By Tim Hepher and Alwyn Scott
PARIS/NEW YORK (Reuters) - Boeing Co (N:BA) on Thursday asked the U.S. Commerce Department to investigate alleged subsidies and unfair pricing for Canadian planemaker Bombardier's (TO:BBDb) new CSeries airplane, against the backdrop of rising trade tensions between the United States and Canada.
The petition against Canada's new competitor to the Boeing 737 aircraft came just days after the Commerce Department imposed duties averaging 20 percent on Canadian softwood lumber, saying that its origin from public land amounted to an unfair government subsidy.
On Wednesday, U.S. President Donald Trump told Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto that he intended to begin renegotiating the 23-year-old North American Free Trade Agreement, after White House officials said Trump had been considering an order to withdraw from the pact.
Boeing said in its petition that Bombardier, determined to win a key order from Delta Air Lines Inc (N:DAL) after losing a competition at United Airlines (N:UAL), had offered its planes to the airline at an "absurdly low" $19.6 million each, well below what it described as the aircraft’s production cost of $33.2 million.
"Propelled by massive, supply creating and illegal government subsidies, Bombardier Inc has embarked on an aggressive campaign to dump its CSeries aircraft in the United States," Boeing said in its petition.
Boeing's similarly sized 737-700 model has a list price of $83.4 million, with the new 737-MAX 7 priced at $92.2 million. Sales discounts from list prices are typically 40 percent to 50 percent in the industry.
Bombardier won the Delta order, its biggest yet, in April 2016 for 75 CS100 jets, worth an estimated $5.6 billion based on the list price of about $71.8 million.
Bombardier’s chief executive conceded the company had been “aggressive” on pricing in order to win, and sources familiar with the deal pegged the discount closer to two-thirds off the nominal list price.
Bombardier said in a statement that it was reviewing the petition.
"Bombardier structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate, including those issues raised by Boeing," the company said.
The request for anti-dumping measures was also addressed to the U.S. International Trade Commission, an independent U.S. trade body that will review any decisions by the Commerce Department.