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The Guardian - UK
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Graeme Wearden (until 2.15) and Nick Fletcher

UK government threatens retaliation against Boeing in Bombardier tariff row - as it happened

A Bombardier CSeries jet.
A Bombardier CSeries jet. Photograph: Paul Chiasson/AP

The day has been dominated by the ructions following the US decision to slap 219% tariffs on Bombardier, the result of a dispute with rival Boeing. Here’s our latest report:

The government has warned aircraft manufacturer Boeing it could lose UK defence contracts over its part in a US decision to slap punitive tariffs of 219% on rival Bombardier, in a dispute that threatens to sour trade relations between London and Washington.

Theresa May said she was “bitterly disappointed” by the move to impose a tariff on sales of Bombardier’s C-Series passenger jet, which threatens at least 1,000 manufacturing jobs in Northern Ireland.

Michael Fallon, the UK defence secretary, stepped up the government’s rhetoric, warning that Boeing’s assault on Bombardier “could jeopardise” its chances of securing government contracts.

The business secretary, Greg Clark, joined the chorus of disapproval, branding the ruling “unjustified” and vowing to work with Canada - where Bombardier is based - to get it overturned.

The backlash follows an interim decision by the US Department of Commerce, which agreed with Boeing’s case that Bombardier received unfair, anti-competitive state support from the Quebec regional government, including a £740m bailout. Bombardier, which has also received £113m in repayable funding from the UK government, called the decision “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programmes”.

The full story is here:

On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.

Here’s our full report on Wolfgang Schäuble’s departure from his role as German finance minister:

Here’s Foster’s tweet on her talks with Theresa May over Bombardier jobs:

Arlene Foster, the leader of Northern Ireland’s Democratic Unionists, has said UK prime minister Theresa May has given a commitment to work to secure jobs in Belfast following the Bombardier row.

The DUP of course have an important position in UK politics, given they are now propping up May’s government in Westminster.

Updated

European markets edge higher

Donald Trump’s proposed US tax reforms have given some support to markets, but investors remain to be fully convinced the US president will be able to pass these latest plans given his legislative difficulties so far in his term.

Joshua Mahony, market analyst at IG, said:

While the headlines are sure to focus on the tax cuts for rich individuals, the market focus will no doubt centre on the planned corporate tax cut which has the potential to sharply impact profitability throughout the market. With a hawkish Yellen and the prospect of a US economic boom, it comes as no surprise that the dollar has been a big outperformer of late.

While the prospect of lower taxes promise a bounty for stocks, it is worth noting that Trump has yet to deliver on any major policies given the constant rebuttals from the Republican dominated Congress. There is a good chance that these tax reforms are going to be as difficult to pass at the health reforms, with issues such as the controversial border adjustment tax likely to provide significant hurdles along the way.

There is also some notable caution thanks to the continuing concerns about the tensions between the US and North Korea. Even so, European markets managed to end the day in positive territory. The final scores showed:

  • The FTSE 100 finished 27.77 points or 0.38% higher at 7313.51
  • Germany’s Dax rose 0.41% to 12,657.41
  • France’s Cac closed up 0.25% at 5281.96
  • Italy’s FTSE MIB gained 0.85% to 22,622.19
  • Spain’s Ibex ended 1.76% ahead at 10,368.9
  • But in Greece, the Athens market dipped 0.5% to 736.64

On Wall Street, the Dow Jones Industrial Average is currently flat on the day.

Over to German politics again, and if the Greek government is celebrating the prospect of Wolfgang Schäuble leaving as finance minister, the joy may be short-lived. ING says:

Updated

UK defence secretary Sir Michael Fallon has ruled out cancelling existing orders with Boeing over the Bombardier dispute. But he pointedly added that there were other contracts which Boeing was expected to bid for in the future.

Earlier Fallon told reporters in Belfast that the UK’s current relationship with Boeing could be damaged by the row and even suggested the UK might decline to buy Boeing products in future.

Now he has told Reuters the UK would not cancel orders from Boeing for nine P-8 spy planes and 50 Apache helicopters but added: “We know they will be back at the door.”

Here’s the statement from Boeing, courtesy of the Press Association:

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 has doubled its direct employment in the UK since 2011 and tripled its spending with more than 250 companies in the UK supply chain over the same period, to 2.1 billion in 2016.

More than 18,700 jobs in the UK are at Boeing or in the company’s tier one supply chain. Earlier this month Boeing broke ground for its first factory in Europe, in Sheffield.

We are pleased to work with our partners, including the British Government, and provide such a vote of confidence in the UK.

Any claimed economic threat to Bombardier is due to the weakness of its product in the marketplace, which explains its desperate action that prompted the ITC case due to Bombardier’s decision to violate US trade rules.

Boeing welcomes competition and Bombardier can sell its aircraft anywhere in the world. But sales must be made according to globally-accepted trade rules.

We believe that global trade only works if everyone abides by the same rules of the road, and that’s a principle that ultimately creates the greatest value for Canada, the United Kingdom, the United States, and our respective aerospace industries.

Boeing’s petition to the International Trade Commission seeks to restore a level playing field in the US single-aisle airplane market. Boeing had to take action as subsidised competition has hurt us now and will continue to hurt us for years to come.

US crude stocks fall but gasoline rises

With US refineries restarting after the closures caused by Hurricane Harvey, crude stocks fell by 1.8m barrels last week, compared to expectations of a 3.4m increase.

But gasoline stocks rose by 1.1m barrels, rather than the 750,000 fall expected.

More on the dollar. Connor Campbell, financial analyst at Spreadex, said:

A better than expected durable goods order reading, and the prospect of Trump’s tax speech this evening, allowed the dollar to maintain its post-Yellen growth this Wednesday.

Ahead of Trump’s appearance in Indiana details have been leaked about his proposed tax plan, the headlines being a lowering of the corporate rate from 35% to 20%, and a reduction to the top income tax rate from 39.6% to 35%.

The Republicans want to push through these tax reforms in part to distract from their complete and utter failure at repealing Obamacare. They face myriad obstacles, however, not least a Democratic Party who’ll be keen to hammer home the point that the proposed changes favour the country’s wealthiest members, something that might not go down well with the President’s key base of support.

Regardless, the prospect of progress on one of Trump’s market-wooing election promises has helped the dollar keep hold of most of its daily growth. The greenback was further shored up by a decent durable goods order figure, which came in at 1.7% against the 1.0% forecast and the miserable -6.8% the month previous.

This all meant cable was pinned back at $1.34 after a 0.3% fall, with the euro suffering a 0.6% drop, taking the weary currency to a fresh, sub $1.175 one month nadir. Against the yen, which has been shaken in recent weeks by the North Korea situation, the dollar found even greater success, briefly hitting a 10 week peak of ¥113.

Ryanair is back in the headlines with its latest cancellations, and affected passengers are already having to rethink their plans. Henry McDonald writes:

There is more airplane-related trouble for Northern Ireland on top of the Boeing versus Bomdardier battle and it comes in the shape of Rynair.

The budget airline has announced on Wednesday afternoon that it is suspending its Belfast to Gatwick route from November to March. The Belfast-Gatwick route is Ryanair’s most popular airlink to Britain in Northern Ireland.

Among those affected by the four month cancellation of flights is former Blue Peter presenter Zoe Salmon who tweeted today that her flight had been cancelled. A West Belfast choral society from the parish of St Agnes’s will have to change their 60th anniversary bash in London in November.

And here is a list of the affected routes:

cancellations

Back with Bombardier, and Ulster Unionist peer Lord Empey, vice chairman of the All Party Parliamentary Group on Aerospace, has slammed Boeing for “bully boy tactics” and said the disputed subsidy was in fact a loan:

The launch aid that was provided to Bombardier which came via Treasury is repayable on the basis of royalties from sales so it is effectively a loan. Throughout my time as DETI and DEL Minister I am content that all transactions with Bombardier were consistent with EU State Aid rules.

In the United States both cities and states give very substantial tax incentives and breaks to Boeing and other manufacturers. The majority of the C Series aircraft, by value, is actually produced in the US like the engine and avionics to name but two.

What I see the core of this dispute being, given that Boeing did not even tender for the Delta Airlines contract, is an attempt by Boeing – and in Europe, Airbus – to suffocate Bombardier. It is bully boy tactics.

The manufacturing of the C Series sees a dramatic increase in efficiency and a reduction in fuel consumption that would mean when oil prices rise the plane becomes much more significant. It is not the current version of the plane that is the target – it is the long term project and what flows from it that has got Boeing in particular so aggravated.

In the markets, shares are edging higher but investors remain cautious thanks to the continuing tensions between North Korea and the US and ahead of Donald Trump’s latest tax proposals.

The dollar is moving higher following the hints from Federal Reserve chair Janet Yellen that US interest rates could rise again as early as December. In turn that has helped lift European markets as a weaker pound and euro gives a boost to exporters.

The FTSE 100 is currently up 0.44%, Germany’s Dax is 0.57% higher and France’s Cac has climbed 0.34%.

On Wall Street, the Dow Jones Industrial Average is 0.13% better. Earlier US durable goods orders climbed by 1.7% in August, better than the 1% analysts had been expecting.

Lukman Otunuga, research analyst at FXTM, said:

A sense of anticipation can be felt across the financial markets ahead of President Trump’s tax proposal in Indiana later today. Although some information has been leaked that corporate tax may be lowered to 20% from 35%, market players are still likely to closely scrutinise the speech for further details on tax reforms. If legislation is passed this year, this should boost sentiment towards the US economy and support the Dollar further.

Back with the reports that Wolfgang Schäuble is stepping down as German finance minister:

Over in Canada, the 219% tariff imposed by the US on Bombardier has been described as an attack on the country.

Quebec premier Philippe Couillard told reporters: “Quebec has been attacked. And Quebec will resist. And Quebec will unite. All together we will protect our workers. All together we will be proud of our engineering.”

He said Quebec had taken a $1bn stake in Bombardier’s C Series plane but had not received any government subsidies.

Boeing hits out at Bombardier's "weak product"

Back with the row over Bombardier, and Boeing said it understands the UK’s concerns but blames its rival’s “weak products.”

A spokesman told Reuters that the company was committed to the UK and it had heard and understood the concerns of the UK government over Bombardier’s workers in Northern Ireland. But it added that any claimed economic threat to Bombardier was due to the weakness of its product in the marketplace.

Earlier Boeing said in a statement:

Global trade works only if everyone plays by the rules that we’ve all endorsed to ensure fair competition, as adjudicated by independent national and international bodies. This dispute has nothing to do with limiting innovation or competition, which we welcome. Rather, it has everything to do with maintaining a level playing field and ensuring that aerospace companies abide by trade agreements.

The process that will continue to play out over the next several months at the International Trade Commission and Commerce is the longstanding, transparent course for examining and addressing situations where products are ‘dumped’ into the United States at below-cost prices for the purposes of gaining market share. We have full confidence that this will continue to be a fair and fact-based investigation, and we look forward to its conclusion early next year.

Updated

Schäuble to quit as German finance minister - reports

In the wake of the weekend’s general election in Germany, there are now reports that Wolfgang Schäuble will be stepping down as finance minister to become president of the country’s parliament.

Schäuble was first elected 45 years ago and is the longest-serving MP in the Bundestag. He has been finance minister since 2009, and was heavily involved in the bailout deals with Greece, albeit he had a fractious relationship with the struggling country. At one point he is believed to have said the heavily endebted Greece should leave the eurozone.

German Finance Minister Schaeuble

Updated

Lunchtime reading: UK tiptoes down Global Competitive league

A decade after the financial crisis, the global economy is still vulnerable to another crash.

So says the World Economic Forum today, in a new report into global competitiveness.

WEF warns that some banks are actually less sound than they were before the credit crunch struck in 2007, triggering the near-collapse of the financial system.

The Fund says:

After a long period of low growth following the global financial crisis, the world economy appears to have picked up speed. This is welcome news. Yet despite this gradual improvement, policymakers in many countries are concerned about the prospects for longterm economic development.

This is partly because the current expansion appears to be cyclical, bolstered by exceptionally low interest rates rather than by the fundamental drivers of structural growth. Productivity improvements appear to remain sluggish and are not expected to return to the levels experienced in past decades.

The report also showed that Britain has dropped to 8th, from 7th, in WEF’s list of competitiveness.

WEF says Britain’s ‘macroeconomic environment’ is a concern (that’s a reference to the UK’s growth, inflation and unemployment situation). It warns that this situation could deteriorate further after the UK has left the European Union.

The United Kingdom (UK) (8th) falls one spot. This drop does not yet reflect the outcome of the Brexit negotiations, which is likely to further undermine the country’s competitiveness.

Currently the country performs very well on technological readiness and the sophistication of its business sector (4th and 7th overall).

Its macroeconomic environment remains challenging (68th) and could become an important constraint in the future as the timeline for a reduction of the fiscal deficit is repeatedly pushed back.

What’s best and worst about the UK economy....
What’s best and worst about the UK economy.... Photograph: WEF
Britain’s economic strengths and weaknesses.
Britain’s economic strengths and weaknesses. Photograph: WEF

The full report is online here.

Updated

Corbyn: May must act to save thousands of jobs

Labour Leader Jeremy Corbyn,

Labour leader Jeremy Corbyn has just told his party conference in Brighton that the tariffs imposed on Bombardier C Series planes threaten “thousands of jobs”.

Corbyn says that Theresa May must use Britain’s special relationship with America to protect the company’s workers in Northern Ireland.

Thousands of jobs are now at stake, thousands of jobs at risk

A Prime minister betting our eocnomic future on a deregulated trade deal with the US might want to take a moment to explain how 220% tarifsf are going to boost our exports from this country.

A Ryanair plane prepares to land at Manchester Airport.

Are you one of the 400,00 people whose Ryanair flight has just been cancelled?

If so, Hannah Maundrell, Editor in Chief of money.co.uk, has some advice:

“It’s so disappointing for Ryanair passengers whose flights have been cancelled, even with more notice this time it’s still seriously frustrating. Ryanair are still in a mess here, but you shouldn’t be left out of pocket.

“If your flight has been cancelled, ask for a refund. You should get your money back within 7 days or given an alternative flight. This should also apply to connecting flights you miss as a result, as long as they were booked together.

“Aside from this, generally if your flight is delayed by over 3 hours you can claim compensation for the inconvenience. Cancellation amounts vary from €250 to €600 depending on your flight.

“If your other travel plans are impacted, look to your travel insurance for cover. This is when having a decent policy can really come in handy.”

Ryanair forced to cancel more flights

Wow! Breaking away from Bombardier.... budget airline Ryanair has just extended its flight cancellation programme, affecting an additional 400,000 passengers.

Ryanair is cancelling 34 routes until next year, in a fresh attempt to tackle its rostering crisis that has left it without enough pilots.

Those affected are being offered a refund or an alternative flight.

It’s a big u-turn; just last week, CEO Michael O’Leary said he hoped to avoid further cancellations.

UK defence secretary warns Boeing of possible retaliation

Defence Secretary Sir Michael Fallon during a visit to Harland and Wolff heavy industries in Belfast today.
Defence Secretary Sir Michael Fallon during a visit to Harland and Wolff heavy industries in Belfast today. Photograph: Niall Carson/PA

The UK government is rolling out the big guns against Boeing, with the defence secretary dropping an unsubtle hint that Britain could retaliate.

Sir Michael Fallon has told reporters in Belfast that the UK’s current relationship with Boeing could be damaged by the row. He even suggests that London might decline to buy Boeing products in future:

Fallon says:

“This is not the behaviour we expect from Boeing and it could indeed jeopardise our future relationship with them.

“Boeing has significant defence contracts with us and still expects to win further contracts. Boeing wants and we want a long term partnership but that has to be two-way.

Boeing is an important investor in the United Kingdom and an important employer in the United Kingdom but we would prefer this kind of issue to be settled on a negotiated basis.

“This is not the kind of behaviour that we expect from along-term partner and I’ve made that very clear to Boeing.

(Thanks to Reuters for the quotes).

Boeing’s military arm produces a wide range of equipment, including Apache attack helicopters, Chinook transport helicopters and surveillance planes.

As this infographic shows, Boeing also employs or supports more than 10,000 jobs in the UK; any tit-for-tat retaliation could affect them.

Boeing in the UK

Updated

Last night, Delta argued that Boeing’s case lacked merit, because it simply doesn’t make an aircraft that competes directly with Bombardier’s C Series:

Stéphane Lessard, the consul general of Canada in Denver, warned that imposing steep tariffs on Bombardier could backfire.

Here are some photos of Bombardier staff working on C Series aeroplane wings:

Workers inspecting a C Series aeroplane wing in the Bombardier factory in Belfast, Northern Ireland.
A man works on a C Series aeroplane wing in the Bombardier factory in Belfast, Northern Ireland September 26, 2017. REUTERS/Clodagh Kilcoyne

Updated

Back in Belfast, a member of the Northern Ireland Assembly has revealed he has family members employed at the Bombardier plant in East Belfast, and that he fears for their future job prospects.

Chris Lyttle of the cross community Alliance Party is an East Belfast representative in the deadlocked Stormont Assembly. Lyttle said:

“This was an astounding ruling but it is important to remember it is only preliminary. The US International Trade Commission must now find as Boeing did not compete for the Delta contract awarded to Bombardier C Series and does not serve this market, no injury has occurred.

“I have constituents, friends and family employed by Bombardier and I am acutely aware of the concern that exists amongst staff. Alliance has already engaged on this issue with the most senior levels of the UK, US and Canadian Governments and we will continue to do so, to work to achieve a fair outcome and protect the thousands of jobs in our aerospace manufacturing sector and economy.

“This ruling could have severe implication not only for jobs in NI but for international trade with the United States, particularly in the aerospace sector.

Business secretary: We'll work 'hand in glove' with Canada

Grek Clark

The UK government is turning up the pressure on Boeing.

Business secretary Greg Clark says that the US planemaker’s complaint against Bombardier is simply “unjustified”, and vowed to work with Canada to reverse last night’s preliminary ruling.

We will work completely hand in glove with the Canadian government to get this overturned.

Clark also believes that the final ruling in this dispute, due next year, should be in Bombardier’s favour.

The Trade Commission needs to look to see if there’s been any detriment to Boeing.. There hasn’t been, as this aircraft doesn’t compete with Boeing.

The Bombardier C series at the heart of the tariff row
The Bombardier C series at the heart of the tariff row Photograph: Bombardier

Labour MP Conor McGinn, who was born and brought up in Northern Ireland, says the Bombardier dispute shows that Britain is stronger within the European Union.

“Hard Brexit campaigners in Government keep promising that Britain will get a great new trade deal with the US after we leave the EU. That’s how they justify their ideological choice to leave the Single Market and Customs Union.

“But now we see the US Government taking a decision which is totally against our economic interests and could put thousands of jobs at risk across the UK, especially in Northern Ireland.

“We can’t rely on a good trade deal with the US being agreed after Brexit. To protect jobs and our economy, we need to stay in the Single Market and Customs Union to preserve trade with our largest market – the EU.”

Paul Adams, head of aerospace at management consultancy, Vendigital, reckons that the Bombardier-Boeing dispute will take some time to resolve:

“Boeing’s legal challenge may in part be influenced by Trump’s ‘America First’ policy. The US manufacturer could be seeking to test the new administration’s resolve when it comes to protecting US jobs against foreign competitors selling to US customers.

“As history shows, trade disputes in the aerospace sector can become protracted - the Boeing / Airbus dispute ultimately had to be resolved by the World Trade Organisation. It is likely that Bombardier will appeal the US court’s decision, before the final hearing in 2018.

Manufacturing Northern Ireland, a trade body, have blasted the US tariff decision -- and warned that Britain could be more exposed to such rulings after it leaves the EU:

In other news: UK retail sales have grown at their fastest pace in two years this.

That’s according to the latest CBI Distributive Trades Survey, which suggests consumers are still spending despite rising inflation and weak wages. It’s a volatile survey, though, so....

The DUP’s Sir Jeffrey Donaldson has repeated his warning that Boeing could be hit by retaliatory sanctions.

Donaldson, who is the party’s chief whip, tells Sky News:

Boeing do sell a lot of aircraft to the UK, and to Canada, and to other countries. The US government has to weigh that in the balance as well.

We think there is still a strong case to be made for Bombardier, and believe that common sense will prevail in the end.

Q: So you would support tit-for-tat sanctions?

Canada has made clear that they will impose import restrictions against Boeing, Donaldson replies. It’s too early to say what the UK should do, he adds.

He also disputes the suggestion that the row has anything to do with Brexit, pointing out that Britain is still in the EU today.

I can’t believe that the US president wants to take an entirely protectionist approach against its closely ally, Donaldson adds.

Q: What are the implications for Northern Ireland if this preliminary decision is upheld?

It would be a “devastating blow” to Bombardier if they were priced out of the US market, and we would struggle to keep the jobs in Belfast, Donaldson warned.

Updated

Chi Onwurah

Labour’s shadow industrial strategy minister, Chi Onwurah, has also heavily criticised Theresa May over the Bombardier tariff ruling.

Onwurah told Sky News:

It’s a damning indictment of the criminal negligence and complacency of Theresa May and her government, and a sign of their entire lack of international negotiating skills which bodes really badly for our post-Brexit negotiations.

Bombardier bonds tumble after tariff ruling

Worryingly, the value of Bombardier’s corporate bonds has fallen this morning.

That means traders believe the risk that the Canadian firm defaults on its debts has risen.

Bloomberg has the details:

Bombardier Inc.’s euro-denominated bonds maturing in 2021 have declined the most in more than two years after the U.S. imposed import duties of 220 percent on the company’s C-series plane, threatening to upend deliveries of more than $5 billion to Delta Air Lines Inc. next year.

The Canadian aircraft and train manufacturer’s senior unsecured notes are currently down by more than seven price points at 99.963, according to Bloomberg prices at 10am London time. The notes had already fallen 2.2 points on Tuesday -- the same day that competitors Siemens AG and Alstrom SA agreed to join their rail businesses.

That bond has been one of the top 10 most actively traded in the European secondary bond market, according to MarketAxess subsidiary, Trax.

Labour leader Jeremy Corbyn may comment on the Bombardier news when he addresses the Labour Party conference at noon today.

Liberal Dem Leader Vince Cable has accused America of ‘protectionist bullying’ over the Bombardier ruling.

He is urged Theresa May to stand alongside Canada’s government in refusing to accept the new tariffs lying down.

Cable says:

“Rather than simply expressing ‘bitter disappointment’, our government should be out there fighting for vital British manufacturing jobs in Belfast.

May must support Trudeau’s administration in standing up to protectionist bullying from Donald Trump and his crude ‘America First’ philosophy.

Do we really believe the US will save us from Brexit with a comprehensive trade deal, when this is how they deal with fair and free international competition?”

Bombardier workers stunned by huge tariff

Workers entering the Bombardier Aerospace plant in Belfast.
Workers entering the Bombardier Aerospace plant in Belfast. Photograph: Niall Carson/PA

Workers at the Bombardier aerospace factory in Northern Ireland have admitted they are shocked and stunned by America’s decision.

The news that a tariff of 220% will be imposed on Bombardier’s jet sales to Delta airlines has come a a big blow to the workforce, who make wings for the C Series planes.

Geordie Burnside, a shop steward, says the size of the tariff - effectively tripling the cost of the C Series jet - has taken everyone by surprise.

Burnside, who has worked at the factory for 26 years, told the Guardian that:

“I’ve been getting phone calls from early morning asking why the ruling had slapped down such an enormous tariff. They cannot believe the enormity of it or get their heads around it. There have been a lot of tough times at this factory over the last 26 years and we got through. I hope that the company will appeal and the battle isn’t over yet.

Burnside also warned that the decision has big ramifications for Northern Ireland’s economy:

“There are highly skilled jobs inside this plant which is the biggest manufacturer in Northern Ireland. Thousands of other people’s jobs outside of Bombardier depend on this company too. There are a lot of worried people out there not only in Northern Ireland but the Republic and Britain who supply into Bombardier. It’s a very worrying time.”

The US commerce department has upheld Boeing’s claim that Bombardier was able to offer its C-Series planes to US airline Delta for a vastly reduced price because of illegal states subsidies from Canada and the UK, violating global trade rules.

Under international rules, unfair subsidies from governments can take the form of grants, loans, equity injections, tax breaks and production contributions, if they give a company or an industry an unfair competitive advantage over foreign rivals.

In this case, Boeing claims that a US$1bn (£750m) bailout of Bombardier by the provincial Quebec government in Canada in 2015 unfairly enabled the firm to sell its C-Series aircraft in the US at below cost price.

The claim also relates to the Northern Ireland Executive and the UK government, which pledged to invest £135m in a new factory in Belfast where the wings for the C-Series planes are manufactured.

Bombardier dispute explained:

The Press Association have written a handy Q&A on the trade dispute between Bombardier and Boeing.

What is the row about?

It centres on US-based Boeing’s allegations that Canadian-headquartered Bombardier received state subsidies allowing it to sell its C-Series planes at below-market prices in America.

The DoC has carried out its own investigation and said it had made a preliminary determination that imports should be subject to a 219.63% import tariff, although it will continue to evaluate the figure.

If the tariff is imposed when deliveries of the aircraft begin it will increase the cost of selling into one of the world’s most important aviation markets.

Bombardier is contracted to supply up to 125 C-Series aircraft to Atlanta-based Delta Airlines in a deal underpinning many staff posts at its manufacturing plant in Belfast.
The UK Government has been actively lobbying in the US for a compromise between Boeing and Bombardier amid growing concern about the potential implications for Bombardier’s Northern Ireland operations.

What are the aerospace companies saying about it?

Boeing submitted a petition with the US International Trade Commission and the Department of Commerce in April which claimed large government subsidies helped Bombardier launch an aggressive campaign to “dump” its C-Series aircraft in the US.

It said there was a shared industry interest in a level playing field.
Bombardier has repeatedly rejected Boeing’s claims, accusing its rival of pure hypocrisy after it alleged anti-competition practices in the sale of aircraft.
The manufacturer described the DoC’s interim determination as “absurd” and “divorced from the reality about the financing of multi-billion-dollar aircraft programmes”.

What are the implications for Belfast?

Bombardier had been under financial pressure and invested large sums in its new jet programme, which is crucial to many jobs in the city.

Last year the firm announced 1,080 job losses at its Northern Ireland plants following delays to the C-Series.

It is one of the country’s largest employers, with around 4,500 on the books. According to the GMB union it supports nearly 10,000 further jobs through its suppliers.

What is the Government doing about it?

Political powersharing at Stormont has been in cold storage for months. However the DUP’s 10 anti-Brexit MPs are a crucial force propping up the Government in key votes after Theresa May lost her majority in this year’s General Election.

DUP leader Arlene Foster’s influence has seen the Prime Minister lobbying US President Donald Trump during a recent visit to New York.

Following the DoC’s announcement the UK Government said it would “continue to strongly defend UK interests” and labelled Boeing’s position as “unjustified”.

More from Labour’s shadows secretary of state for Northern Ireland:

Northern Ireland’s devolved government collapsed in January, and the region’s political parties haven’t yet agreed a new power-sharing setup.

The CBI, which represents Britain’s business leaders, has warned that this deadlock is hurting the economy.

Angela McGowan, CBI Northern Ireland Director, says:

“Bombardier makes a huge contribution to the Northern Irish economy. They are a major regional employer and support a wider supply chain that stretches across Northern Ireland.

“The decision by the US Department of Commerce represents a challenge to the Northern Ireland economy and places an important driver of regional economic growth at risk.

“This just reinforces the need for the swift return of an inclusive devolved government. Government and business must work in partnership to deliver a new far-reaching industrial strategy to improve regional resilience, economic competitiveness and facilitate growth.

“With jobs and future prosperity in the region being put at risk by decisions made far away from Belfast, we need a devolved government that can speak up for and champion the needs of the local workers and businesses most affected.”

The BBC’s Simon Jack has done a good blogpost explaining the issues around the Boeing-Bombardier case.

In it, he points out that Boeing has received plenty of money from the US government over the years. Can it really complain about other companies getting subsidies with a straight face?!

The deal with Delta to supply up to 125 planes was the largest order yet for its big hope, the C-Series, but an order only made possible, say Boeing, by absurdly low pricing made possible by Canadian and UK government subsidies.

While it is true that Bombardier has received billions from the government of Quebec and the state’s pension fund, Boeing has received more, a lot more, from the US military, Nasa and the State of Washington over many decades.

Boeing would argue these were commercial arrangements, others would call them padded contracts amounting to subsidies.

Jack adds that Theresa May is in a bind. She needs Northern Ireland’s DUP to back her in parliament, but she can’t really afford to upset a major employer like Boeing either....

Boeing issued a polite but firm reminder to Theresa May that it employs 16,500 people in its UK supply chain and last week broke ground on a new facility in Sheffield.

The Prime Minister may find it difficult to keep her new best friends in the DUP sweet while not offending such an important employer in the rest of the UK.

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Owen Smith: May was 'complacent' and 'criminally negligent'

Labour MP Owen Smith, shadow secretary of state for Northern Ireland, has heavily criticised Theresa May’s government.

He says they were ‘criminally negligent’ for not persuading the US to reject Boeing’s claim.

Smith also points out that the decision suggests cracking a new trade deal with America after Brexit will be tough:

Conservative MP Anna Soubry, a vocal opponent of Brexit, has also tweeted about the ruling:

Updated

Unions are blaming Theresa May for not persuading Donald Trump to reject Boeing’s claim.

Ross Murdoch, of the GMB union,says the PM was:

“asleep at the wheel when she could and should have been fighting to protect these workers. It’s high time she woke up”.

Arlene Foster.

Arlene Foster, the leader of Northern Ireland’s Democratic Unionists, also said the Department of Commerce’s decision was “very disappointing”.

Foster says:

“The CSeries is a hugely innovative aircraft that is vital to Bombardier’s operations in Belfast. It is this innovation that sets the C-Series apart and it is not in direct competition with Boeing.

Read the US tariff ruling here

The Department of Commerce released its ruling against Bombardier last night - you can see it online here:

U.S. Department of Commerce Issues Affirmative Preliminary Countervailing Duty Determination on Imports of 100- to 150-Seat Large Civil Aircraft From Canada

It argues that Bombardier has received subsidies from the Canadian government on the C-Series planes that it has sold to the Delta airline, worth 219%.

So, it is ordering US Customs and Border Protection to collect cash deposits on every plane shipped into America - effectively tripling the cost.

U.S. Secretary of Commerce Wilbur Ross says the Trump administration won’t tolerate illegal subsidies:

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules.

The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”

Updated

Labour: Government must protect Bombardier jobs

Angela Raynor MP

Shadow education secretary Angela Rayner called on the government to protect the thousands of Bombardier workers in Belfast.

She stressed that the UK had followed the rules and added that the government “needs to be robust in their defence of that”.

She told BBC Radio 4’s Today programme:

“The Bombardier situation is quite a crucial one because these are UK jobs that we depend on, thousands, and actually the government were involved in that contract process and were robust and I think that we have to defend the fact that that contract was awarded and we followed the rules.

“At times Jeremy [Corbyn] talks about sometimes the global rules don’t benefit UK jobs, but actually we followed the rules, we got that contract fair and square and the government must ensure that we protect those jobs to ensure that we can keep our businesses running.”

DUP MP: America really shouldn't act like this

Q: There are reports that Canada may retaliate by imposing a block on Boeing imports into Canada. Should Britain hit Boeing with reprisals too?

Sir Jeffrey Donaldson MP says it is too early to consider this, as we’ve only had the preliminary decision from the US Department of Commerce.

But he drops a hint that the UK could hit back, saying Theresa May is “putting down a marker” by criticising the decision so strongly today.

If Boeing want to do business in the UK, they need to stop acting in such an unreasonable and irrational way against an aircraft that is innovative and isn’t in direct competition with Boeing.

If America is about free trade and free enterprise, it really shouldn’t be doing this.

Reminder: Donaldson’s position is significant, as the DUP are now propping up Theresa May’s government in Westminster.

Q: Are you pessimistic or optimistic about Bombardier’s chances in this dispute, Sir Jeffrey?

I believe David can defeat Goliath, Donaldson shoots back.

Updated

Q: What did Trump say to Theresa May about this dispute?

At that stage, they were waiting for the interim decision, replies Sir Jeffrey Donaldson. He’s sure they’ll speak again now the decision is out.

Donaldson adds:

He [Trump] has adopted in the past a protectionist approach to US business.

But we believe strongly in this case that it isn’t about protectionism because Bombardier and Boeing were not competing for the Delta aircraft [contract].

We think the C-Series is not in direct competition with Boeing.

Updated

DUP MP: Devastating consequences for Belfast if factory closes

Sir Jeffrey Donaldson, a Democratic Unionist Party MP, is also on the Today Programme.

He says Bombardier’s factory is critical to Belfast, supporting 4,000 jobs and around 80 firms in the supply chain.

There would be devastating consequences for the economy if the factory were closed, and we’re going to do everything we can to make sure that doesn’t happen.

Donaldson adds that Bombardier have a strong case, and accuses Boeing of acting unreasonably by bringing its case against its Canadian rival.

The C-series is an innovative aircraft, it’s hugely competitive, and that’s why Boeing in the most unreasonable and irrational way have tried to block Bombardier from the market.

Haley Dunne, director of public affairs at Bombardier Belfast, says the 219% tariff is “absurd”.

Speaking on Radio 4 she says that:

It’s a preliminary decision, and we’ll continue though the process....

The magnitude of the fines that are being imposed are absolutely absurd.

Q: Can you give any guarantees to your workers that jobs are safe?

Dunne says that Boeing’s claim is “meritless”, and Bombardier are confident that the facts will support them in the end.

However, there is “no doubt” that the C series jet is crucial to our future, she adds.

Updated

This 219% tariff slapped on Bombardier could “kill demand for the C-Series in the US”, says the BBC’s Simon Jack on the Today Programme.

He points out that last night’s ruling is only ‘preliminary’. A further ruling in February will examine how much damage has actually been suffered by Boeing (who didn’t actually pitch for this contract to supply jets to Delta).

Some critics have claimed that Boeing is just trying to “strangle a competitor” by bringing its complaint, Jack adds.

May 'bitterly disappointed' by tariff move

The UK government has hit back against the US Department of Commerce’s decision to imposing a 219% tariff on sales of Bombardier’s C-Series jet to Delta.

Theresa May says she is “bitterly disappointed” by the move, and pledged to keep working with Bombardier to protect jobs in Northern Ireland.

Unions had urged May to step in to protect Bombardier workers in Northern Ireland.

She raised concerns about the future of the factory in a recent phone call with President Donald Trump, and also discussed the issue with Canadian PM Justin Trudeau when she visited Canada this month.

Updated

Introduction: Bombardier jobs at risk after US imposes tariffs

Workers at the Bombardier Aerospace plant in Belfast.
Workers at the Bombardier Aerospace plant in Belfast. Photograph: Niall Carson/PA

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Thousands of aircraft workers in Northern Ireland have woken up to an uncertain future after the US sided with Boeing in its war against Canada’s Bombardier.

Donald Trump’s administration have slapped Bombardier with preliminary tariffs of up to 219% on sales of its C-Series jet to the US airline Delta.

This follows allegations from Boeing that Bombardier had unfairly used subsidies from the UK and Canada to sell its regional C-series jets at below cost into the US.

The decision could be a huge blow to Northern Ireland’s economy, as Bombardier is the region’s biggest hi-tech employer, with more than 4,000 workers.

Our Ireland correspondent, Henry McDonald, explains how the decision will hurt Bombardier, and how Canada has already hit back:

If imposed, the duties would more than triple the cost of a C-Series aircraft sold in the US to about $61m per plane, based on Boeing’s assertion that Delta received the planes for $19m each.

Bombardier called the decision “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs”.

Canada’s foreign affairs minister Chrystia Freeland reacted angrily to the decision saying it was “clearly aimed at eliminating” Bombardier’s narrow body jets from the US market.

We’ll be tracking full reaction to the decision through the day.

Also coming up today.....

  • 11am BST: The CBI releases its survey of UK retail sales in September. Volumes are expected to rebound, after shrinking in August.
  • 1.30pm BST: US durable goods figures for August. Economists expect a small rise, after a surprise 6.8% tumble in July.
  • 2pm BST: The IMF publishes the Analytical Chapters of the October 2017 World Economic Outlook. They will examine issues including wage dynamics, how low-income countries cope with weather events, and the impact of fiscal policy across countries.

European stock markets are expected to open a little higher.

Updated

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