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Rabu, 27 September 2017

Alex Brummer: Why has Trump let Britain down?

President Donald Trump (pictured) declared he would put America first and protect US manufacturing

When President Trump declared he would put America first and protect US manufacturing from cheap foreign competition, everyone imagined he was referring to the dumping of goods in the country by China, and the cars, steel and consumer products swamping the US from Mexico.

No one could have guessed he would turn his fire on two of America’s closest Anglo-Saxon allies – Canada and the UK. After all the US already has a big open trade deal with Canada known as the North America Free Trade Agreement.

And it has wooed Theresa May’s government with a pledge to reverse Barack Obama’s threat to send the UK to the back of the queue for any post-Brexit free-trade deal. But as we have learnt, Trump is nothing if not unpredictable.

This week his administration, via the US Department of Commerce, imposed an astonishing 220 per cent duty on a major order from Delta Air Lines for the Canadian plane manufacturer Bombardier’s C-Series short-haul passenger jet to be partly built in Belfast. Trump’s decision was made in the face of passionate pleas from Canadian Premier Justin Trudeau and Mrs May not to punish Bombardier.

At the heart of the dispute is the vexed issue of subsidies. Every government in the Western world provides assistance to plane makers to help cover the enormous research, development and engineering costs required when building new generations of aircraft.

Seattle-based Boeing claims that the cash injected into Bombardier C-Series is over the top and amounts to ‘dumping’ by Canada and the UK.

There are dozens of ways in which aircraft manufacturers are assisted by their governments. Boeing itself receives development support both from the US government and the city of Seattle and Washington state where its main factories are located. It charges premium prices to the Pentagon for military aircraft and receives cheap finance from the US Export-Import Bank, the country’s official export credit agency.

Boeing and Toulouse-based Airbus are in almost permanent combat at the World Trade Organisation over the scale of the hidden subsidies to vast aircraft and engine deals.

One of the major curiosities about Boeing’s complaint against Bombardier is that it currently doesn’t have an off-the-shelf short-haul aircraft to fulfil the needs of Delta on domestic US flights. So the world’s biggest aircraft maker does not even have any skin in the game.

The US imposed a 220 per cent duty on a major order for the Canadian plane manufacturer Bombardier’s C-Series short-haul passenger jet to be partly built in Belfast (pictured) 

Furthermore, the 220 per cent tariff could actually damage US manufacturing since the engines which will power Bombardier’s C-Series are made by US engineering colossus Pratt & Whitney. The imposition of the new duty is by no means the last word in the dispute. The matter will now go to the US International Trade Commission which will rule on whether the duty is justified.

Even if it were to find against Bombardier, the matter could be referred to the World Trade Organisation.

The difficulty for Bombardier is that keeping production lines in Northern Ireland and Canada open while the dispute trundles through the appeals process would be hugely costly.

Bombardier’s great hope may lie in China where the company is currently in negotiations with several regional carriers about buying the C-Series plane.

Indeed, it may well have been the possibility of Boeing being frozen out of the lucrative Chinese market which made it so determined to throw a spanner in the works of the Delta sale.

Whatever happens, the dramatic action by the US Department of Commerce cannot help but seriously damage Anglo-American trade relations and the ambitions of Liam Fox and the UK’s post-Brexit team of trade negotiators to forge a major free trade deal with the US.

The United States talks up free trade at every opportunity it has.

Yet Trump’s protectionist stance looks likely to be the biggest threat to open trade of modern times.

Alex Brummer: Why has Trump let Britain down? Rating: 4.5 Diposkan Oleh: Fatih

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