The stakes are high in global aerospace and the levels of government subsidy support enormous.
Trade wars in the skies: Bombardier being challenged in its critical US market
At least until the election of President Trump, most major governments pay lip service to free and fair trade. Alongside this, however, they attempt to protect aerospace as the “must have”, strategic and high technology sector. For decades, the European aviation sector has envied what they see as US Federal government subsidy of Boeing and other American firms through defence-related contracts. The Americans have accused Airbus of being heavily subsidized.
This is the market within which Belfast-based manufacturer Bombardier operates. It is therefore not surprising that complaints have been made about the extent to which the Canadian government has subsidized the costs of producing the CSeries airliners. Boeing has complained to the US International Trade Commission and Commerce Department that cheap finance from the Canadian Provincial and National Governments have enabled Bombardier to knock about $14m off the price of an airliner. Boeing would like the US to apply import duties to cancel any such price advantage.
Notwithstanding recent cut-backs, Bombardier continues to be a major employer in the greater Belfast area with about 4,500 jobs (Belfast make the wings for the CSeries). Unsurprisingly, the UK government has tried to respond to Boeing’s claims. Business Secretary Greg Clark went to the US to lobby and PM May has telephoned President Trump.
Unfortunately, given the very high stakes, trade dispute and even trade wars are quite common in aerospace. They may even get worse given that many governments around the world- Brazil, Japan, China- are trying to build up passenger jet manufacturing firms.