Boeing Lays Out Facts to Parliament on U.S. Trade Case
LONDON, December 13, 2017 - Boeing [NYSE: BA] met with the Northern Ireland Affairs Committee of the House of Commons today to set out the facts of the trade case in the United States following Bombardier’s violation of long established trade law by dumping CSeries passenger jets in the U.S. market.
“Boeing values its relationship with the UK and is looking forward to continuing to grow this partnership for prosperity with the UK Government in the years to come,” said Sir Michael Arthur, president of Boeing Europe and managing director of Boeing UK and Ireland. “The trade case in the United States is entirely separate. Bombardier has been found – preliminarily – to have violated trade law by the appropriate authorities.
“The U.S. process is not political, but legal and it is very simple. From Boeing’s perspective, Bombardier has sold aircraft in the U.S. at absurdly low prices, below the cost of production and below the price in other markets. It is a textbook case of dumping. It was done to seek a flagship sale in the U.S. to boost sales of an aircraft to which the market has not warmed.
“Boeing welcomes competition. We believe it makes us better. And Bombardier can sell their aircraft anywhere in the world. But those sales must be made in accordance with the law, and with respect for the global trade rules we have all adopted. A level playing field, free and fair trade, and compliance with the rules that underpin that process are all things that the UK Government and Parliament, support. So does Boeing. That is what this case is all about.
“Furthermore, this concern is shared across the world. Brazil has opened its own case at the World Trade Organisation because of the government support taken by Bombardier from Canada.”
Claims have been made that Boeing does not make an aircraft that competes with the CSeries. However, Bombardier’s own public materials refute this by demonstrating that the 737 MAX 7 competes with the CSeries.Click image to view larger.
Source: Bombardier Investor Day presentation, March 20, 2014.
The best evidence that these aeroplanes do compete is that they have already done so, including in the competition at United Airlines between the 737-700 and the CS100. Furthermore, not even Bombardier can dispute that the CS300 competes directly with the 737-700 and 737 MAX 7, given the relatively small number of seats by which these models differ in most normal configurations.
Further claims have been made that Boeing did not compete on one of the deals cited in Boeing’s petition. These claims are both inaccurate and irrelevant. Inaccurate, because Boeing did compete for the sale, and its initial offering of used regional jet aircraft was dictated by customer preference - which changed only after Bombardier offered its C-Series jets at an absurdly low price, leveraging illegal state subsidies. Irrelevant, because this dispute relates to Bombardier’s activity in, and the resulting effects on, the U.S. market as a whole, not any single sale.
“Bombardier’s management decided to risk its business and jobs by launching a product that the market has not warmed to and also decided to violate trade law to secure a sale in a key market,” said Arthur. Furthermore, in November of 2016 the CEO of Bombardier was quoted in the Canadian media saying that Bombardier almost went bankrupt in 2015.
“Boeing is not putting Bombardier and Northern Ireland jobs at risk nor is Boeing in the wrong and we have not received illegal subsidies,” said Arthur.
“In addition, one of the trade union witnesses at a previous hearing of the committee commented that the Belfast site has seen employment go from 10,500 when he began work there to 7,100 three years ago to 4,000 today. He also said that the apprentice programme has been suspended for two or three years. These changes are not due to Boeing or the trade case. This issue is being used to cover up Bombardier’s broader challenges that all pre-date the case.
“Boeing will celebrate 80 years of partnership with the UK in 2018,” continued Arthur. “The company employs 2,200 people in the UK, which is twice the level of 2011. Boeing spent £2.1 billion with the UK supply chain in 2016, three times the level of 2011, supporting an estimated 16,500 jobs in the UK tier one supply chain, up 80 percent since 2011.
“In summer 2016, in partnership with the government, we pledged to double the size of our business again in the coming years and to open up further opportunities for UK suppliers on our future programmes. Next year we will open our first factory in Europe, Boeing Sheffield, which will make systems for 737 and 777 aircraft, building on more than a decade of partnership with the University there and the Advanced Manufacturing Research Centre nearby, where we were a founding member.
“We look forward to continuing to grow in the UK and to contributing further to the country’s prosperity and security,” Arthur added. “We also look forward to the conclusion of the trade case in the U.S. in early 2018 and to the long-term level playing field it aims to secure in the aerospace sector.”
Boeing employs more than 2,200 people across the UK at numerous sites, from Glasgow to Gosport, and the company is experiencing solid organic growth. In 2018 Boeing will celebrate 80 years of partnership with the United Kingdom, the Armed Forces, British manufacturing and the air transport industry. Today the UK remains a critically important market, supplier base and a source of some of the world’s most inventive technology partners. Boeing’s expenditure with the UK aerospace industry in 2016 was £2.1 billion and the company supports an estimated 16,500 jobs in the UK supply chain, in the process enhancing skills, facilitating exports and generating intellectual property. For more information visit www.boeing.co.uk or follow us on Twitter @BoeingUK.