Boeing > Bombardier

The place for general political discussion.

Boeing > Bombardier

Postby Kane » Fri Oct 06, 2017 1:25 pm

While this isn't surprising, it's at least comical in a way I can recall the Pentagon Wars was:

RealClearMarkets wrote:
As Boeing Battles Bombardier, Taxpayers Get Hit Twice

The iconic American company Boeing seems simultaneously to be for and against intervention. This spring Boeing’s former CEO and other U.S. business leaders convinced President Trump to give a new lease on life to the Export-Import Bank, a trade-distorting relic of crony capitalism’s heyday. Just weeks later, Boeing asserted the sanctity of fair trade in allegations about Bombardier, a Canadian aircraft company.

The Export-Import Bank was on life support, but, in April, following a meeting with former Boeing CEO Jim McNerney, President Trump reversed himself and decided the Export-Import Bank should not be shut down after all. The Bank has supported major U.S. corporations for years with taxpayer dollars, with Boeing being its chief beneficiary. In 2014, before Congress moved to curtail its activities, the Bank provided long-term loan guarantees totaling $10.8 billion, of which $7.4 billion went to Boeing. All told, Boeing received about 40 percent of the Bank’s $20.5 billion in programs - hence the moniker “the Boeing Bank.”

Then, in May, Boeing asked the Commerce Department to punish Bombardier for harming Boeing and distorting trade with the sale of a new series of passenger planes to Delta at a price Boeing alleges is well below what the planes should have cost, a practice commonly referred to as “dumping.” It is practically a fait accompli that the Department of Commerce will agree that Boeing’s claims have a solid enough foundation to turn the matter over to the International Trade Commission (ITC), an independent, quasi-judicial government agency, for a formal investigation. President Trump is proudly skeptical of international trade’s benefits for the United States, or at least the way commerce has been conducted in recent decades.

Given the advantages Boeing enjoys courtesy of the Export-Import Bank and its defense contracts, it is both galling and ironic to see Boeing then ask for more U.S. government intervention over Bombardier’s sale of 75 C Series planes to Delta. Boeing claims the $19.6 million price per plane is well below the $33 million or more Boeing figures the planes should have cost. The only way to account for the bargain basement price is that Bombardier must have deliberately underpriced them to muscle Boeing out of the way and that Bombardier could only have done so because it is the recipient of lavish subsidies by federal and provincial government in Canada, according to Boeing. The standard remedy is to affix special duties on Bombardier’s planes sold in the U.S.

The irony for Boeing is rich. Domestic airlines have complained for years that below market, and taxpayer-subsidized, loans through the Export-Import Bank have been used by foreign countries to buy airplanes and offer cut rate airfares. And, according to Veronique DeRugy, Senior Research Fellow at the Mercatus Center, “When Delta and other airlines can’t compete on costs, they have to cut jobs. And that’s what they do. During the hearing on Ex-Im before the House Finance Committee, the CEO of Delta, Richard Anderson, testified that some 7,500 U.S. airlines jobs had to be cut because they faced unfair competition from the Ex-Im subsidized ‘customers.’”


But here are some facts that should become readily apparent to the ITC. Boeing does not make a plane that competes with Bombardier’s C Series so there is no way that Boeing could have been injured by the alleged unfair competition.

Boeing has no business asking the ITC to help it overcome what, in retrospect, appears to have been a strategic misstep about the market for 100-150-passenger class of plane. The taxpayer-funded ITC exists to make sure foreign governments and companies play by the rules of global commerce, not to pick winners and losers, which brings us back to the Ex-Im Bank.

The Bank, like so many government agencies, has its origins with the New Deal. It was set up to help U.S. companies looking to export by providing a type of insurance. One way it does this is with foreign loans guarantees, in essence, creating a market for U.S. products by loaning foreigners money to buy U.S. goods. To be sure, exports benefit American workers but the American taxpayer has been subsidizing business transactions that would likely take place without the Bank and other forms of government support for far too long.

It could be that Bombardier is simply producing a great new airplane and Boeing, regretting a strategic decision years ago, now wants to marginalize Bombardier as a competitor. In a perfect world, Boeing and other companies would make products the market wants at a competitive price without government (taxpayer) support. However, even in an imperfect world, it is unfair to ask taxpayers to foot the bill to pay for entities such as the Export-Import Bank and then saddle them with duties imposed on foreign products that do not compete directly with U.S. products. Boeing is claiming it simply wants fair trade. In fact, Boeing wants to be able to trade just as unfairly as other countries do – and then some.

David Williams is president of the Taxpayers Protection Alliance.


National Review wrote:
Delta concludes that instead of offering a competitive product of its own:

“Boeing instead attempted solely to block Bombardier.” US trade remedy laws are not intended to create a choice for airlines like Delta between a domestic product that is too big and uneconomical to fly the intended missions and, at the time of the CS 100 purchase, was not even available until 2020 . . . Delta’s fleet contains numerous Boeing planes that are the right size for their mission. Delta was not looking for a non-Boeing aircraft at any price. Delta was looking for the right sized aircraft . . . Boeing has not demonstrated a reasonable indication of an imminent threat of material injury to the domestic industry. Instead, Boeing has built its case around a single sale it did not lose, for an aircraft it does not produce, in a market segment it ceased serving in 2006.

...


Result?

Reuters wrote:
U.S. backs 300 percent in duties on Bombardier after Boeing complaint

WASHINGTON (Reuters) - The U.S. Commerce Department on Friday moved to impose trade duties of nearly 300 percent on sales of Bombardier Inc CSeries jets in the United States, prompted by Boeing Co’s complaint that the Canadian company received illegal subsidies and dumped the planes at “absurdly low” prices.

The Commerce Department proposed a 79.82 percent antidumping duty after a preliminary finding that the jets were sold below cost to Delta Air Lines Inc in 2016, adding to the 219.63 percent duty for subsidies announced last week.

The new proposed penalty, which would not take effect unless affirmed by the U.S. International Trade Commission early next year, is nevertheless expected to heighten trade tensions between the United States, Canada and Britain, where wings for the Bombardier jetliner are made.

The total duty was well above the 80 percent Boeing sought in its complaint.

....


I'm not totally opposed to the idea of the Ex-Im Bank (Chinese firms are basically this and only this - it's a unique benefit that's beneficial to them now and probably bad for them the longer they utilize it to the extent that they are) because I don't think there really is a competitor out there that doesn't benefit from some government assistance. But considering Boeing's size and strength...why should they get so much of this assistance? And why should this charade really continue when they didn't even have a competitive product to offer that countered Bombardier's?

Crazy.
Stephen Jay Gould wrote:When people learn no tools of judgment and merely follow their hopes, the seeds of political manipulation are sown.
User avatar
Kane
Governor
 
Posts: 7298
Joined: Sat Aug 18, 2012 1:09 pm
Location: The Yay
Gender: Male
Has thanked: 299 times
Been thanked: 497 times
Political Leaning: Rockefeller Republican

Re: Boeing > Bombardier

Postby exploited » Fri Oct 06, 2017 2:46 pm

This is an outrageous judgement, clearly motivated by politics, with zero grounding in economic reality.
User avatar
exploited
Vice President
 
Posts: 20958
Joined: Fri Sep 14, 2012 2:32 pm
Location: Ontario, Canada
Gender: Male
Has thanked: 2197 times
Been thanked: 1702 times

Re: Boeing > Bombardier

Postby John Galt » Fri Oct 06, 2017 3:07 pm

it seems outrageous but i think it was done by trade wonks, and actually not done with a political edge

the problem is apparently no one pays the list price for an airplane, but a negotiated rate. the judgement is because canada is giving financial assistance it unfairly hurts boeing so it's stating that Delta has to pay the list price for the plane, basically. and then also a penalty

i don't like that the Canadian government props up its manufacturers and then wants to play "fair" with trade in the US

on the other hand, propping up an airline industry isn't a bad idea, as that means propping up transportation and defense simultaneously. however, competition is good, even if dumping. this penalty seems rather outrageous

what happens with bombadier's dumping? well the canadian government is subsidizing american airlines, in the end, making it cheaper for delta to operate. is that bad? i feel like america is getting a good deal
Americans learn only from catastrophe and not from experience. -- Theodore Roosevelt
User avatar
John Galt
Technical Admin
 
Posts: 12333
Joined: Sat Aug 18, 2012 3:22 pm
Location: Bowling Green Massacre Survivor
Gender: None specified
Has thanked: 577 times
Been thanked: 1283 times
Political Leaning: Classic Liberal

Re: Boeing > Bombardier

Postby exploited » Fri Oct 06, 2017 3:30 pm

John Galt wrote:it seems outrageous but i think it was done by trade wonks, and actually not done with a political edge

the problem is apparently no one pays the list price for an airplane, but a negotiated rate. the judgement is because canada is giving financial assistance it unfairly hurts boeing so it's stating that Delta has to pay the list price for the plane, basically. and then also a penalty

i don't like that the Canadian government props up its manufacturers and then wants to play "fair" with trade in the US

on the other hand, propping up an airline industry isn't a bad idea, as that means propping up transportation and defense simultaneously. however, competition is good, even if dumping. this penalty seems rather outrageous

what happens with bombadier's dumping? well the canadian government is subsidizing american airlines, in the end, making it cheaper for delta to operate. is that bad? i feel like america is getting a good deal


Boeing has received $64 billion dollars in loans from the US government, and $13 billion from local and state subsidies.

I have no problem with this at all. These kinds of industries require subsidies and always have. Literally everyone understands this, which is exactly why this is clearly politically motivated. Probably to have even more leverage in the upcoming NAFTA negotiations.

Besides, Boeing isn't being hurt. How can they be? They don't even compete in this market.
User avatar
exploited
Vice President
 
Posts: 20958
Joined: Fri Sep 14, 2012 2:32 pm
Location: Ontario, Canada
Gender: Male
Has thanked: 2197 times
Been thanked: 1702 times

Re: Boeing > Bombardier

Postby Kane » Fri Oct 06, 2017 4:55 pm

John Galt wrote:it seems outrageous but i think it was done by trade wonks, and actually not done with a political edge

the problem is apparently no one pays the list price for an airplane, but a negotiated rate. the judgement is because canada is giving financial assistance it unfairly hurts boeing so it's stating that Delta has to pay the list price for the plane, basically. and then also a penalty

i don't like that the Canadian government props up its manufacturers and then wants to play "fair" with trade in the US

on the other hand, propping up an airline industry isn't a bad idea, as that means propping up transportation and defense simultaneously. however, competition is good, even if dumping. this penalty seems rather outrageous

what happens with bombadier's dumping? well the canadian government is subsidizing american airlines, in the end, making it cheaper for delta to operate. is that bad? i feel like america is getting a good deal


Yeah but again...Boeing seems to have brought this on without a card to play in the game. Delta went to Bombardier because they were looking for 100 - 125 person aircraft - Boeing said the soonest they could get Delta a Jet that fit those needs was 2020. Delta then went and ordered planes that they could currently get and count on...

This really is about who's bringing the action/lodging the complaint against Bombardier. It just makes no sense. On top of that - Bombardier sends $2.4 Billion into the US annually in the form of orders for interior pieces for these planes.

It just looks so bad.
Stephen Jay Gould wrote:When people learn no tools of judgment and merely follow their hopes, the seeds of political manipulation are sown.
User avatar
Kane
Governor
 
Posts: 7298
Joined: Sat Aug 18, 2012 1:09 pm
Location: The Yay
Gender: Male
Has thanked: 299 times
Been thanked: 497 times
Political Leaning: Rockefeller Republican

Re: Boeing > Bombardier

Postby Saz » Sat Oct 07, 2017 4:38 am

This is like Phos calling ex a terrible poster. He isn't wrong, but come on....

Although that's what canada gets for being a little bitch of a nation. We wouldn't do this to airbus, even though their subsidy is open and obvious, because the EU could actually punish us back.
Pun intended for the plebes on here who don't get a joke
User avatar
Saz
Governor
 
Posts: 8447
Joined: Mon Mar 17, 2014 9:37 am
Location: Airstrip One
Gender: Male
Has thanked: 1068 times
Been thanked: 899 times
Political Leaning: Classic Liberal

Re: Boeing > Bombardier

Postby exploited » Sat Oct 07, 2017 7:14 am

Saz wrote:This is like Phos calling ex a terrible poster. He isn't wrong, but come on....

Although that's what canada gets for being a little bitch of a nation. We wouldn't do this to airbus, even though their subsidy is open and obvious, because the EU could actually punish us back.


Oh, we can punish you back, it is just that most people realize it would be bad for the US, and worse for Canada. It really is the equivalent of getting into a trade war with one of your own states. I don't want to see this happen, but if it is needed, it'll happen. We'll manage.

Last I looked, the EU trades about a trillion a year with the US, while Canada does about $600 billion. So they do substantially more, but on a per capita basis? Not even close.

Luckily, free trade is well supported here, so we are quickly diversifying into EU and Chinese markets. CETA in specific will be a big boost for us. And while the Liberal government has some very weak spots, on trade, I have full faith in our will and ability to defend ourselves. We've been very actively working to bypass your federal government, with great success, until such a time that it is controlled by a responsible adult.

This is, at the end of the day, a fairly minor blow. Terrible for the Quebec government and Bombardier, but small in the grand scheme of things. Clearly a warning shot in anticipation for NAFTA renegotiations, but it is so transparent that it is kind of having the opposite effect of what was intended.
User avatar
exploited
Vice President
 
Posts: 20958
Joined: Fri Sep 14, 2012 2:32 pm
Location: Ontario, Canada
Gender: Male
Has thanked: 2197 times
Been thanked: 1702 times

Re: Boeing > Bombardier

Postby Kane » Sat Oct 07, 2017 10:43 am

Agree. I think this will go down as a self inflicted wound. It's should be emphasized that there was pushback from the UK on this as well because Bombardier employs 4,000 people in Northern Ireland - a vital block for May and her current government (fraught as it is).

https://www.bloomberg.com/news/articles ... bombardier
Stephen Jay Gould wrote:When people learn no tools of judgment and merely follow their hopes, the seeds of political manipulation are sown.
User avatar
Kane
Governor
 
Posts: 7298
Joined: Sat Aug 18, 2012 1:09 pm
Location: The Yay
Gender: Male
Has thanked: 299 times
Been thanked: 497 times
Political Leaning: Rockefeller Republican

Re: Boeing > Bombardier

Postby exploited » Sat Oct 07, 2017 10:51 am

Kane wrote:Agree. I think this will go down as a self inflicted wound. It's should be emphasized that there was pushback from the UK on this as well because Bombardier employs 4,000 people in Northern Ireland - a vital block for May and her current government (fraught as it is).

https://www.bloomberg.com/news/articles ... bombardier


It just isn't necessary. I see no reason why Western countries should start getting into this kind of retaliatory back and forth, especially when we need unity in the face of China's trade practices.

While there are different standards between the US, EU and Canada, I think we are equal enough in terms of development and quality of life that we can compete on a more or less equal playing field, even if we have favoured sectors that receive subsidies.

Besides, it is more productive to address these issues through more and better free trade deals than it is through tariffs, which hurt everyone.
User avatar
exploited
Vice President
 
Posts: 20958
Joined: Fri Sep 14, 2012 2:32 pm
Location: Ontario, Canada
Gender: Male
Has thanked: 2197 times
Been thanked: 1702 times

Re: Boeing > Bombardier

Postby exploited » Mon Oct 16, 2017 11:08 pm

:))

Airbus just bought 50.01% the CSeries line, and will assemble them in Alabama, thus eliminating the tariffs.

Brilliant deal. They are going to grab the entire market for this size of aircraft.
User avatar
exploited
Vice President
 
Posts: 20958
Joined: Fri Sep 14, 2012 2:32 pm
Location: Ontario, Canada
Gender: Male
Has thanked: 2197 times
Been thanked: 1702 times

Next

Return to General Discussion

Who is online

Users browsing this forum: Philly and 2 guests