A US trade commission on Friday handed an unexpected victory to Bombardier against Boeing, in a ruling that allows the Canadian company to sell its newest jets to US airlines without heavy duties, sending Bombardier's shares up 15 per cent.
The US International Trade Commission's unanimous decision is the latest twist in US-Canadian trade relations that have been complicated by disputes over tariffs on Canadian lumber and US milk and President Donald Trump's desire to renegotiate or even abandon the North American Free Trade Agreement (Nafta).
Mr Trump, who did not weigh in on the dispute personally, took his "America First" message to the world's elite on Friday, telling a summit that the United States would "no longer turn a blind eye" to what he described as unfair trade practices.
The ITC commissioners voted 4 to 0 that Bombardier's prices did not harm Boeing and discarded a US Commerce Department recommendation to slap a near 300 per cent duty on sales of the company's 110- to 130-seat CSeries jets for five years. It did not give a reason immediately.
US Commerce Secretary Wilbur Ross said in a statement that the commission's finding "shows how robust our system of checks and balances is."
Boeing's shares closed flat.
"It's reassuring to see that facts and evidence matter," said Chad Bown, a senior fellow at the Peterson Institute for International Economics in Washington. "This part of the trade policy process works unimpeded despite President Trump's protectionist rhetoric."
The decision will also help Bombardier sell the CSeries in the US by removing "a huge amount of uncertainty", at a time when its Brazilian rival Embraer is bringing its new E190-E2 jet to market, a source familiar with the Canadian plane and train maker's thinking said.
The ITC had been expected to side with Chicago-based Boeing. The company alleged it was forced to discount its 737 narrow-bodies to compete with Bombardier, which it said used government subsidies to dump the CSeries during the 2016 sale of 75 jets at "absurdly low" prices to Delta Air Lines.
Bombardier called the trade case self-serving after Boeing revealed on December 21 that it was discussing a "potential combination" with Embraer. Boeing denied the trade case was motivated by those talks.
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The dispute may not be over.
"This can still be appealed by Boeing," Andrew Leslie, parliamentary secretary to Canadian foreign minister Chrystia Freeland, told reporters in Montreal.
Boeing said it would not consider such options before seeing the ITC’s reasoning in February.
But Boeing said it was disappointed the commission did not recognise "the harm that Boeing has suffered from the billions of dollars in illegal government subsidies that the Department of Commerce found Bombardier received and used to dump aircraft in the US small single-aisle airplane market."
Bombardier, Delta and the US consumer advocacy group Travelers United all called the ITC decision a victory for consumers and airlines.
The decision may end up helping Mr Trump's goal of boosting US jobs as the CSeries jets for US airlines will be built in the US rather than Canada.
Through a venture with European plane maker Airbus, which has agreed to take a majority stake in the CSeries this year, Bombardier plans to assemble CSeries jets in Alabama to be sold to US carriers starting in 2019.
Airbus chief executive Tom Enders promised to push ahead "full throttle" with the Alabama plans. "Nothing is sweeter than a surprise, a surprise victory," he said.
The case had sparked trade tensions between the US and its allies Canada and the UK. Ottawa last year scrapped plans to buy 18 Super Hornet fighter jets from Boeing.
The well-paid jobs associated with the CSeries are important both to Ottawa and the British government. Bombardier employs about 4,000 workers in Northern Ireland.
The British prime minister's office said it welcomed the decision, "which is good news" for the British industry, while Canada's innovation minister said the ITC came to the "right decision" on Bombardier.
Former ITC chairman Dan Pearson praised the decision. "Not a single commissioner was willing to buy Boeing's arguments," he said. "I think 'America First' is a policy of the White House and the Commerce Department. But it's not the policy of an independent agency (like the ITC)."
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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COMPANY PROFILE
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The rules on fostering in the UAE
A foster couple or family must:
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
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HOSTS
T20 WORLD CUP
2024: US and West Indies; 2026: India and Sri Lanka; 2028: Australia and New Zealand; 2030: England, Ireland and Scotland
ODI WORLD CUP
2027: South Africa, Zimbabwe and Namibia; 2031: India and
Bangladesh
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2025: Pakistan; 2029: India
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
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Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
