Canada scraps plan to buy Boeing fighters amid trade dispute

Canada scraps plan to buy Boeing fighters amid trade dispute

Canada is following through on its threat to abandon plans to purchase 18 Boeing Super Hornet fighter jets.

Boeing complained to the USA government that Bombardier was receiving subsidies, which in turn allowed it to sell its C-Series civilian passenger aircraft at below-market prices. The Royal Canadian Air Force (RCAF) will likely purchase 28-30 used fighter planes from the Australian military, according to reports Tuesday. The funding allowed Bombardier to significantly lower the cost per aircraft, Boeing argued.

Canadian defense sources say the air force - seeking to maintain close ties with its US counterpart - has long preferred a USA jet, which would narrow the race to the Super Hornet or Lockheed Martin Corp's F-35 stealth fighter. They would supplement Canada's existing CF-18 fleet until a new aircraft could be acquired.

Canada was in the midst of negotiations to buy the Boeing-made F/A-18s for an estimated $5.15 billion, but the country put talks on hold after the defense contractor in April filed a complaint with the U.S. Commerce Department against Canadian company Bombardier. That legal process continues with final rulings expected by the U.S. International Trade Commission early next year. Prime Minister Justin Trudeau said at the time the country would not engage in business with Boeing till such time its dispute with Bombardier continued, a sentiment he repeated to President Donald Trump in October.

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The F/A-18 is a twin-engine, supersonic combat aircraft that can operate as a fighter or attack jet. "It has to be a two-way street, there has to be this mutually beneficial relationship for it to be one that grows, one that both sides are happy and excited about".

Canada's decision to shun Boeing Co jets could open the way for European rivals seeking to supply new fighters, assuming the government can sort out major procurement challenges, three sources familiar with the matter said on Wednesday.

"We have tremendous losses with Mexico and losses with Canada, and covered by NAFTA". It's not just the company but countries. "Unfortunately, I think they're taking advantage of a [political] context that's favourable to them".

Shares of Boeing fell 0.86 percent during Tuesday trade on the New York Stock Exchange.

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