While it may seem like an eternity, barely six years have passed since the Canadian aerospace industry was the subject of an unprecedented trade action in the United States – Boeing’s challenge to Bombardier’s C Series for allegations of dumping and illegal subsidies.
Even then, most observers agreed that the move was grossly hypocritical, with Boeing considered the biggest recipient of government subsidies in American corporate history across all industries. The United States International Trade Commission (ITC) agreed, and Bombardier won its case against the ITC’s decision in its favour.
However, this process was not without immense inconvenience and serious economic consequences for Canada. The Canadian aviation sector suffered considerable damage along the way: temporary anti-dumping and countervailing duties of nearly 300% were imposed on C Series aircraft, effectively shutting them out of the US market. In addition, it was decided, at the expense of employment in the aeronautical sector in Canada, to build an assembly line for the C Series aircraft in the United States, in order to mitigate the risks that such measures punitive measures can once again be applied against Canadian industry.
In response to this saga, the Canadian government introduced a policy in 2017, which aims to assess the impact of bidders on the economic interests of Canada, in addition to other technical and commercial criteria, to evaluate bids for the replacement fighter jets from Canada. Subsequently, the 2021 federal budget confirmed this policy and extended it to all defense procurement:
“Companies that have harmed the economic interests of Canada through trade challenges will have points deducted from their bid score at a level commensurate with the severity of the economic impact, up to a maximum penalty. »
This policy has been dubbed by many observers the “Boeing clause”. What happened to this clause?
Today, Canada launched a major procurement initiative under the Canadian Multi-Mission Aircraft Project, which aims to replace the CP-140 Aurora aircraft from 2032.
Incredibly, although Canadian companies responded to the RFI last year and Bombardier announced a partnership with General Dynamics Mission Systems Canada (GDMS-C) for this program, the Government of Canada is seriously considering entering into an over-the-counter contract with Boeing.
If a sole-source contract is awarded to Boeing, Canada will have to give up its own schedule and process, and will have to adapt to Boeing’s schedule, which has indicated that it will stop producing the P-8 aircraft. in 2025 in the absence of new orders.
This approach is eminently problematic for Canada, for several reasons. Who will take Canada seriously in the future? U-turning on an announced policy sends the wrong message and exposes Canada to further intimidation.
Some have questioned the appropriateness of the “Boeing Clause” for a trading nation like Canada, which relies on free and open markets. This concern is valid in principle, but it ignores the harsh reality of the aviation sector, which is frequently subject to aggressive government intervention. French President Macron has just announced a series of investments in France totaling €8.5 billion by 2027 to decarbonize aviation. Aeronautics is clearly not a level playing field, and Canada’s overly naïve approach is bound to fail. National markets vary greatly in size, which makes Canada particularly vulnerable and exposed to protectionist policies.
This is why a policy such as the “Boeing Clause” may be necessary. Boeing is pushing again to undermine Canadian industry. As with the C Series, the consequences could be far-reaching if Boeing succeeds in eliminating a modern and effective maritime surveillance aircraft solution from Canada. The export opportunities to replace maritime surveillance aircraft around the world are considerable. These are hundreds of devices. Canada has a unique opportunity to be a leader in this area.
This is what a sole-source deal with Boeing would deprive Canada of, for a one-time, one-time sale of P-8s to the Royal Canadian Air Force before Boeing shuts down its production line.
If you still disagree with the “Boeing Clause” because you are an avid free-trader, then you should support holding a free and open tender for the Canadian multi-mission aircraft. There is no justification for a sole-source contract, however one looks at it.