The U.S. aircraft manufacturing industry’s demand for tariffs pursuant to domestic trade remedy laws provides a case in point. First, the industry consists of only one firm: The Boeing Company. Boeing is no stranger to taxpayer largesse and its pursuit of government assistance to thwart import competition evokes the famous Gilded Age adage: “The tariff is the mother of the trust.” Boeing is asking the government to impose duties on a certain class of airplanes: 100‐to‐150 Seat Large Civil Aircraft from Canada.
In April, Boeing’s lawyers—advancing arguments that can only be made with tongues planted firmly in cheeks—filed both antidumping and countervailing duty (anti‐subsidy) petitions at the U.S. International Trade Commission (ITC) and the U.S. Department of Commerce (DOC). Under the antidumping law, “relief” in the form of antidumping duties is available if the domestic industry can demonstrate that it is materially injured or threatened with material injury by reason of imports sold at prices that are determined to be less‐than‐fair‐value (LTFV). Relief in the form of countervailing duties is available when material injury or the threat of material injury exists by reason of subsidized imports.
The ITC is tasked with determining whether material injury or the threat of material injury exists and, if so, whether that injury is by reason of LTFV or subsidized imports. To determine whether there is injury, the ITC staff looks at trends in industry performance metrics, such as production, prices, volumes, shipments, profits, investment, return on investment, employment, capacity utilization and other factors that speak to the state of the industry. The DOC obtains sales, cost, and subsidy information from the foreign producers subject to the investigations and performs analyses of the data to determine whether and to what extent there is dumping or countervailable subsidization.
Boeing, which has received tens of billions of dollars in federal, state, and local subsidies over the years and whose sales abroad are famously facilitated by taxpayer subsidized loans through the U.S. Export‐Import Bank to foreign airlines, claims that it is threatened with material injury, by reason of sales from Canadian manufacturer Bombardier to Delta Airlines. What makes Boeing’s argument especially audacious is that the sales that allegedly threaten the domestic industry with material injury haven’t yet been made. Those transactions will begin to take place no sooner than mid‐2018. And those sales will involve a class of airplanes that Boeing doesn’t even produce and is technically incapable of producing for several years because of a backlog of orders for its larger aircraft. The monopolist is doing quite well, thank you.
Boeing’s argument requires an impossibly expansive definition of what constitutes a threat of material injury. Under U.S. law, the ITC is directed to evaluate a “threat of material injury” by analyzing whether “further dumped or subsidized imports are imminent and whether material injury by reason of imports would occur unless an [antidumping or a countervailing duty] order is issued…”