A U.S. trade body erased import duties of nearly 300 per cent on Bombardier’s CSeries Friday, unanimously rejecting a bid by U.S. aircraft maker Boeing.
The U.S. International Trade Commission (USITC) voted 4-0 against maintaining duties of 292 per cent against Bombardier as sanctioned by the U.S. Commerce Department.
READ MORE: A guide to the Bombardier trade dispute
The Canadian-made aircraft “do not injure U.S. industry,” the USITC said in a brief statement released after the vote.
Bombardier’s stock price jumped by nearly 20 per cent on the news.
“Today’s decision is a victory for innovation, competition, and the rule of law,” Montreal-based Bombardier said in a press release published moments after the vote.
The ruling came as a surprise to trade experts, who were largely anticipating an outcome in favour of Boeing.
“This is highly unusual and a significant victory for Bombardier and Canada,” said Jesse Goldman, an international trade lawyer and partner at Bennett Jones in Toronto.
Boeing argued it suffered “material injury” from the CSeries, for which Bombardier has received generous government support. But the U.S. aircraft giant does not currently have an airplane that is considered a direct competitor to Bombardier’s narrow-body jet airlines, according to Goldman.
“Boeing attempted to portray injury to production it didn’t have,” he added.
Despite this, the overwhelming expectation was for a pro-Boeing decision by the USITC, which has very rarely voted against U.S. industry, according to Goldman. That it didn’t mean, “Boeing’s case was incredibly weak based on the law.”
The vote is “a sign that there is some sort of regulatory process that isn’t completely swamped by politics,” said William Mitchell, professor of strategic management at the University of Toronto’s Rotman School of Management.
Not the last chapter in the Boeing-Bombardier dispute
The decision, hover, is unlikely to be the last chapter in the Bombardier-Boeing dispute.
The U.S. airplane manufacturer could appeal the vote or file a new petition against Bombardier once there is another U.S. order for the CSeries, said Goldman.
U.S.-based Delta Air Lines has placed a firm order for 75 CS100 planes.
In documents filed to the USITC on Wednesday, Bombardier itself said its rival would likely respond to a loss with new bids to have the U.S. government impose fresh duties.
In a new petition, Boeing could build a stronger case if it changed its 737 narrow-body airliner to compete more directly with the CSeries, said Goldman.
A partnership or acquisition of Brazilian aircraft manufacturer Embraer, which has long been a direct competitor of Bombardier, could also allow Boeing to strengthen its legal argument, he added.
Victory doesn’t scutter plans for CSeries production in Alabama
Friday’s win is unlikely to change existing plans to transfer some of the CSeries production to an Airbus manufacturing plant in Alabama, said Mitchell. However, “there is likely more latitude now to decide what parts will be produced in Canada and what parts in the U.S.,” he said.
Airbus acquired a majority stake in Bombardier’s CSeries program in October with plans to assemble the plane in the U.S. in order to avoid import duties.
Boeing launched the trade case last April, arguing that governments in Canada and Britain subsidized the plane’s development and allowed Bombardier to sell it at unfairly low prices.
– With files from the Canadian Press