Canada's Defense Minister Threatens Boeing Deal in Speech

Toronto: Canada's defense minister repeated a threat to cancel the purchase of 18 fighter jets from Boeing Co because of the company's trade complaint against Canadian plane maker Bombardier.

Defense Minister Harjit Sajjan said Boeing's action against Bombardier is "unfounded" and not the behavior of a "trusted partner." He said on Wednesday buying the Super Hornet fighter jets "requires a trusted industry partner".

Sajjan urged Boeing to withdraw the complaint in a speech. Canada's foreign minister has also threatened to block the order.

"Our government - and I stress this - our government is disappointed in the action of one of our leading industry partners," he said.

Chicago-based Boeing's trade complaint prompted a US Commerce Department anti-dumping investigation that could result in duties being imposed on Bombardier's new larger CSeries passenger aircraft. Boeing insists the plane receives Canadian government subsidies that give it an advantage internationally.

Canada's threat is coming amid increasing trade disputes with the US Scott Day, a spokesman for Boeing, defended the company's trade action, suggesting it should not be linked to its military relationship with Canada.

"It's more of a commercial issue with regard to the Bombardier case," he said. "We're going to continue working with the US Navy, providing information on the Super Hornet that will be provided to the government of Canada."

Boeing petitioned the US Commerce Department and the US International Trade Commission to investigate subsidies of Montreal-based Bombardier's CSeries aircraft. Boeing says Bombardier has received more than USD 3 billion in government subsidies that let it engage in "predatory pricing."

Brazil has also launched a formal complaint to the World Trade Organization over Canadian subsidies to Bombardier. Sao Paolo-based Embraer is a fierce rival of Bombardier's.

The Quebec government invested US$1 billion in exchange for a 49.5 percent stake in the CSeries last year. Canada's federal government also recently provided a USD 275 million loan to Bombardier, which struggled to win orders for its new medium-size plane. But Bombardier won a 75-plane order for the CSeries from US-based Delta Air Lines in 2016. Bombardier said its planes never competed with Boeing in the sale to Delta.