Theresa May threatens USA with trade war over Bombardier row

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Theresa May threatens USA with trade war over Bombardier row

The Commerce Department's penalty against Bombardier will only take effect if the U.S. International Trade Commission (ITC) rules in Boeing's favor in a final decision expected in 2018.

The U.S. Commerce Department on Tuesday slapped preliminary anti-subsidy duties on Bombardier's CSeries jets after Boeing accused Canada of unfairly subsidizing the aircraft. As Laura Frykberg reports, the move is likely to strain trade relations between the neighbours and cause problems in Britain where Bombardier's Northern Ireland factory employs thousands.

Boeing, meanwhile, said it felt it's action was necessary to highlight the unfair advantage Bombardier had.

Canada is in the midst of negotiations to buy 18 Boeing-made F/A-18 Super Hornet fighter jets for an estimated $5.15 billion.

The ruling followed claims from Boeing about unfair subsidies paid to the Canadian aircraft-maker by the United Kingdom and Canada.

FILE- In this February 17, 2016, file photo, a Bombardier CSeries jet sits in a Montreal hanger.

Meanwhile, UK Secretary of Defense, Sir Michael Fallon, was reported by the BBC to have said that "Boeing stands to gain from British defense spending" however "this kind of behavior could jeopardize our future relationship" with the company. "The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination".

Senior UK politicians including the Prime Minister and her closest ally in Northern Ireland are involved in a diplomatic row with the United States over a new tariff that has thrown thousands of British jobs into doubt. And there's little doubt that Boeing was encouraged by Trump's aggressive language to seek the most punitive measures possible against Bombardier. Bombardier's subsidies, by contrast, come in the form of the government effectively partnering with the company in funding the early stages of product development.

Boeing said it understood the Government's concerns but claimed Bombardier was not playing by accepted worldwide trading rules.

"Boeing may have won a battle but let me tell you, the war is far from over and that we shall win", he said in Quebec City.

Boeing claims Bombardier's new C Series aircraft have an unfair advantage over its own similar aircraft in the U.S. market due to the nature of subsidies the company receives from the Canadian and British governments.

"Here's hoping the ITC does its job well and puts this frivolous dispute to bed before Bombardier delivers its first C Series plane to Delta in the spring". Hours before the Commerce Department's announcement, Siemens and France's Alstom SA agreed to join their rail businesses in a deal that gives rise to a European transportation giant better able to counter competition from China.

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