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Bombardier, Boeing prepare to make final arguments in bitter trade dispute

Last Updated Dec 15, 2017 at 5:20 pm EDT

A Bombardier Global 7000 aircraft mock up is shown in Toronto on Tuesday, November 3, 2015. The bitter dispute between Bombardier and Boeing will enter a critical phase next week, when the two aerospace rivals appear before an all-important trade tribunal, whose ruling will ultimately decide the fight. THE CANADIAN PRESS/Nathan Denette

OTTAWA – The bitter dispute between Bombardier and Boeing will enter a critical phase next week, when the two aerospace rivals appear before an all-important trade tribunal whose ruling will ultimately decide the fight.

The U.S. International Trade Commission will hold hearings Monday in which Boeing will explain why it believes it was injured by Bombardier’s landmark deal to sell C-Series passenger jets to a U.S. airline.

Montreal-based Bombardier will have its own chance to fire back by arguing that the multibillion-dollar deal involving up to 125 C-Series jets for Delta Airlines had no impact on Boeing’s economic well-being.

Canada’s ambassador to the U.S., David MacNaughton, along with his British counterpart, are also expected to attend on behalf of their respective governments, which support Bombardier.

The hearings mark the last chance for all sides to appear before the commission before it issues a final ruling, likely early in the new year, which will determine whether every C-Series jet entering the U.S. is hit with a hefty duty.

The U.S. Department of Commerce proposed a 300-per-cent duty after finding that Bombardier broke trade rules by selling the C-Series planes to Delta at an unfairly low price with help from government subsidies.

Such a penalty was seen as a potential stake to the heart for the C-Series until European aerospace giant Airbus proposed to buy a majority stake in the planes and try to skirt any duties by assembling them in Alabama.

But that deal, which was unveiled in October and whose terms have not been made public, still hasn’t been approved by the federal government, which is looking at whether it would amount to a net benefit to Canada.

Boeing officials briefing reporters on background Friday also argued that any duties on the C-Series should apply to major components imported into the U.S., as well.

Still, heading into this final stretch of the dispute the pressure is very much on Boeing to prove that it lost out because of the deal between Bombardier and Delta.

That’s because the proposed duty, which could change when the Commerce Department issues a final duty rate on Monday, will be thrown out unless the International Trade Commission sides with Boeing.

Some trade experts believe Boeing faces an uphill battle because it did not compete for the Delta contract, which is what Bombardier and the Canada’s federal government have argued.

“Boeing does not compete and was not injured by this sale,” said Bombardier spokeswoman Nathalie Siphengphet. “It’s clear that it has not hurt Boeing.”

But Boeing officials said the company’s single-aisle 737-700 did compete against — and beat out — the C-Series for a contract with United Airlines in March 2016.

The U.S. aerospace giant plans to argue that even though it did not compete for the Delta contract, the deal will result in an influx of heavily subsidized airplanes that will hurt future opportunities in the American market.

The hearings come less than a week after the Canadian government punished Boeing over the dispute by abandoning plans to buy 18 Boeing-made Super Hornet fighter jets.

The government also plans to start assessing the “harm” that companies are causing to Canada’s economic interests before awarding large military contracts — a move widely seen as a shot at the U.S. company.

The Boeing officials would not comment on those moves, but said the company assessed the potential risks before pressing ahead with a fight against Bombardier and has not thought about throwing in the towel.

“We’ve not looked back and have not made efforts or tried or even thought about stopping the proceeding,” one Boeing official said.

— Follow @leeberthiaume on Twitter.