Bombardier hit by 300% hike in duties after Boeing complaint

A Boeing 737 MAX on display at Paris air show and Bombardier’s CS300 aircraft at their AGM in Montreal. New US tariffs could effectively halt sales of Bombardier’s innovative new plane to US airlines by quadrupling the cost of the jets imported to the US. (Reuters)
Updated 07 October 2017
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Bombardier hit by 300% hike in duties after Boeing complaint

WASHINGTON: The US Commerce Department has notched up proposed trade duties on Bombardier CSeries jets to nearly 300 percent, affirming Boeing’s complaint that the Canadian company received illegal subsidies and dumped the planes at “absurdly low” prices.
The decision underscored the defensive trade policy of US President Donald Trump, and could effectively halt sales of Bombardier’s innovative new plane to US airlines by quadrupling the cost of the jets imported to the US.
The Commerce Department proposed a 79.82 percent antidumping duty on Friday, on top of a 219.63 percent duty for subsidies announced last week.
The new duty follows a preliminary finding that Bombardier sold 75 CSeries jets below cost to Delta Air Lines in 2016. The total was well above the 80 percent Boeing sought in its complaint.
The proposed duties would not take effect unless affirmed by the US International Trade Commission (ITC) early next year.
The duties are expected to heighten trade tensions between the US, Canada and Britain, where CSeries wings are made. The US, Canada and Mexico also are negotiating to modernize the North American Free Trade Agreement.
After the first duty was announced on Sept. 26, Canada and Britain threatened to avoid buying Boeing military equipment, saying duties on the CSeries would reduce US sales and put thousands of Bombardier jobs in their countries at risk.
“This is a disappointing statement but hardly surprising given last week’s preliminary ruling sided with Boeing,” a British government spokesman said on Saturday.
“We continue to make all efforts alongside the Canadian government to get Boeing to the table to resolve the case.”
Boeing, the world’s largest plane maker, hailed the decision and hinted at an alternative for Bombardier.
“These duties are the consequence of a conscious decision by Bombardier to violate trade law and dump their CSeries aircraft to secure a sale,” Chicago-based Boeing said in a statement.
“Bombardier always has the option of coming into full compliance with trade laws,” Boeing added.
Canada’s foreign ministry said Boeing was “manipulating the US trade remedy system” to keep the CSeries out of the country.
Canada is in “complete disagreement” with the decision and would keep raising concerns with the US and Boeing, Foreign Minister Chrystia Freeland said in a statement.
To win its case before the ITC, Boeing must prove it was harmed by Bombardier’s sales, despite not using one of its own jets to compete for the Delta order.
Bombardier said it was confident that the ITC would find Boeing was not harmed, calling the Commerce Department decision a case of “egregious overreach.”
Delta said the decision was preliminary and it was confident the ITC “will conclude that no US manufacturer is at risk” from Bombardier’s plane.
Boeing has said the dispute was about “maintaining a level playing field” and was not an attack on Canada or Britain.
US Commerce Secretary Wilbur Ross said the decision affirmed Trump’s “America First” policy.
“We will do everything in our power to stand up for American companies and their workers,” Ross said in a statement.
But the industry is not so simple. More than half of the purchased content of each CSeries aircraft comes from US suppliers, Bombardier has said.
The plane supports an estimated 22,700 jobs and Bombardier’s aerospace division spent $2.14 billion in the US last year, according to the company and documents seen by Reuters.
Boeing has said the CSeries would not exist without hundreds of millions of dollars in launch aid from the governments of Canada and Britain and a $2.5 billion equity infusion from the province of Quebec and its largest pension fund in 2015.


France’s Total has officially left Iran: oil minister

Updated 20 August 2018
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France’s Total has officially left Iran: oil minister

  • Total said it would be impossible to remain in Iran unless it received a specific waiver from Washington, which was not granted
  • Total would have been highly vulnerable to US penalties for remaining in Iran
TEHRAN: French energy giant Total has officially quit its multi-billion-dollar gas project in Iran, Oil Minister Bijan Namdar Zanganeh said on Monday, following the reimposition of US sanctions.
“Total has officially left the agreement for the development of phase 11 of South Pars (gas field). It has been more than two months that it announced that it would leave the contract,” he told parliament’s news agency ICANA.
Zanganeh also appeared before parliament to underline the dire state of Iran’s oil and gas facilities, which he said were “worn out” and in need of renovation that Iran could not afford.
The United States said in May that it was abandoning the 2015 nuclear deal and reimposing sanctions on Iran in two phases in August and November.
The second phase will target Iran’s oil industry.
The other parties to the nuclear deal — Britain, France, Germany, China and Russia — have vowed to stay in the accord but their companies risk huge penalties if they keep doing business in Iran.
Total had already said it would be impossible to remain in Iran unless it received a specific waiver from Washington, which was not granted.
Total signed up in July 2017 for the $4.8 billion project to develop the field off Iran’s southern coast, as the lead partner alongside the China National Petroleum Corporation (CNPC) and Iran’s Petropars.
It was due to make an initial $1 billion investment, but the company said in May that it had spent less than €40 million on the project to date, as uncertainty over US actions mounted.
Total would have been highly vulnerable to US penalties for remaining in Iran.
The company has $10 billion of capital employed in its US assets, and US banks are involved in 90 percent of its financing operations, Total said in May.
It remains unclear whether CNPC will take over Total’s stake in the project.
Iran remains wary of relying on Chinese firms after bad experiences in the past. A previous contract for CNPC to develop the field at South Pars was suspended in 2011 after it failed to make progress.
The urgent need for investment to upgrade Iran’s dilapidated energy infrastructure was a key motivator behind its decision to join the 2015 nuclear deal.
Zanganeh appeared in parliament on Monday to answer questions on safety concerns following a number of recent fires at refineries.
“A big part of the oil industry has been worn out and the necessary renovation has not taken place,” he told parliament, according to the official IRNA news agency.
He said there were 10 cases per day of tubes perforating in Iran’s southern facilities, and that some refineries were as much as 80 years old, “whereas the useful life of an industrial unit is 30 years.”
“We have no resources for renovating them,” he added.