NERA Experts Contribute to the Boeing-Bombardier Dispute at the International Trade Commission

The Situation

In 2017, the US Department of Commerce imposed a significant import tariff on Bombardier’s sales of C-Series aircraft into the US market. This threatened thousands of jobs in Bombardier’s global supply chain. A high-profile dispute developed between the US, Canadian, and UK governments.

The Department of Commerce was concerned that Bombardier Belfast, Northern Ireland’s largest manufacturer, had been unfairly advantaged in producing C-Series aircraft by subsidies from the UK government. These subsidies allegedly harmed Boeing.

The UK government had provided the subsidiary of Bombardier in Northern Ireland with a repayable launch investment (RLI) in 2009, a government initiative to provide investment in the design and development of civil aerospace projects in the UK. The investment was structured through a risk-sharing lending arrangement.

The Department of Commerce contested that the arrangement was not market-related, gave Bombardier unfair commercial advantage, and could lead to anti-dumping concerns. It imposed the import tariff.

The UK and Canadian governments took the matter to the International Trade Commission (ITC).

NERA's Role

NERA was retained by Linklaters, acting on behalf of the UK government. NERA Associate Director Amanda Pletz, an expert in financial instruments, and Director Grant Saggers, an expert in competition and state aid issues, were asked to evaluate the commerciality of the terms of the risk-sharing arrangements based on examples available in the commercial market. They filed an expert opinion at the ITC. 

The NERA experts outlined that the RLI arrangement shared characteristics that were typically observed in risk-sharing lending arrangements referred to as royalty-based (or revenue-based) financing and were commonly used in the private sector. This helped show that a distortion to competition was unlikely.  

The Result

On 26 January 2018, the ITC unanimously ruled in favour of NERA’s clients, concluding there was no material distortion to competition. No anti-dumping or countervailing duty orders were issued. The tariff was removed.

The BBC reported, “Canadian aerospace firm Bombardier has won a landmark case in the US, overturning a decision to impose huge 292% tariffs on imports of its C-Series planes, partly built in the UK.” Further details are available here.