Bombardier ruling exposes stupidity of anti-EU claims of left and right

September 27, 2017 at 10:37 am (Brexit, Canada, capitalism, economics, Europe, internationalism, Jim D, nationalism, populism, United States, workers)

People work on a C Series aeroplane wing in the Bombardier factory in Belfast, Northern Ireland September 26, 2017
Above: Bombardier workers at the Belfast plant

America’s Department of Commerce has made a preliminary finding that the Canadian company Bombardier had received unfair state subsidies and sold below cost.

It has now imposed a 219.63% countervailing duty on Bombardier’s new commercial jets, putting thousands of jobs at risk. Bombardier, the largest employer in Northern Ireland with a workforce of 4,100, describes the contract as “critical” to its operations.

The US International Trade Commission will now consider the case ahead of a final ruling in February.

The dispute centres on the sale of 125 C-Series airliners, the wings for which are made in Northern Ireland.

Boeing alleges that the subsidies Bombardier receives from the UK and Canadian governments mean it is launching its new C series jets below cost in the US, and so the US trade authorities should impose tariffs.

Boeing had accused its much smaller rival of “price dumping” to win a lucrative contract from the American carrier Delta. The US aerospace giant claimed each jet cost $33m (£25m) to produce, but that Bombardier had sold them for $20m (£15m) each.

Bombardier also disputes claims that support it had received from governments – £75m from the UK and $1bn (£745m) from Quebec was illegal.

Bombardier says Boeing’s position is hypocritical and absurd – hypocritical because Boeing prices its new planes very cheaply at launch, and because Boeing has received huge subsidies from the US government over the years; and absurd because Boeing is claiming to be damaged by Bombardier’s sales even though Boeing does not sell any competing planes of a similar size and has not done so for a decade.

Canadian Prime Minister Justin Trudeau has now said the Canadian air force will not buy Boeing’s Super Hornet jets from “a company that’s busy trying to sue us and put our aerospace workers out of business.” Theresa May, in turn, has said she will raise the issue with the famously protectionist Donald Trump when she grovels to him later this week at the UN.

This case provides a classic demonstration of the stupidity of those (on both left and right), who try to make out that the EU is the major obstacle that a British government faces (or would face) if it tried to give state aid to particular industries. Both supporters of Theresa May’s “industrial strategy” and of Jeremy Corbyn’s interventionist industrial policy have suggested that, when the UK leaves the EU, it will have greater freedom to apply state aid. But in a capitalist world, state aid may still come into conflict with new trade deals if one side or the other decides that such government intervention provides a legitimate reason to impose tariffs.

Some sectors of the economy (of which aerospace is just one) have very significant government involvement almost by their nature. In such cases it may be very difficult to treat trade disputes as “purely commercial” matters. As things stand, it will be the US trade authorities that decide on the Boeing-Bombardier dispute.

In any future US-UK trade deal, would we want US and UK courts deciding these matters, or would some joint arbitration body be a better way to adjudicate? This issue places May and the Tory anti-EU fanatics in a very difficult position, given their hostility to the ECJ and (presumably) any other supranational court with national jurisdiction.

Maybe post-Brexit the little-Britainers of left and right will stop complaining about “Brussels” interfering with national governments and start complaining about “Washington”, “Geneva” … and, indeed “the rest of the world”?

  • JD acknowledges the use of information from a piece by Andrew Lilico at City A.M. in the preparation of this post.

6 Comments

  1. Robert R. Calder said,

    and there for those silly brats in the belly of ‘the mother of parliaments’ is the mother ands father of a demonstration of how far Bwrecksiteers (and the indierefriffraff) are assuming or presuming that they are arguing with their Mummy, and recent comments from an EU negotiator show his scorn at having been dressed up as the old lady.
    And if he was such an old lady (s)he’d still have responsibilities to people in other countries of the EU

  2. ron said,

    A bit over the top argumentation considering “Brussels” interfering with Greece and the French elections.

    • Jim Denham said,

      “Greece” I get, but “and the French elections”???

  3. SteveH said,

    You need to investigate the crucial difference between state aid and nationalisation!

    • Glasgow Working Class said,

      Some on the left do not care about the jobs that they declare are Unionist jobs. Unionists are not working class according to the left.

  4. Jack Allen said,

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