CSeries dumping petition by Boeing
On 28 April 2016, Bombardier Aerospace and Delta Air Lines announced a sale for 75 CSeries CS100 firm orders and 50 options, the first aircraft should enter service in spring 2018.
[8] On 27 April 2017, Boeing filed a petition charging Bombardier with dumping for selling 75+50 CS100s to Delta Air Lines for $19.6m each, below their $33.2m production cost.
[9] Aviation Week & Space Technology noted "The reaction to Boeing's petition against Bombardier across much of the aerospace industry has been sharply negative".
[15] Bombardier Commercial Aircraft president Fred Cromer said "the Boeing numbers are not accurate, whether we're talking about the sales price or the production cost,[...] early airplanes are expensive [to produce] and every manufacturer looks at the entire program" and the pricing to Delta was in the context of relaunching the program at the 2015 Paris Air Show and had to account for the "perceived risk" of ordering a new aircraft.
[20] On 26 September, the Department of Commerce announced it found that Bombardier received subsidies of 220%, and will collect deposits based on these preliminary rates.
[24] University of Waterloo's Danny Lam suggest Boeing's trade complaint real reason is the potential expansion of China's aviation industry through Bombardier.
[28] Canadian Defence Minister Harjit Sajjan confirmed on 28 September 2017 that Boeing's products are unlikely to be selected because it is not a "trusted partner".
[37] The Republic of Ireland's Taoiseach Leo Varadkar warned that the Commerce Department's tariff may result in a UK-US trade war.
In a 20 November filing, Delta said "In Boeing's view, any action would be a potential form of 'evasion'", like modifying a purchase agreement, evaluating 109-seat aircraft not produced in US or expanding the US aerospace industry and competition for customers.
Travellers and airlines will benefit from its roomier cabin, lower noise and emissions, better fuel economy and longer range to make domestic tertiary markets viable.
If Airbus, Bombardier and maybe others can rely on government subsidies, its managers think Boeing could lose its ability to innovate and price its products competitively, thus jeopardizing its long-term survival.
[48] On 13 December 2017, Michael Arthur, president of Boeing Europe and managing director of Boeing UK and Ireland, formally testified in the UK House of Commons, stating the process is simply legal and not political: Bombardier sold aircraft below the cost of production, a textbook case of dumping, to seek a flagship sale to boost sales.
[50] The next day, Boeing stated that it has not tried to stop the proceedings before the US Commerce Department issues its findings and the ITC hosts a final hearing on 18 December 2017, ahead of its vote on 26 January 2018.
[52] Canada's ambassador to the US, David MacNaughton, warned that a positive finding by the ITC "based on just the type of 'speculation and conjecture' that is prohibited under both US and international law" could violate World Trade Organization agreements.
[53] For industry observer Addison Schonland, the ITC commissioners seemed insufficiently qualified and missed opportunities to better understand fleet planning by asking why the MAX7 is not a commercial success, even revamped, or why would United initially ordered the less efficient 737-700 and then switched to the larger 737-900 within two months.
[56] On 21 December, Boeing and Embraer confirmed to be discussing a potential combination with a transaction subject to Brazilian government regulators, the companies' boards and shareholders approvals.
It notes a "moderate-to-high degree of substitutability" between the CS100/CS300s and the 737-700/Max 7, with the questionnaire responses reporting better availability, price, lifetime costs, fuel efficiency and technology for the CSeries, while Boeing has an edge for fleet commonality, performance and range.
Bombardier has identified the tooling and equipment required, replicating its Mirabel plant and has prepared a human resources plan to recruit 400-500 employees.
In answering the ITC request for more information on its possible merger with Embraer, Boeing claims its regional jets do not, and will not, compete with the 737, unlike the CSeries, and that it has collaborated with the Brazilian company on previous projects.
[64] Republican Alabama congressman Bradley Byrne and Kansas senator Jerry Moran have written the ITC to support Bombardier as the tariff would "take work away from US suppliers and quash thousands of US jobs, ultimately hurting the greater US aerospace industry".
[67] On 26 January 2018, the ITC four commissioners unanimously determined the U.S. industry is not threatened and no duty orders will be issued, the Commission public report will be available by March 2, 2018.
[69] Airinsight wrote that Bombardier was dumping aircraft below their cost is technically correct, like every other manufacturer, as early deliveries are sold to major launch customers at less their actual cost, not benefiting from learning curve improvements; and Bombardier did receive government subsidies for the program, like Airbus, Boeing, and Embraer have all received government subsidies ... but the ITC was also correct in finding "no harm – no foul".
"[70] In its reasoning published three weeks after, the ITC said "Boeing lost no sales or revenues" and "The higher standard seating capacity of the 737-700 and 737 MAX 7 limits competition between those models and the CS100 for some purchasers".
[75] In a similar case in 1982 for 19-seat turboprops, Fairchild claimed its Metro (600 made between 1972 and 2001) was threatened by the Embraer Bandeirante (501 made between 1973 and 1990), Embraer argued that it was absurd to impose tariffs because 54% of its components were US-made and Fairchild suffered no damage from an airplane of different specifications: the Metro is a pressurised aircraft while the Bandeirante is not; the ITC rejected the complaint.
