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US agency says it rejected Bombardier tariffs on finding C-Series deal did not harm Boeing sales

Reuters
Bombardier and Boeing jets - REUTERS

An independent US trade body on Wednesday said it rejected hefty duties on Bombardier's C-Series jets partly because Boeing lost no sales or revenue when Delta Air Lines ordered the aircraft in 2016 from the Canadian planemaker.

The International Trade Commission (ITC) also said the 110-seat C-Series jets ordered by Delta and Boeing Co's smallest 737 MAX 7 plane do not compete, adding the sale to Delta did not come at the American planemaker's expense as it did not offer any new aircraft to the No 2 US carrier.

"Boeing lost no sales or revenues," the ITC said in its 194-page ruling.

"The higher standard seating capacity of the 737-700 and 737 MAX 7 limits competition between those models and the CS100 for some purchasers."

The ITC issued the reasoning three weeks after its Jan 26 ruling that discarded a US Commerce Department recommendation to slap a near 300pc duty on sales of Bombardier Inc's 110-to-130-seat C-Series jets for five years, following a complaint by Boeing.

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ITC commissioners voted 4-0 that Bombardier's C-Series prices to US carriers did not harm the 737 MAX 7, thereby removing a valid reason to impose duties.

A Bombardier spokesman could not immediately be reached for comment.

A Boeing spokesman, which said the company is now reviewing the decision, said in January it would not consider options like an appeal before seeing the ITC's reasoning.

Boeing has the option of appealing the decision at the Court of International Trade in New York, or a trade dispute settlement panel under the North American Free Trade Agreement (Nafta).

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However, in negotiations to modernise Nafta, US Trade Representative Robert Lighthizer has pushed to scrap Nafta's process to settle trade disputes, which he says is biased against the United States.

The ITC decision was the latest twist in US-Canadian trade relations that have been complicated by disputes over tariffs on Canadian lumber and US milk and President Donald Trump’s desire to renegotiate or even abandon Nafta.

Boeing alleged it was forced to discount its 737 narrow-bodies to compete with Bombardier, which it said used government subsidies to dump the C-Series during the 2016 sale.

The report, however, said that the C-Series is not likely to depress prices of US-made jets and that Bombardier is unlikely to offer other prospective buyers the same discounts provided to Delta.