO complaint does not (as yet it seems) cover the Bombardier issue. The consensus here is that Freeland and Trudeau have finally decided that playing ‘what a lovely, clever person you are Mr Trump and so are all of your lovely family’ game is not working and will never work and are instead taking proactive measures in the event Trump does an unilateral removal from NAFTA. By having all of these cases of US self-imposed penalties before the WTO before a NAFTA revision it will make the case against all US initiated trade-limiting actions stronger. What is fascinating to note is that less than half of the formal complaints against the US refer to impositions against Canadian products – something close to half refer to tariffs imposed by China and other nations complaints are also cited

  17. When you start a war, even trading, you know when it starts, but not how it will end. The Boeing 737-7s may be taxed by the Canadian government for the same reason the Americans rely on for the cseries. Nothing prevents them from being so twisted. While Airbus will become our national manufacturer, will be able to benefit from tax exemption that Boeing will have to pay for all its products. Military and commercial sales in Canada, Europe, the uk will also be subject to customs duties. Bombardier may not be selling cseries in the US, but the Americans are slowly starting to get out of their way. The Americans seem to forget that Canada, even if it is a small country, is their biggest customer.

    • I know it, Boeing does not care.

      Boeing Corporation is a cold blooded reptile.

      It does not kill out of anger, it kills out of what it feels is its need to win.

      We are fortunate that so far they feel their best interests aligns with ours.

      If not, they would move to China or Russian.

      It is up the citizens to maintain control of their government so that corporate entities (and pass throughs) toe the line in our overall best interests.

      Unfortunately that has been corrupted.

      • They are spending a lot off money on the 777X to build it for the ME-airlines to hurt the US big 3, impressive technology however. Why not hurt Canada to support Brazil and their own greed?

        Don’t want to press wrong buttons here but the CIA hijacked Russian technology in 1959 for the US to put a man in space. Now Boeing is making money with it.

      • Before things get out of hand, maybe more related to 2018 Transformations, the oil price is pushing towards US$70/barrel. Could be the Northern hemisphere’s cold winter. But take note, bringing the US “hardrock” oil to account is going to whee-off the Greenies with good reason as it requires some real bad juices to make it happen.

        • Anton: Hopefully Scott is ok with some side views.

          I am interested to know where the link is between the CIA and Russian on rockets?

          Much to my dismay, our end goes back to V2 and good old Von Bron who was up to his neck in slave labor on the V2 and should have been hung with the other Nazis.

          The Russians simply did a better more focused job on it that we did initially.

          We stumble along with the USAAC/USAF, Army and Navy all fighting for the glory and shooting the collective effort in the foot.

          Sadly we did not have a visionary like Elton Musk but the brute rocket approach of Warner.

          As near as I can determine, the US was inept at intelligence and never successfully got anything from Russia that was not turned over by people who loathed the system and that was in the realm of political not technical.

          If we counted 1000 rockets we assumed that 80% of them worked.

          In reality maybe 20% of them worked at any given time.

          We could have saved a lot of money if we were that good!

          I just read that Russian equipment has sealed gear systems on their armored equipment. They don’t want any chance to let anyone mess with the oil.

          Apparently its common to sabotage your own equipment so you can sit there until its fixed.

          • It was actually technology related to the capsule to put a man in space.

            Saw a documentary (NATGEO like stuff), was really white knuckle stuff from the CIA/Nasa to pull it off.

    • No they won’t, its foolish.

      If it can be worked around? Have to see.

      I don’t get the last part, Boeing has no A320s let alone GTF?

      Are you saying Boeing should buy them from Airbus and sell them to Delta?

  18. Boeing’s special needs in the next decade may be solved by Embraer article Leeham

    is now open for comments

    • It is perplexing, and I tend to think “The Mafia” actions boil down to hubris. You would have thought the easiest fix was for them to buy, control or merge of some sort with BBD. They would then have a turboprop and RJs in three lengths to decide what to do with; 100 – 150 in the bag; and the technology of GTF, another carbon wing, Li Aluminum expertise and automated assembly to add to their commercial line. There’s no way “The Family” (Beaudins) could publicly refuse some sort of premium offer especially if it is known to all investors. The market would honor a merger. This stifling of innovation is a crime. [As always, this comment is proofread for spelling and grammar.]

      • Hello Sam,

        If Boeing had ended up owning the turboprops, it would have the second time (If one includes the Dash 8 predecessors of the Q400), and if there is anyone still around at Boeing who remembers the first time, the memories are not likely to be pleasant ones. Boeing’s relations with the Canadian Auto Workers union were poor. Present Boeing management is less union friendly than Boeing management circa 1992, and I can’t imagine them having much interest in an acquisition in which production workers would be represented by this union.

        The following excerpt is from January 1992 UPI story (see the link immediately after the excerpt).

        “SEATTLE — Boeing Co. said Wednesday it has agreed to sell its de Havilland division to a joint venture of Bombardier Inc. and the province of Ontario for $260 million.

        Reports about the transaction, which will give Montreal-based Bombardier a 51 percent stake in the commuter-aircraft producer and the remaining 49 percent to Ontario, had emerged earlier this week.

        The sale, expected to be completed within a month, would end Boeing’s 18-month effort to unload de Havilland, which Boeing acquired from the Canadian government in 1986.

        Boeing agreed last year to sell de Havilland to France’s Aerospatiale SNI and Italy’s Alenia S.p.A. But the European Community Commission block the deal last October because it gave the companies too big a share in the market for commuter turbo-prop aircraft.”

        “Boeing purchased de Havilland from the Canadian government in January 1986 for $112 million, an acquisition praised at the time by analysts, who said it would improve Boeing’s product line.

        Since then, however, the unit has been a constant drain on Boeing’s earnings. While the Seattle aerospace giant has not released specific numbers on the subsidiary, analysts say de Havilland probably has lost several hundred million dollars since Boeing acquired it.

        Boeing is believed to have spent more than $400 million to improve de Havilland’s plant in Downsview, Ontario, the production site for the Dash 8 turboprop.

        The company settled a lawsuit filed against the Canadian government that alleged Boeing was misled about the condition of de Havilland’s facilities at the time of the 1986 purchase. Boeing received about $97 million as part of the settlement.

        Other problems also have plagued the operation, including rocky relations with the Canadian Auto Workers union.”

        The following is an excerpt from a January 1992 New York Times article (see the link immediately after the excerpt).

        “The accord was announced before cheering workers at de Havilland’s sprawling plant in Downsview, Ontario, by Bombardier’s chairman, Laurent Beaudoin; Premier Bob Rae of Ontario, and the federal Industry Minister, Michael H. Wilson. Workers booed when Boeing’s name was mentioned. The plant, with 3,760 employees, down from 6,200 in 1989, is about 20 miles north of Toronto.”

        • More on Boeing’s 1980’s fling with de Havilland Canada (designer of the Dash 7, which begat the Dash 8, Q200, Q300 and Q400), from Wikipedia.

          “The Airbus affair refers to allegations of secret commissions paid to members of the Government of Canada during the term of Prime Minister Brian Mulroney (1984–93), in exchange for then-crown corporation Air Canada’s purchase of a large number of Airbus jets. The Chairman of Airbus (a European consortium) at the time of the contract competition was Franz Josef Strauss (1915–1988), a high-profile German politician in Bavaria.

          The order in question had long been pending, and both Boeing and Airbus had been competing heavily for the contract. Both offered shared production in Canada, and Boeing went so far as to buy de Havilland Canada to further strengthen their bargaining position, as well as gain access to the feederliner market where they, at that time, had no presence. The contract was eventually won by Airbus in 1988, with an order for 34 Airbus A320s, as well as the sale of some of Air Canada’s existing Boeing 747 fleet. Boeing immediately put de Havilland up for sale, thereby putting that company in jeopardy, but the blame for this was generally placed on the government.”

          • If there’s anything History teaches us, it is that it is no predictor of the future. I can sum up the counter argument to this History in: NSA = CSeries. Boeing knows it. They are spending 10s of millions of dollars to do everything possible to derail its success. They might even spend 6 Billion dollars to buy a product to weakly compete with it. And as I finish my burger in Clines Corner, NM on I40 dodging a Minnesota winter, I marvel at the technology that allows me to discuss this subject with such knowledgeable people. But this technology pales to the innovation Bombardier crammed into that plane that allows it to be operated at 5 to 10% less than the B737.

        • The following suggests that Boeing and CAW may be getting along much better than they did in the 80’s Boeing / de Havilland Canada era.

          From a January 2013 CAW press release.

          “The local union went into early negotiations with the intention of securing new investment. The investment will go towards setting up a new production line for work for the 737 airplane.

          CAW Local 2169 President Tim Cathro said that this was the first time the local has entered early bargaining in recent memory and the committee was pleased with the result. “I think this is an exceptional deal for our members,” said Cathro. “We weren’t sure how early negotiations would go, but in the end, it went quite well. We’re very happy with the agreement we could bring back for our members.”

          “This new agreement ensures future work here in Winnipeg,” said Winnipeg Area Director Tom Murphy. “Today, there aren’t very many places that can say they have six years work.”

          CAW Local 2169 represents 1,200 members at Boeing Canada, in small parts fabrication – including the forward strut which attaches the motor to the wing, and the fairing, attaching the wing to the body of the airplane.”

  19. Boeing is definitely trying to kill a rival, make even more sense when you learn that they have talks to buy Embraer.

    But Boeing didn’t act very wisely, they maybe gonna take Bombardier C series out of the states but so far the Canadian government had a change of heart and his not considering buying military planes from them anymore, bad timing, next year Canada is to renew is military fleets.

  20. Canada is reported to have offered to drop the WTO complaint if the US stops its game-playing over softwood lumber.

    Time after time for decades Canada wins in US hearings but another part of the US government imposes duty/penalties/tariffs.

    Dishonest people keep trying until they are really stomped on. (Evcntually the marketplace will, because the thinking warps their decision-making for their business.)

    • NAFTA gets involved in some of the bunfights, as it has clauses to resolve disputes, and supports people in one country suing people or governments the other. Neo-Marxist activists in Canada want to eliminate the latter, some US interests want to eliminate a key dispute resolution clause.

      It’s all collectivism, which the current POTUS supports (he’s really a hawkish Democrat, a RINO).

Leave a Reply

Your email address will not be published. Required fields are marked *