The U.S. Department of Commerce proposed a hefty 219% duty on Bombardier’s CSeries jets, accusing the Canadian company of receiving improper government subsidies, which gave an unfair advantage when selling south of the border.
The Bombardier decision is likely to further harden Canada’s stance on keeping a key dispute-settlement mechanism in NAFTA, which the Trump administration wants to eliminate.
U.S. Trade Representative Robert Lighthizer said the decision on Bombardier still had several stages to go through before it was finalized.
“There are several more stages, we don’t even know whether it is going to be successful, and in addition there are off-ramps in the litigation,” he said. “It’s too early to tell.”
The investigation was sparked by a complaint from U.S. aerospace giant Boeing, after Bombardier secured a deal for up to 125 of its CS100s with Delta Air Lines in April 2016.
The list price for the planes is around US$ 6 billion, but the actual amount of money involved in the deal has not been made public and Boeing alleges Bombardier offered them for much less.
The financial penalties aren’t officially due until Bombardier delivers the first CS100 to Delta, which is expected in the spring. They could also still be dropped or refunded.
The key will be whether the U.S. International Trade Commissions finds that Bombardier-Delta deal actually hurt Boeing’s business, a decision that’s not expected until the spring.
Bombardier operates aerospace manufacturing facilities in Queretaro, Mexico, since 2006. Its more than 1,800 employees, allow Bombardier to develop a production capacity that lessens its reliance on third parties for structural aircraft components and contributes to the reduction of operating costs and increased profitability overall.
Operations include the manufacture of the carbon composite structure, electrical harness and wing assembly, for Learjet aircrafts. The complex also builds structural aircraft components, such as the aft fuselage for the Global business jet family, the flight control work package (rudder, elevator and horizontal stabilizer) for the Q400 NextGen turboprop, the Challenger 605 aircraft, and rudder for the CRJ700/900/1000 NextGen.
Manufacturing of the composite structure, electrical harnesses and wing assembly for the all new, state-of-the-art Learjet 85 business jet, as well as sub-assembly systems installation, is also carried out in Mexico.