The Canadian government is looking into buying second-hand fighter jets in Australia – instead of a new fleet of 18 Super Hornets – as it tries to force Boeing Co. to drop its trade dispute against Bombardier Inc., sources said.
Federal officials said the government is refusing to sign a planned multibillion-dollar contract for Super Hornets as long as Boeing pursues its complaint against Bombardier at the International Trade Commission in the United States.
A final decision to pull the plug on the Super Hornet contract has not been made, but tensions with Boeing are quickly escalating and the government is looking at all options to increase the pressure on the firm, the officials said.
A Canadian delegation travelled to Australia last month to see whether second-hand F/A-18 fighter jets, which are being placed on the market by the country's military, could fit Canada's needs for an "interim" fleet.
In addition, Prime Minister Justin Trudeau called Eric Greitens, the Governor of Missouri, where Boeing's Super Hornets are assembled, to highlight the billions of dollars and thousands of jobs that are now in play.
"Canada is reviewing current military procurement that relates to Boeing, as Boeing is pursuing unfair and aggressive trade action against the Canadian aerospace sector. Meanwhile, Boeing receives billions in support from U.S. federal, state and municipal governments," the Prime Minister's Office said on Tuesday.
Federal officials said that Boeing recently walked away from discussions with the federal government to find a way to settle the Bombardier dispute. Last week, a senior executive from the firm told Canadian media that Boeing would not back down in its fight against unfair subsidies, alleging Bombardier received billions in illegal assistance from the Canadian and Quebec governments.
"We recognize the Canadian government might be upset with us. We don't intend to upset anybody, but we plainly have to do what we believe is right," Boeing International president Marc Allen told The Globe and Mail.
Boeing complained in April to the U.S. Department of Commerce that Bombardier's C Series planes were unfairly subsidized by the Canadian and Quebec governments. Last year, Bombardier sold 75 109-seat CS100 planes to Delta Air Lines at a cut-rate cost, which led to Boeing's accusation of predatory pricing.
Bombardier has denied any wrongdoing and is currently defending itself in front of the International Trade Commission.
"The bottom line is that Boeing's petition is meritless and based on false assumptions citing a campaign in which they didn't even compete," Bombardier Commercial Aircraft spokesman Bryan Tucker said. "Boeing's petition is a direct attack on innovation, competition, development and jobs on both sides of the border."
However, Mr. Allen urged the federal government to stop making a link between Boeing's case against Bombardier and the Super Hornet contract, which Ottawa announced last year to fill a "capability gap" until a new fleet of fighter jets is acquired in the next decade.
"We are not here to tell the sovereign state what to do, that's not our role and we would never pretend to that. Do we think the two should be tied together? No, we don't think they should be," Mr. Allen said. "If you ask me my opinion, I wouldn't want the U.S. government trading national security for trade."
Mr. Allen said the federal government should not forget that Boeing does $4-billion a year of business in Canada, with 560 suppliers and an overall impact of 17,000 jobs.
"If Canada kicks Boeing out, I think that will be deeply unfortunate for us both. It would be a deeply unfortunate outcome," he said. "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."
However, Mr. Trudeau pointed out on Tuesday to Mr. Greitens that Canada is Missouri's biggest trading partner.
"Canada-Missouri bilateral trade was valued at US$8.2-billion in 2016, and 163,800 jobs in Missouri depend on trade and investment with Canada," the Prime Minister's Office said in its statement.
With a report from Nicolas Van Praet