Saturday, 27 January 2018

Bombardier rescued for now … but who will take the credit?



Relief as, in a surprise ruling, the US International Trade Commission rejects the complaint against Bombardier. 

 


It was before Trump came to power by playing the America First card that Boeing accused Bombardier of price dumping into its home market. The Trump administration, however, threatened the Canadian company with punitive tarifs of 292%, turning this dispute from an economical one to a political one as the Donald sought to profile his America First policy. Canada, the UK and the EU worked together to prevent the tariffs, the EU stating "that there is no legal basis to impose definitive duties”. The true hero of the piece, however, may just be the American system of the separation of powers. 

Opinion

One could be forgiven for regarding the UK as a seven year old with a five minute attention span, crying for its toys only when it is threatened with their loss; first Gibraltar and then Northern Ireland.  

The government failed to mention Gibraltar in Article 50, making it easier for Spain to start salivating at the possibility of reclaiming the rock. This led certain swivel eyed loons from the British elite to threaten war. The difficulties of Northern Ireland and the border (which got a brief mention from Cameron in his speech on the 19th of May 2016) almost became a stalling point of the talks at the end of 2017. That Brexit could cause Ireland to become by default united through European Citizenship, that the border issue could lead to the resurgence of the Troubles, was not considered properly until it was too late. That membership of the single market was instrumental in the Good Friday agreements was news to those of us who thought it had been solely down to Tony Blair’s charisma and Mo Mowlam’s wig.

The UK Government, having made a pact with the DUP, and having been accused of ignoring the concerns of the other three countries included in the union, badly needs to show that it is not just here for the English.

The Bombardier case offered No. 10 a chance to demonstrate to the people of Belfast how much they would work for them to protect their interests (and considering the DUP and the Tory alliance are happy to overlook the will of the Northern Irish people to stay in the EU) this opportunity should have been taken up enthusiastically. Instead it was the EU that showed a surprising level of support for Bombardier in light of Brexit. Cecilia Malmström, The EU trade commisssioner told the FT that
the "UK are members until the very day they leave, so, of course, there is absolutely no discrimination or distinction here.”

However, the government stands accused of being lacksadaisical in its approach to representing Bombardier’s interests (and 4,500 jobs in Belfast). This is perhaps not surprising for a government that believes a border like the one between Northern Ireland and Ireland could be manned by drones. As it is, despite protesting the opposite, the government in one letter to the US Department of Commerce stated it is not the appropriate legal partner to defend Bombardier (So much for that Brexit Bravado), was tardy when answering questions put to them by the US Department of Commerce, and submitted a legal defence of only four pages, compared with the Canadian government’s 170 page doorstopper. (refer to Facts section for sources). 

This could be a sign of unusual honesty, brevity and efficiency. The UK government could argue quality over quantity here. However we have heard enough about their ability to write impact assessments to suspect that this is not the case.

Thank heavens then for the EU and the Canadian government?

The EU has already been an effective ally of the UK in the face of US tendencies to impose unfair tariffs, back in 2002 it successfully disputed US attempts to impose tariffs on steel. The chance for the EU to add its weight to the case of Bombardier allows it to profile itself as a faithful defender of the Irish economy and to combat the narrative of the EU looking to punish the UK for being a little bit Brexity. Of course, this rather depends on the EU being able to communicate its involvement more effectively than it has done in the past. Go back to 2012 and the case of Karen Murphy avoiding Sky's monopoly on the Premier league by streaming the games from Greece. Thanks to the European Court of Justice ... she won.

Should the EU manage to claim any credit for helping bring about this unforeseen result it would not be unlike the Brexiteers to spin this as the EU looking after its own (Bombardier has plants in France, Germany, in fact, in most of the EU states). However, it is the UK and Canada that Boeing has made its claims of unfair advantage against.

If anything, this case should show how complicated the world we will be living in post Brexit is; the different layers of legal bureaucracy and the international cooperation required to safeguard the livelihoods of 4,500 men and women working in Belfast has been a mini exercise in post Brexit existence. 

But who is the true hero of the Bombardier case? Canada with Justin Trudeau's charm offensive and its 170 page document full of legal arguments? The UK's May sweet talking President Trump and saving the judges time through the brevity of their legal arguments? The EU for promising to back the UK and Northern Ireland's interets?

Interestingly, it might actually be justice and the American system of the separation of powers. That the judiciary is still independent of the White House in what was clearly made to be a political case, the independence of the state machinary was again shows that Trump's America First agenda will meet with resistence where it infringes on the core values of American society.

Facts

  • Bombardier designs, manufactures and assembles the wings for the C Series aircraft. These are to be sold to Delta in the USA.
  • The threat of tariffs came after Boeing accused Bombardier in Canada of dumping its C series plane in the US.
  • Bombardier is Northern Ireland’s largest manufacturing employer. It employs 1,000 people directly, but has 4,100 staff based in and round Belfast. It provides business to around 50 suppliers.
  • The £134m in loans and grants the company has received were well worth the investment, as it puts £158m into the local economy in terms of wages it pays out. The potential loss of this company would have had a severe impact on the community and delivered a tangible shock to the Northern Ireland economy.
  • A complaint made by Boeing that Bombardier was selling its planes to the US firm Delta for less than they cost thanks to grants from the UK and Canadian governments was backed by the American government.
  • Before the tariffs could be imposed Bombardier a US trade investigation had to be conducted by the Department of Commerce and the US International Trade Commission. Back in September 2017 it was anticipated that Bombardier would not be able to avoid these tariffs.
  • Had he decision gone against Bombardier, they would have been able to appeal the decision in the US court of International trade or through NAFTA. The final arbiter in the worst case scenario would be the World Trade Organisation.
  • Bombardier has had several interested parties fighting on its side: the Canadian government, the EU and, of course, the UK.
  • The European Commission provided the US Secretary of Commerce with a “case brief” and stated that: “This investigation shows significant shortcomings, both regarding the findings as well as concerning the methodologies applied”. They also announced their intention to back the UK should the case go as far as the WTO.
  • “The commission also has strong doubts that the methodology applied for the establishment of the [300 per cent] duty level is compatible with World Trade Organisation rules.” (Ben Chu, Independent)
  • The UK has worked with Canada and has been supported by the EU to safeguard the jobs of those in Ireland. Diplomatic engagement at the highest levels reflect how critical Bombardier is for Northern Ireland’s economy.
  • The UK stated it has been proactive in defending Bombardier’s position; it provided 7, 000 pages of evidence to the US International Trade Administration and International Trade Commission.
  • However, it has been accused of lacking rigour; the government has apparently stated that it didn’t consider itself a “legally proper party” to the dispute (Jim Fitzpatrick , BBC News), it was also late responding to questions put to them by the US Department of Commerce officials
  • The key hearing was in December. The UK submitted four pages of legal argument to support the company. Canada submitted 170 pages.

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