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Bugs





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PostPosted: Wed Sep 27, 2017 3:50 pm    Post subject: Trudeau "disappointed" to be caught subsidizing Bo Reply with quote

Quote:
Trudeau ‘disappointed’ in U.S. decision to slap 220 per cent duty on Canada’s Bombardier jets
U.S. aerospace giant Boeing contends that the Montreal-based plane maker is propped up by Canadian government subsidies that allow it to offer the jets at unfair low prices in the U.S. market.

By ALEX BALLINGALLOttawa Bureau
Wed., Sept. 27, 2017

OTTAWA—Prime Minister Justin Trudeau has joined the chorus of condemnation over a U.S. government decision to slap a 220 per cent duty on the sale of Bombardier jets, stating Wednesday that he’s “disappointed” by the move and vowing to fight for Canadian jobs.

In Quebec, where the Montreal-based company employs thousands of workers, Premier Philippe Couillard urged the federal government to take a strong stand against Boeing, the American aerospace giant whose complaint over Canadian subsidies to Bombardier sparked the U.S. decision to impose the punishing duty.

“Not a bolt, not a part, (and) of course not a plane from Boeing (should be) entering Canada until this conflict is resolved in a satisfactory way,” Couillard said in Quebec City.

“Quebec has been attacked,” Couillard added. “But let me tell you, the war is far from over and we shall win.”

The punishing duty was announced in a preliminary ruling from the U.S. Commerce Department on Tuesday evening. The move stems from a Boeing complaint about the sale of 125 Bombardier C-Series jets to the American airline, Delta. Boeing contends that the Montreal-based plane maker is propped up by Canadian government subsidies that allow it to offer the jets at unfair low prices in the U.S. market. [....]
https://www.thestar.com/news/canada/2017/09/27/trudeau-disappointed-in-us-decision-to-slap-220-per-cent-duty-on-canadas-bombardier-jets.html


But is M. Couillard contending that any part of the Boeing charges are untrue?

I don't understand these clowns. At time 1, Bozo wants free entry to American markets, which is dependent on unsubsidized trade. At time 2, Bozo wants an exemption for his subsidized products or he will retaliate.

And to think -- the air defense of the nation might be at stake.

The thing is ... the Quebec Pension monies are heavily invested in Bombardier, and they must not be allowed to lose money, no matter what it costs the English-speaking parts of the country. That's what happens when politicians have access to large streams of funds.

Bombardier's management should wake up to the fact that their days as the lap dog of government are coming to an end. They should start focusing on delivering their streetcars on time.
Bugs





Joined: 16 Dec 2009
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PostPosted: Wed Sep 27, 2017 4:05 pm    Post subject: Reply with quote

This is a better report.

Quote:
Bombardier Blitzed
By Peter Clark — National Newswatch — Sep 27 2017

Peter Clark
The NAFTA 2.0 negotiators are dealing with trade remedies this week. These disciplines on trade are more commonly known as safeguards, anti-dumping and countervailing duties. The first shoe has dropped in the Boeing–Bombardier trade remedies saga focusing real-time attention on the trade remedies warriors and reinforcing the importance to Canada of maintaining access to judicial review under NAFTA Chapter 19.

The U.S. Department of Commerce (DOC) has imposed a preliminary 219.63 percent countervailing duty on C‑series passenger jets which may be imported in the United States. Yes, this is absurd but not unusual – at least for imports from China. The duty would more than triple the price of a C‑Series jet. Boeing alleged 80 percent in its complaint and lobbied for higher uncooperative rate. They got an unbelievable windfall in their quest to eliminate Bombardier from the U.S. market.

DOC adjusted the average useful life of aircraft manufacturing facilities from the 20 years claimed by Boeing to 10. This meant that certain subsidies would double – because of allocation over a shorter period of time.

There is more grief coming. October 4 will bring a preliminary finding of dumping. Based on Boeing’s estimates, this will put the total duties over 300 percent.

The duties cannot be maintained in force unless the U.S. International Trade Commission (USITC) finds that the subsidizing and dumping has caused or threatens injury to Boeing’s production of like aircraft. That should be a stretch. Boeing has an 8 year order backlog and its competing aircraft will not be ready until 2019.
http://www.nationalnewswatch.c.....cwQ5GhSzIV


The last paragraph is the new information. Bombardier can escape the subsidy charge only because Boeing is already over-loaded. So it looks as if Bombardier has until 2019 -- less than two years -- to clean up its act.
cosmostein





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PostPosted: Thu Sep 28, 2017 9:52 am    Post subject: Reply with quote

Wasn't Europe taking issues with Boeings Government subsidies till recently?

http://trade.ec.europa.eu/docl.....146484.pdf
Bugs





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PostPosted: Thu Sep 28, 2017 10:13 am    Post subject: Reply with quote

The aircraft business has, as one major customer, governments, and as such, is also much given to kickbacks, payoffs, and 'industrial benefits' as well as subsidies. It's a dirty business, no doubt

But Bombardier specializes in commodities that are (mostly) bought by governments, or where governments have big inputs into the decisions. Like streetcars, and mass transportation vehicles. And it gets a lot of its money from the Quebec pensions, and government 'bailouts'.

Bombardier is, itself, partially a creation of these patriotic funding sources. It's all wound in with Dome Petroleum and the first Trudeau era. I don't like defending this stuff, and the idea that governments can pick winners and losers in the economy. Some might be able to, but based on the record -- ours can't.
cosmostein





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PostPosted: Thu Sep 28, 2017 5:01 pm    Post subject: Reply with quote

I hate defending Bombardier but while I enjoy a good outrage, this issue is not the droid we are looking for.

As for the issue at hand with the Tariffs;
I don't like governments picking winners and losers in the private sector, however the C-Series is a winner, one of the few items in Aerospace that seemingly exceeded expectations in weight, speed, and fuel savings.

Likely why Boeing is panicked even though they don't currently have an Aircraft that competes with the CS-100.

Bombardier sunk 6b dollars of their own money into this program before selling half of it to the Quebec government for 1b (a bargain considering the programs worth after the Delta order) and secured 500m from the Federal Government in loans.

Not all that dissimilar to Boeing when it undertook its 747 program which almost bankrupted them but made them the kings of wide-body commercial air travel for decades.

Boeing isn't going after Bombardier because they are "subsidized"

Boeing secured 64b dollars from the US Federal Government over the last few decades by way of loans and loan guarantees for goodness sake.

As you stated above Aerospace is a dirty business.

They are going after Bombardier because the CS100 is a great product that Bombardier was able to repackage into another great product in the CS300 (Another Aircraft that Boeing doesn't really have a great offering to compete against as its still a small single aisle plane)

BUT if Bombardier can take all of this and apply it to the CS500 (double aisle aircraft, which competes largely with the bread and butter aircraft like the 737) Boeing (and to an extent Airbus) have an issue;

Specs here:
https://seekingalpha.com/article/3966654-potential-cs500-highly-disruptive

Boeing is protecting its interests;
If Bombardier had a substandard offering on the Aerospace side and the Canadian Government was feeding them cash to go down the rabbit hole and enjoy the illusion of being a global player;

I would be right there with you;
But in the case of the C-Series, that simply isn't the case, they did something really well and its a product that has a massive market.
Bugs





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PostPosted: Thu Sep 28, 2017 7:53 pm    Post subject: Reply with quote

You raise a lot of good points, and you're knowledgeable. I accept your view.

It still raises these sticky issues, when you get so much government involved in this, at every level, going back to the time when they were solicited to take over de Havilland. There were probably incentives involved in that. Now the question is: why is the federal government contributing to a Province of Quebec investment?

But put that aside. It's like the streetcar delivery dates. The interlocking relationships become so complex and mix with social policy consideration -- like job creation -- that we're stuck with what we have.
cosmostein





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PostPosted: Fri Sep 29, 2017 10:09 am    Post subject: Reply with quote

I am somewhat mixed on Canadian companies like Bombardier;
The balance between keeping the jobs here and my desire to attract more jobs.

Amazon announced recently it was looking for a second North American head office, and we watched cities, states, and regions bend over backwards to try and attract that business to their boundaries.

https://beta.theglobeandmail.com/opinion/forget-it-canada-were-not-winning-the-amazon-lottery/article36261023/?ref=http://www.theglobeandmail.com&

I would imagine the city that attracts that head office will likely be giving up loans, guarantees, land, tax breaks, and pretty well everything else they can legally throw at Amazon.

Its really a double edged sword for me.

On one hand, I dislike government subsidies of the private sector
But on the other, I would have no issue if the City of Toronto razed 40 square blocks and gifted it to Amazon to secure that head office.


Last edited by cosmostein on Fri Sep 29, 2017 2:44 pm; edited 1 time in total
Bugs





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PostPosted: Fri Sep 29, 2017 12:02 pm    Post subject: Reply with quote

Exactly. There is so much 'regulation' and 'taxation' involved, and so many special facilities required for big enterprises, that some negotiation is probably inevitable, but the problem is that these companies can actually start bidding wars, as if governments are buying jobs with tax concessions and building road access, etc.

Back in the last part of the first Trudeau era, construction of housing virtually stopped under the weight of rent control and other municipal zoning laws. In fact, investment was stopping. The government created MURBS -- that allowed accelerated depreciation to create tax shelters. The acceleratd depreciation sheltered income enough to pay for a mortgage loan, and at the end of the period, the MURB owner would own a condo, but would be fully taxed on it when he sold. This, along with the condominium laws, allowed construction to restart. But then we overbuilt condos, and when the slump came along, a lot of those condos were bought by the city and used as public housing.

This stuff starts as an individual concession, and then the practice metastasizes. One set of subsidies makes up for another set of regulations, for example. It gets crazy.
cosmostein





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PostPosted: Fri Sep 29, 2017 4:30 pm    Post subject: Reply with quote

I understand the criticism;
However I don't have a good answer as I am not sure where I would put the line.

Business and Government is at its core a partnership;
Government is responsible for developing the infrastructure and the fiscal climate to attract business.

Business in turn hires people who pay taxes and consume goods and services in the area they have hired people which again generates taxes.

The issue is that when the partnership stops benefiting one party (usually the business) and they leave, I find it challenging to not lay those job losses on both parties.
Bugs





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PostPosted: Sat Sep 30, 2017 12:44 am    Post subject: Reply with quote

I just saw that the Netflix deal includes tax concessions! Supposedly in return for Canadian content. In a way, that means jobs. Vancouver and Toronto both now have large movie production facilities.

See previous comments on metastasizing ...
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Trudeau "disappointed" to be caught subsidizing Bo

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