Canada sought to resolve Boeing disputes at meeting

OTTAWA/MONTREAL: Canada last month attempted to end a deepening dispute with Boeing Co by suggesting it could withdraw a threat not to buy Super Hornet jets if the US firm dropped a trade challenge against Canadian planemaker Bombardier Inc, three people with knowledge of the matter said. The informal proposal would have created an unusual link between trade and arms deals, which are typically separated in international negotiations, trade analysts said, and showed the lengths Canada is willing to go to protect Bombardier jobs.

Ottawa froze talks on a planned purchase of 18 F-18 Super Hornet jets for more than $5 billion after Boeing in April launched a trade challenge accusing Bombardier of dumping its new CSeries airliners into the US market.

Senior Canada government officials and Boeing met last month to discuss the disputes, officials said.

One of the sources familiar with the discussions said Ottawa’s proposition to Boeing had been “if we resolve the challenge, that will allow us to resume our discussions on the F-18,” but said Boeing dismissed the idea of linking the two disputes. Boeing walked away with none of the issues resolved, Canada’s ambassador to the United States told reporters this week, without elaborating.

One industry source said Boeing sees the alleged CSeries dumping as a long-term threat to its civilian airliner business and has shown little interest in a compromise, even at the risk of losing the military contract.

“The Canadian government is trying to link the F-18 file with the Boeing-Bombardier dispute.

The position of Boeing and the US government is that they are not linked,” said a second source directly familiar with the matter.

The office of Canadian Foreign Minister Chrystia Freeland, who has overall responsibility for relations with the United States, said it could not confirm the sources’ account.

Time is running out for Canada to end the dispute. The US Department of Commerce is due to hand down its initial ruling on September 26 on whether to impose countervailing duties on the CSeries, a decision that could dampen airlines’ demand for the 110-130 seat jets in the key US market.

That decision could also boost Boeing’s leverage in any future talks with Canada, though the duty would only potentially apply after a final ruling by the US International Trade Commission (ITC) in 2018.

Bombardier spokesman Mike Nadolski said on Friday the company is focused on the 2018 ruling and noted Boeing did not take part in the Delta competition that the CSeries won. “It’s really hard to see how they are harmed,” he said in an e-mail.

— Reuters