Business News

CCTV Script 28/09/17

— This is the script of CNBC's news report for China's CCTV on September 28, Thursday.

The US Department of Commerce has announced that a 219.63% tariff be levied on Canada Bombardier C Series jets after US aircraft manufacturer, Boeing, complained that Bombardier was unfairly subsidized by Canada, resulting in the C-series being dumped in the US market at below-cost prices last year. After investigation, the US Department of Commerce concluded that there were indeed subsidies. Therefore, the US Department of Commerce will announce countervailing levies. In an interview with US Secretary of Commerce Wilbur Ross, he said that the US values its relationship with Canada, but even our closest allies must play by the rules.

[Wilbur Ross, U.S. Secretary of Commerce] "It says the Boeing Company brought an action which we're now processing. Their actions said that the Quebec and the Canadian government illegally subsidize the development of that aircraft. So what came up today was our preliminary determination that that was the case. Now there are a couple more procedural steps so there will be some months before a final determination is made. But this with or without NAFTA, this would be the kind of action would have been brought."

Ross also said that the subsidization of goods by foreign governments is something that the Trump administration takes very seriously. The final decision for the Bombardier countervailing duty will be announced in February next year. If the final decision is still to tax Bombardier, then the company would very likely face heavy losses. Canadian Foreign Minister, Freeland, said the move clearly labelled this levy as an act to eliminate the C-series from the US market, and called this an obvious US trade protectionist policy.

After this news, Bombardier shares opened at the Toronto Stock Exchange with a drop of 14%. It recovered a little but ultimately still fell by 7.5% during closing.

Therefore, this is not purely a spat between Boeing and Bombardier. Instead it has snowballed into an increasingly tense trade fight between US and Canada. Furthermore, trade retaliation against Boeing may not only come from Canada but also from the UK, reason being that Bombardier C-series aircraft is manufactured in UK. The production plan is located in Northern Ireland. The factory employs more than 4,000 workers and it is the largest manufacturing enterprise in Northern Ireland.

Therefore, if the Bombardier C series is levied, the factory in Northern Ireland could very likely collapse, leaving the 4,000 workers unemployed. Other than the workers, British trade unions warned that the 9400 supply chain jobs dependent on Bombardier would also be affected. So the British government has warned that such a move may result in Boeing losing its British procurement contract. Following this, we will see UK and Canada trade officials trying to reach an agreement with US trade representatives. The US International Trade Commission will also decide by early next year whether to support the decision made by US Department of Commerce.

Besides, Bombardier could also still appeal to the United States Court or submit the dispute to a settlement mechanism under the North American Free Trade Agreement (NAFTA). Similarly, the Canadian government can also submit the dispute to the World Trade Organization (WTO). We will continue to keep watch on what will happen next. CNBC's Qian Chen reporting from Singapore.