BBD.A Bombardier Inc

By Doug Cameron 

U.S. trade officials on Thursday launched an official probe into whether Canada's Bombardier Inc. sold passenger jets to the U.S. at unfair prices backed by illegal subsidies, opening a new front in tensions between the two nations.

The Commerce Department investigation followed a complaint in April from Boeing Co. alleging Bombardier was "dumping" its new CSeries jet with customers including Delta Air Lines Inc. in an effort to win market share, harming the U.S. company and domestic workers.

The Boeing charge has been widely criticized by many aviation analysts as plane makers routinely sell initial aircraft at below-cost prices to win market traction, while Bombardier is selling a jet with little or no overlap to the U.S. company's own products.

The Commerce Department announced its investigation during a hearing about the charges at the International Trade Commission before Bombardier or Delta had started their testimony, with Boeing officials still pressing their case.

Bombardier has called for the case to be dismissed and said its planes don't compete directly with the Boeing aircraft. Canada has denied it provided Bombardier with illegal subsidies.

The department said its probe will run parallel with the commission's own investigation, which is due to report by June 12. If Bombardier is found to have broken U.S. rules, the Commerce Department said it could start collecting import tariffs this year.

The move adds to existing trade tensions between the U.S. and Canada, centered on the lumber and dairy industries.

Boeing filed a petition with the Commerce Department and the ITC alleging Canadian state subsidies created an unfair competitive threat to its own 737 Max 7 passenger jets, which are smaller than the CSeries

Brazil has also lodged a complaint with the World Trade Organization over Canada's support for Bombardier, which competes with plane maker Embraer SA.

Boeing wants the U.S. to impose antidumping duties on imports of Canadian passenger jets. The ITC offers a potentially quicker route than through the WTO. The U.S. and the European Union have been embroiled for years in disputes related to subsidies provided to Boeing and Airbus SE.

Delta last year placed an order for 75 CSeries jets, providing the program with a marquee customer after years of sluggish sales. It is due to receive the first planes in the second half of 2018.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

May 18, 2017 14:33 ET (18:33 GMT)

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