Bombardier tax ruling: five things you need to know
US threat to slap Bombardier jets with 220% tariff puts 4,000 UK jobs at risk
US plans to impose a 220% tariff on jets made by Bombardier threaten thousands of jobs across Canada and in Northern Ireland, where the aircraft manufacturer is a major employer.
Rival aerospace manufacturer Boeing accuses the Montreal-based firm of benefiting from unfair government subsidies while selling its biggest jet, the C Series, in the US at less than “fair value”, Bloomberg reports.
While the decision is subject to an appeal, Prime Minister Theresa May described the ruling as “bitterly disappointing” and business secretary Greg Clark called it “unjustified”. The UK will work with Canada to reverse last night’s preliminary ruling, The Guardian says.
Here’s what you need to know:
What’s the dispute about?
Boeing petitioned US officials in April claiming that unfair Canadian and British government subsidies, including £75m from the UK specifically, allowed Bombardier to sell jets to Atlanta-based Delta Airlines for $20m (£14.9m) each, although they cost $33m to manufacture.
Bombardier, which described the US ruling as “absurd”, argues that Boeing suffered no harm as it didn’t compete for the Delta Airlines contract and “years ago abandoned the market the C Series serves”.
The preliminary ruling means “Washington sided with Boeing it its war against Bombardier”, says The Financial Times.
How many UK jobs are at stake?
There are fears that at least 4,000 jobs at Bombardier’s Belfast base could be at risk. Thousands more jobs in Northern Ireland are supported through the manufacturer’s supply chain. Last year the firm announced 1,080 job losses at its Northern Ireland plants following delays to the C-Series.
Sir Jeffrey Donaldson, an MP for Northern Ireland’s Democratic Unionist Party, told BBC Radio 4’s Today programme there would be “devastating consequences for the economy if the factory were closed”.
What action can the UK and Canadian government take?
Canadian Prime Minister Justin Trudeau and UK Defence Minister Sir Michael Fallon have threatened to stop buying Boeing fighter jets in retaliation for Boeing’s complaint against Bombardier.
Reuters says Fallon told reporters in Belfast today that the UK’s relationship with Boeing could be “jeopardised” and that “Boeing has significant defence contracts with us and still expects to win further contracts. Boeing wants and we want a long term partnership but that has to be two-way.”
What’s stopping Theresa May from retaliating immediately?
May is caught between wanting to please DUP politicians in Belfast, who are propping up her coalition government, and voters in middle England who work for the American aircraft giant. Boeing employs 16,500 people in its UK supply chain and last week broke ground on a new facility in Sheffield.
The BBC’s Simon Jack says the Prime Minister “may find it difficult to keep her new best friends in the DUP sweet while not offending such an important employer in the rest of the UK”.
What’s the next step in the Bombardier appeal?
The Commerce Department’s tariff on Bombardier will only take effect if the US International Trade Commission rules in Boeing’s favor in a final decision expected in 2018, Reuters says.