'America First' shock-and-awe hits Bombardier: What's next in tariff fight
Buttons for sale on Jan. 18, 2017, ahead of the presidential inauguration of Donald Trump in Washington. (Matt Rourke / AP)
Alexander Panetta, The Canadian Press
Published Wednesday, September 27, 2017 9:25AM EDT
Last Updated Wednesday, September 27, 2017 2:33PM EDT
WASHINGTON -- There's no question: The shock-and-awe approach to trade disputes is having an impact in the early days of the Trump administration, with the stunner of a 219-per-cent duty on Bombardier just the latest example of the new tariff-happy, America First climate in Washington.
Donald Trump's commerce secretary even bragged about it when announcing a first duty late Tuesday. In a statement, Wilbur Ross touted a 48 per cent increase from last year in anti-dumping and countervailing cases initiated by the U.S. Department of Commerce.
That's on the heels of a study that found a 26 per cent spike in U.S. trade actions against G20 partners in the first half of this year from the same period in 2016, according to the Center for Economic Policy Research's Global Trade Alert.
Just ask Canadian softwood-lumber producers. They've been tasting that punitive medicine for months.
The latest decision rewarded Boeing with duties practically three times higher than the U.S. aerospace giant asked for, as it argued that Bombardier's subsidies from Canadian taxpayers gave it an unfair entry into the U.S. market.
Ross appeared to agree: "The U.S. values its relationships with Canada, but even our closest allies must play by the rules."
It's only the beginning.
As a matter of fact, trade experts consulted late Monday agreed on two things: There's time to fight back, and friendlier battlefields to fight on. They urged the Canadian government to choose its battles wisely, and not needlessly escalate the dispute.
One trade-policy analyst at Washington's free-market Cato Institute criticized the U.S. department that handled the initial decision.
He said later arbiters won't likely be as hostile.
The raison d'etre of the Department of Commerce's enforcement unit is to protect U.S. companies, said Dan Ikenson -- it even offers counselling services to help U.S. companies prepare their complaint.
It sides with American petitioners more than 90 per cent of the time and will certainly clobber Bombardier again with a new anti-dumping duty as early as next week, he said.
"The Commerce Department is a pit bull," Ikenson said.
"They see it as a sign of success (when they impose a duty)... They're political."
It's different in other forums, he added.
The case later heads back to the U.S. International Trade Commission, which must determine whether Boeing has actually suffered and, if not, could cancel the duties. Historical stats show a perfectly even track record: 39 per cent affirmative decisions, 39 negative, with 22 per cent of cases withdrawn.
And he's urging the Canadians to try their luck in a third venue: the U.S. domestic court system's Court of International Trade. He said that court is actually friendlier to foreigners, siding with them in a majority of cases.
He said that's a smarter route than a fourth venue: NAFTA's Chapter 19 dispute process. He said U.S. policy-makers might find Chapter 19 easier to ignore, given that the current Trump administration hates it, wants to get rid of it in the new NAFTA, and might relish the opportunity to pick a fight challenging its authority.
"I'm convinced the courts will find mischief (from Boeing)," he said.
"I can't understand their claim of injury... They don't even make these damned planes (Bombardier makes)."
He compared Boeing's complaint to a snow-plow salesman suing a bicycle-maker. He also noted the irony of Boeing suing anyone over government assistance, since it's the No. 1 recipient of government support through the U.S. Export-Import Bank -- referred to jokingly in Washington as "the Bank of Boeing."
"Boeing is very much at the trough," he said.
Duties are still months away.
That's because the order of up to 125 Bombardier CS100s doesn't start heading to Delta before the spring. That makes the dispute different from softwood, where producers got whacked immediately on log exports.
That will buy both sides more time, said Canada-U.S. trade lawyer Mark Warner.
"Everybody's going to get worked up over this," said Warner, of MAAW Law in Toronto. "But calm down, everybody. There's a ways to go."
It would be a mistake for the Canadian government to make rash decisions in two specific areas, Warner said: the purchase of Boeing Super Hornet fighter jets, and the Chapter 19 discussion in NAFTA negotiations.
Canada, he said, should make those other decisions on their merits -- and not muck up already-sensitive processes like military purchases and NAFTA.
"Keep this out of NAFTA," he said. "Have a conversation about Chapter 19 that's cold-blooded."
The same advice came from a Washington aviation consultant who said he thinks Boeing messed up. Richard Aboulafia said the giant risks hurting itself in a number of global partnerships, over a tiny plane purchase.
But he thinks Canada would be compounding the mistake by dragging the issue into the NAFTA discussion: "Will it? Yeah, you know it might," he said. "Should it? Oh God, no. Look this is a very discrete case best decided by experts."