The Bombardier-Boeing dogfight is one of those strange cases where both sides are fibbing, and both sides are telling the truth.
Boeing claims, and the U.S. International Trade Commission and Commerce Department agree, that Bombardier received subsidies from Canada, Quebec and other governments, making possible the development and sale of its C Series jets. To which the correct reply is: No kidding, Sherlock.
Canadian governments have for decades nurtured Bombardier in a rich ecosystem of taxpayer assistance. Most recently, when the C Series project got into financial trouble, Quebec City invested $1-billion, acquiring a 49.5-per-cent ownership in the jet, and Ottawa gave the company $372.5-million in repayable loans. And that's just the last two years.
But anyone who sees Boeing as a paragon of free enterprise needs to make an appointment with an optometrist, immediately. The plane maker has long feasted on a host of United States government supports and military contracts – and it's the largest client/dependent of the government's U.S. Export-Import Bank. The bank is jokingly mocked inside the Washington Beltway as the "Bank of Boeing," because of how much of its operations are dedicated to providing the kind of financing that helps sell Boeing planes to foreign airlines.
Boeing can claim that it only needs government support because its European, Brazilian and Canadian competitors are receiving it; competitors like Bombardier can point the finger right back. Everyone is bending the rules, and everyone justifies it because everyone else is doing it. Mom, I only took a cookie because he did it first.
Did Bombardier sell C Series jets to Delta Air Lines at a price well below the official list price? Yes. Can Boeing sometimes offer jets at discounted prices, thanks to government assistance? As surely as the Earth rotates around the sun.
By imposing an absurdly high 220-per-cent tariff on Bombardier C Series jets, is the U.S. government using its power to defend Boeing's corporate interests? Absolutely. The penalty is nearly three times what Boeing asked for, and, if it is upheld, it will triple the price of C Series jets sold into the U.S. The likely consequence of that would be to make the plane too expensive for any U.S. airline currently considering it.
The U.S. government is effectively trying to ruin a potential competitor to one of its largest industrial employers.
But, of course, Washington is arguing that it's only delivering this kneecapping to compensate for the fact that Bombardier gets so much support from Ottawa, Quebec and even the United Kingdom.
And when Prime Minister Justin Trudeau said not long ago that the government of Canada would scupper its plan to buy $6-billion worth of Boeing Super Hornet fighter jets, unless Boeing dropped this trade complaint against Bombardier, he only highlighted the intimacy of the relationship between Ottawa and a private company, and the lengths to which the government of Canada will go to defend the latter.
"We won't do business with a company that's busy trying to sue us and put our aerospace workers out of business," said Mr. Trudeau.
The PM referring to Bombardier as "us" was a telling Freudian slip. The willingness of the Canadian government to use national defence as a pawn in a trade dispute was just one more reminder of the connection between taxpayers and Bombardier.
On Wednesday, Quebec Premier Philippe Couillard further underlined it, saying that the announcement of tariffs on Bombardier means that, "Quebec is being attacked. Quebec will resist."
Final irony: When Delta did its deal with Bombardier, there was no Boeing plane offered that could compete with the C Series. The claim that Boeing was harmed by that sale, or will be in future, is an awesome nose-stretcher, which Washington has of course entirely bought.
This is a trade fight fuelled by Washington politics, over an airplane that got airborne thanks to Canadian politics. Ottawa, Quebec City and Washington are all unable to act as anything approaching unbiased judges in this case. Washington is wearing referee's stripes while playing for one team; Quebec City and Ottawa are doing the same on the other side.
In an ideal world, the global aerospace industry wouldn't be a cesspool of subsidies. Do not expect to experience that world anytime soon.
On this planet, the best hope for an eventual resolution is the North American free-trade agreement's Chapter 19 independent dispute resolution panels. Without them, the 220-per-cent tariff imposed by Washington would stand. But as long as Chapter 19 is in operation, that's unlikely to be the final outcome.