This story originally published here.
OTTAWA — The federal government’s suggestion it may trash plans to buy “interim” fighter jets from aerospace giant Boeing Co. may open up a window for F-35 producer Lockheed Martin Corp. to swoop into.
Boeing convinced the U.S. Commerce Department and International Trade Commission this week to launch an investigation into much-subsidized Montreal-based Bombardier Inc. for “dumping” commercial airplanes into the U.S. market — a dispute overshadowed by an impending renegotiation of the North American Free Trade Agreement.
Foreign Affairs Minister Chrystia Freeland’s subsequent chastening and promise Thursday to review military procurement involving Boeing leaves in limbo Canada’s purchase of 18 Super Hornet jets, a deal expected to cost $5 billion to $7 billion.
A spokeswoman for Lockheed Martin — which, meanwhile, is partnering with Bombardier on a U.S. Air Force procurement — reacted Friday, saying the company “would openly welcome discussions about interim fighter solutions.”
Still, said Cindy Tessier, “it would be inappropriate for Lockheed Martin to comment directly on a matter between the Government of Canada and another company.”
A government official argued Friday that Freeland couldn’t take a business-as-usual approach with Boeing after its attack — especially because the same processes recently led to new tariffs being imposed on Canadian softwood lumber. An army of lawyers is working on avoiding the same outcome for Canadian aerospace.
Prime Minister Justin Trudeau publicly lent his support to Bombardier Friday. But he avoided speculating on alternative options for interim jets.
In a statement Friday, Boeing spokesman Dan Curran said the company has a “deep relationship” with Canada and “our case is focused on the Bombardier company, not the country at large.”
Curran said “substantial government subsidies have enabled Bombardier’s predatory pricing” in the U.S. In February, the federal government extended a $372.5 million interest-free loan to the company, and last year, for a 49.5-per-cent share, Quebec offered a US$1 billion investment in the CSeries jets with which Boeing takes issue.
A Bombardier statement, meanwhile, said the giant’s accusations are “unfounded” and noted Boeing has “never lost a sale” in competition with the specific planes being targeted.
Freeland pointed out many of Bombardier’s suppliers are based in the U.S. and components directly support “high-paying jobs in many U.S. states.”
Reuters reported Friday Boeing executives were concerned about the fighter jet deal getting swept up in the commercial plane dispute. Its defence unit was seeking meetings with Canadian officials to smooth the waters.
In addition to Lockheed Martin, other potential winners include rival makers of jets Dassault Aviation SA, Airbus SE and Saab AB, analysts told Reuters.
David Perry, senior analyst with the Canadian Global Affairs Institute, said Canada’s posturing on a review or delay to the fighter jet purchase is hard to square with its insistence a capability gap urgently needs addressing. “It seems more like a negotiating ploy, potentially,” he said.
Reacting to the Boeing statement, Conservative defence critic James Bezan told reporters, “if the government is so blatantly willing to throw away the contract, it says to me that there is no capability gap, that they imagined it right from the start .… The government is looking for a way to get out of that commitment.”
Canada had announced the intention to explore the purchase of Boeing aircraft last November and defence minister Harjit Sajjan locked in that position in February, saying overtly: “we are buying new Super Hornets.”
The government said it would launch an open competition for a full fleet before the next federal election.
Years of indecision have delayed the replacement of the current aging fleet. Liberals backed away from a Harper government decision to purchase Lockheed Martin jets (though acknowledging the company’s right to bid in a competition) despite Canada’s continued participation in the Joint Strike Fighter program along with the U.S.
Perry said he believes the “interim purchase first, competition later” approach will be more costly in the long run. But he noted Liberals have repeatedly doubled down on the plan, despite criticisms. “I don’t really see an inclination on the government’s part, so far, that they’re going to move away from that,” he said.
Although it is early to predict what may come of this week’s aerospace dispute — a decision from the trade commission isn’t expected until June 12 — Liberals have potentially boxed themselves into a corner.
If the government is serious about retaliating, should Boeing prove successful, and if it is also serious about buying fighter jets to fill an immediate capability gap, ahead of a competition, few easy options remain that wouldn’t break a Liberal election promise: “we will not buy the F-35.”
This story originally published here.