Boeing Files AD and CVD Petitions on Imports of Large Civil Aircraft from Canada

The Boeing Company (Boeing) filed antidumping (AD) and countervailing duty (CVD) petitions on April 27 pertaining to imports of 100- to 150-seat large civil aircraft from Canada.
The U.S. AD law imposes special tariffs to counteract imports that are sold in the United States at less than “normal value.” For AD duties to be imposed, the U.S. government must determine not only that dumping is occurring, but also that there is “material injury” (or threat thereof) by reason of the dumped imports. Importers are liable for any potential AD duties imposed. In addition, these investigations could impact purchasers by increasing prices and/or decreasing supply of large civil aircraft.

Background

Boeing has battled Airbus for many years in a bitter dispute at the World Trade Organization, with both Boeing and Airbus accusing each other of benefiting from massive government subsidies. In these new petitions, Boeing accuses Bombardier of taking a page out of Airbus’ playbook. According to Boeing, Canadian producer Bombardier, Inc. (Bombardier) for many years produced only regional jets with fewer than 100 seats, but in the mid-2000s launched a “C Series” program to catapult itself into the ranks of large civil aircraft (LCA) manufacturers.

Bombardier’s C Series program targets the market for 100- to 150-seat LCA, which are capable of trans-continental flights that are beyond the range of regional jets. Boeing alleges that the Canadian, Québec, and UK governments provided hundreds of millions of dollars in launch aid to Bombardier for the C Series program, which began in 2008. According to Boeing, in the autumn of 2015, with the program on the brink of collapse due to cost overruns and poor sales, Bombardier obtained commitments by the Government of Québec to provide an additional USD 2.5 billion bailout in the form of equity infusions. Boeing also claims that with the help of the subsidies, Bombardier is aggressively selling its C Series aircraft in the U.S. market at “absurdly” low prices—allegedly USD 19.6 million for airplanes that cost USD 33.2 million to produce.

Scope

The merchandise covered by this petition is aircraft that have a standard 100- to 150-seat two-class seating capacity and a minimum 2,900 nautical mile range, as these terms are defined below.

“Standard 100- to 150-seat two-class seating capacity” refers to the capacity to seat 100 to 150 passengers on commercial airline routes, when the aircraft contain 8 passenger seats configured for a 36-inch pitch, and the remaining passenger seats are configured for a 32-inch pitch (regardless of actual seating configuration). For example, aircraft with a “standard 100- to 150-seat two-class seating capacity” can be configured with fewer than 100 seats (e.g., with an all business class configuration). “Pitch” refers to the distance between a point on one seat and the same point on the seat in front of it.

Having a “minimum 2,900 nautical mile range” means:

i. able to transport between 100 and 150 passengers and their luggage on routes equal to or longer than 2,900 nautical miles; or

ii. covered by a U.S. Federal Aviation Administration (“FAA”) type certificate or supplemental type certificate that also covers other aircraft with a minimum 2,900 nautical mile range.

The scope includes all aircraft covered by the description above, regardless of whether they enter the United States fully or partially assembled, and regardless of whether, at the time of entry into the United States, they are approved for use by the FAA.

The merchandise covered by this investigation is currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 8802.40.00.40. Although this HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of the investigation is dispositive.

Alleged Dumping Margin

Petitioners allege a dumping margin of 80.50 percent for Canadian producer Bombardier.

Alleged Subsidy Margin

Petitioners allege that the federal government of Canada, the provincial government of Québec, and the Government of the United Kingdom are providing billions of dollars of countervailable subsidies with respect to the manufacture, production, or export of Canadian C Series aircraft. Petitioners allege countervailable subsidies equal to at least 79.41% ad valorem.

Estimated Schedule of Investigations

• April 27, 2017 – Petition is filed
• May 17, 2017 – DOC initiates AD and CVD investigations
• May 18, 2017 – ITC staff conference (estimated)
• June 12, 2017 – Deadline for ITC preliminary injury determination

For further information, contact Douglas J. Heffner or Richard P. Ferrin, or any other member of the Customs and International Trade Team.