Canada warns it may cancel US jet buy over Bombardier probe


The U.S. Commerce Department said on Thursday it was launching an investigation into claims by Boeing Co BA.N that Canadian plane maker Bombardier Inc BBDb.TO dumped CSeries jetliners in the U.S. market and is being unfairly subsidized by the Canadian government.

The announcement comes as the U.S. International Trade Commission (ITC) launches its own investigation into the matter in response to an April 27 complaint from Boeing that Bombardier sold each airplane for some $13.8 million than they cost to manufacture.

"The US market is the most open in the world, but we must take action if our rules are being broken", says commerce secretary Wilbur Ross in a media release. "While assuring the case is decided strictly on a full and fair assessment of the facts, we will do everything in our power to stand up for American companies and their workers".

USA aeronautics powerhouse Boeing argued at the hearing that duties should be imposed on Bombardier aircraft, insisting its smaller Montreal-based rival receives government subsidies that give it an illicit toehold in the worldwide market.

The antidumping investigation will look into charges that Canada´s Bombardier receives subsidies of almost 80 percent, and could lead the US Commerce Department to impose equivalent punitive import duties.

If the trade commission determines USA industry may have been injured, the Commerce Department investigation will continue, it says. As of now Delta remains the only USA airline to order the airplane.

Bombardier has dismissed the allegations.

Bombardier lawyers were in a Washington, D.C. courtroom on Thursday, arguing against the petition and saying it was "unprecedented in its overreach".

"Boeing would prefer that airlines buy older larger aircraft based on older technology", chief executive Alain Bellemare said during the company's shareholder meeting on 11 May.

Bombardier lawyer Peter Lichtenbaum said the plaintiff is a global powerhouse that hasn't lost any sales as a result of Bombardier, has an enviable order backlog and doesn't even compete with Bombardier in the sales campaigns it's complaining about.

The contract with Delta includes options for an additional 50 aircraft, and the airline can convert a portion of its commitment to orders for the larger CS300. U.S. International Trade Commission (USITC) staff will hear testimony from both companies and from Bombardier customer Delta in the case. Delta expects to start taking deliveries next spring.

Boeing's similarly sized 737-700 model has a current list price of $82.4 million, with the new 737-MAX 7 priced at $92.2 million.

Bombardier said last month it worked to ensure compliance with the laws of countries where it operates and spent about $3 billion annually with American suppliers.

The Quebec government invested US$1 billion in exchange for a 49.5 percent stake in the CSeries previous year.