Boeing v. Bombardier: Material Injury Analysis at the International Trade Commission

Abstract

On February 13, 2018, the U.S. International Trade Commission (ITC) determined unanimously that Boeing, the U.S. manufacturer of commercial aircraft, was not materially injured or threatened with material injury by reason of commercial aircraft imported from Canada by Bombardier. By finding that material injury did not exist, Bombardier was able to complete the sale of its C Series jets to Delta Airlines without the imposition of antidumping or countervailing duties. Boeing claimed that the Canadian government’s illegal subsidization of the C Series program allowed Bombardier to sell its products in the U.S. market at an artificially low price. During its material injury analysis, the ITC found however, that Bombardier’s C Series imports would not displace sales of Boeing’s competing product, that the “launch-pricing” Bombardier offered to Delta would not set the market price for future sales of such product, and that importation of the C Series would not adversely impact future sales and development of Boeing’s competitor product, the 737 Max 7. The decision had a significant impact not only on both parties, but on the commercial aircraft industry as a whole, and international trade policy. While the dispute caused Bombardier to partner with Airbus to ensure the viability of the C Series, Boeing responded by purchasing the Brazilian jet manufacturer Embraer, one of Bombardier’s competitors. The decision also helped to smooth U.S.-Canada trade relations, supported the theory that multinational supply chains reduce incentives for tariffs, and reinforced the independence of the ITC. Moreover, the decision affirmed the U.S. commitment to a rules-based global trade system in spite of recent political support for increased protectionism.