Britain’s May fires warning to Boeing over Bombardier trade dispute

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Britain's May fires warning to Boeing over Bombardier trade dispute

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LONDON (Reuters) – Prime Minister Theresa May told U.S. planemaker Boeing (BA.N) on Thursday that its behavior in a trade dispute with Canada’s Bombardier (BBDb.TO) was undermining its commercial relationship with Britain.

May intervened in the trade row between Canada and the United States after a complaint by Boeing led to the U.S. Department of Commerce imposing a preliminary 220-percent duty on Bombardier’s CSeries jets.

The U.S. ruling puts as many as 4,200 jobs at risk at a plant in the British province of Northern Ireland, where the carbon wings for the jets are made.

“We have a long-term partnership with Boeing in various aspects of government and this is not the sort of behavior we expect from a long-term partner and it undermines that partnership,” May said in response to a question at a Bank of England event.

Boeing, the world’s biggest plane maker, has said it is committed to the United Kingdom and values its partnership.

May’s criticism of Boeing indicates the importance of the plant to the small Northern Irish political party on which her government has relied since she lost her parliamentary majority in June following a botched election campaign.

Britain would nevertheless find it difficult to unpick its relationship with one of its most important defense equipment suppliers.

May also needs U.S. President Donald Trump’s support as Britain prepares to sever ties with the European Union. She has pitched a new trade deal with the United States to cushion the impact of leaving the EU’s tariff-free single market.

But May could find it difficult to convince Trump, who has made ‘America First’ a theme of his administration, to get one of the titans of U.S. industry to back off from defending what it views as its trade rights.

May, who had raised the issue with Trump, said she would try to work with Canada’s government to stress the importance of Bombardier to Northern Ireland.

Britain’s Prime Minister Theresa May speaks at an event to mark the 20th anniversary of the Bank of England’s independence, in the City of London, September 28, 2017. REUTERS/Mary Turner

CONTRACTS

On Wednesday, Boeing said it had listened to Britain’s concerns but gave no indication that it might change tack in the dispute.

Boeing said that since 2011 it had tripled its spending in the United Kingdom to 2.1 billion pounds ($2.8 billion) in 2016, while the firm and its suppliers accounted for more than 18,700 UK jobs.

British defense minister Michael Fallon has also criticized Boeing. He ruled out cancelling existing orders with Boeing for nine P-8 spy planes and 50 Apache helicopters, but added the U.S. firm was seeking other UK contracts.

Boeing has risen since 2000 from a relatively minor defense supplier in Britain to become one of the country’s top five following the purchase of C-17 transporters and Apache attack helicopters, according to defense analyst Francis Tusa.

Possibilities for reprisals are relatively limited in the short term but further ahead, potentially valuable requirements include the replacement of the Boeing-built Chinook helicopter.

Britain could also consider moving lucrative maintenance and support work for the C-17 transport plane from the United States to Britain, he added.

“What is going to be fascinating is that the Bombardier case will open the eyes of senior service chiefs to the fact that Britain is less important to the United States,” Tusa said.

May’s comments came in a question and answer session after she had delivered a robust defense of capitalism and free markets in a speech designed to halt the rising popularity of a more radical interventionist economic model espoused by her political opponents, the Labour Party.

Labour said the trade dispute should be referred to the World Trade Organization, and criticized May for “threatening to victimize Boeing”.

Britain is already involved in the world’s largest trade dispute, involving mutual claims of illegal aircraft subsidies between Europe and the United States. The case has led to years of dispute over a type of UK government funding for Airbus that also went to Bombardier.

Writing by William James and Tim Hepher; Editing by Guy Faulconbridge and Catherine Evans

Our Standards:The Thomson Reuters Trust Principles.

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