Defence Secretary Michael Fallon hints Government may ban new contracts with Boeing over Trump administration's Bombardier decision

Minister suggests Britain could initiate trade war with US over military contracts

Andrew Griffin,Lizzy Buchan,Alexandra Wilts
Wednesday 27 September 2017 13:15
Defence Secretary hints government may ban new contracts with Boeing over Bombardier decision

Britain has been left on the brink of a trade war with the United States after the Government warned aircraft manufacturer Boeing it could be stripped of lucrative defence contracts over its dispute with rival Bombardier.

Defence Secretary Michael Fallon said Boeing’s decision to pursue a complaint leading to punitive import tariffs on the sale of jets by Belfast-based Bombardier would “jeopardise” relations with the US company that only last year secured a £1.7bn British contract to build Apache helicopters.

Theresa May said she was “bitterly disappointed” by the decision – over which she is understood to have lobbied President Donald Trump – as it could threaten thousands of jobs in Northern Ireland and heap pressure on her fragile agreement with the Democratic Unionist Party (DUP).

The concern centres on an interim decision by the US Department of Commerce to slap a 220 per cent tariff on the sale of Bombardier’s C-Series jets, after Boeing complained that its rival had received unfair state subsidies on sales of planes in the UK and Canada.

The verdict is likely to come as a blow to Ms May’s plans for a post-Brexit trade deal with the US, with one expert warning it could “give us a taste of what ‘America First’ really means”.

Sir Michael said: “Boeing is a major defence partner and one of the big winners of the latest defence review so this is not the kind of behaviour we expect from a long-term partner.

“This is not the behaviour we expect of Boeing and could indeed jeopardise our future relationship with Boeing.”

He added: “Boeing stand to gain a lot of British defence spending.

“We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicopters and they will also be bidding for other defence work and this kind of behaviour clearly could jeopardise our future relationship with Boeing.”

If the tariff is ratified in a final ruling, due in in February, it could have a devastating impact on more than 4,000 jobs at Canadian-owned Bombardier, which is one of Northern Ireland’s biggest employers.

The US Commerce Department told The Independent that if Boeing withdraws its complaint, the tariff would no longer be imposed.

Lesley Bachelor, Director General of the Institute of Export, told The Independent how there has been a 48 per cent increase in 2017 of the number ‘anti-dumping’ cases being taken up by the US government.

She said: “It does begin to show that it is going to be very difficult to secure a trade deal with these guys.

“It gives us a taste of what ‘America First’ really means.”

Announcing the regulator’s preliminary finding on Tuesday, US Secretary of Commerce Wilbur Ross said the subsidisation of goods by foreign governments was something that President Trump’s administration “takes very seriously”.

Bombardier’s director of communications in Belfast, Haley Dunne, said the company was “disappointed, but not surprised” by the ruling.

She said the process tended to favour the petitioner in its early stages and expressed confidence the decision would be reversed when a final ruling was made by the US International Trade Commission.

“We weren’t entirely shocked by a result that was more in Boeing’s favour, the tariffs we do believe are absurd that are being suggested,” she said.

Boeing said it valued its relationship with the UK, where it employs more than 18,000 people either directly or through its supply chain.

The firm said in a statement: “We have heard and understand the concerns from the Prime Minister and the Government about Bombardier workers in Northern Ireland.

“Boeing is committed to the UK and values the partnership, which stretches back almost 80 years.”

The company said was attempting to “level the playing field”, adding: “Boeing welcomes competition and Bombardier can sell its aircraft anywhere in the world. But sales must be made according to globally accepted trade rules.”

The Premier of Quebec, Philippe Couillard, called the US tariffs imposed on Bombardier an “attack” on the province and Canada.

“Boeing may have won a battle but, let me tell you, the war is far from over. And we will win,” Mr Couillard said.

The White House and the US Department of Defence did not respond to The Independent’s request for comment.

Mr Trump has not yet publicly commented on the dispute, but since winning the election last year, Mr Trump has berated Boeing on multiple occasions, including when he complained on Twitter about the price of the company’s 747 airliner. While speaking at a Boeing factory in South Carolina, the President also threatened a “substantial penalty” for companies that move jobs overseas.

However, in April, Mr Trump announced his support for the Export-Import Bank, which supports US exporters and foreign buyers of US goods, having previously opposed the agency. Boeing is an Ex-Im beneficiary and has spent millions of dollars lobbying over the past few years to get it re-authorised.

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