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Prime Minister Justin Trudeau and British Prime Minister Theresa May walk in the Hall of Honour on Parliament Hill in Ottawa during a visit on Monday, Sept. 18, 2017.

Justin Tang/The Canadian Press

Prime Minister Justin Trudeau has raised the stakes in Ottawa's dispute with Boeing Co., vowing to freeze out the U.S.-based aerospace giant from any federal contract as long as it pursues its trade dispute against Canada's Bombardier Inc.

The Prime Minister's threat was clearly related to a $6.4-billion deal for 18 new Super Hornet fighter jets from Boeing that is already in the works. Still, the Prime Minister's words could eventually apply to a much bigger prize, namely Ottawa's plans to buy 88 new fighter jets to replace Canada's CF-18 fleet in the next decade at a cost of nearly $20-billion.

"We won't do business with a company that is busy trying to sue us and put our aerospace workers out of business," Mr. Trudeau said on Monday, before repeating his comments in French to maximize their impact across the country.

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For subscribers: Boeing promises $18-billion in benefits if Super Hornet contract goes ahead

This was the Liberal government's strongest rhetoric to date in the dispute that started with Boeing's complaint to the U.S. Department of Commerce against the Bombardier C Series aircraft in April. According to Boeing, Bombardier is dumping its newly designed aircraft in the American market at "predatory" prices because of illegal federal and provincial subsidies.

Ottawa has called on the U.S. government to intervene with Boeing and get it to drop its complaint. However, the U.S. government has indicated that there is little that can be done until a first ruling by the U.S. International Trade Commission on Sept. 25, a federal official said.

Boeing quickly rejected Mr. Trudeau's line of attack on Monday, pointing out that the company "is not suing Canada."

"This is a commercial dispute with Bombardier, which has sold its C Series airplane in the United States at absurdly low prices, in violation of U.S. and global trade laws," Boeing said in a statement. "We like competition. It makes us better. And Bombardier can sell its aircraft anywhere in the world. But competition and sales must respect globally accepted trade law."

Boeing has been working in recent weeks to stop the federal government from making a link between the trade dispute and the Super Hornet contract, pointing repeatedly to the potential spinoffs of the deal in Canada. Earlier this month, 10 companies that are part of the "Boeing team in Canada" sent a letter to Mr. Trudeau urging him to approve the Super Hornet deal.

However, Mr. Trudeau said Boeing's case against the Bombardier C Series airplane is designed to stifle the growth of an innovative rival.

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"The action that Boeing has taken is very much in their narrow, economic interest to harm a potential competitor and is frankly not in keeping with the kind of openness to trade that we know benefits citizens in all countries around the world," he said.

Mr. Trudeau made his comments on the dispute at a joint news conference with British Prime Minister Theresa May, who is also siding with Bombardier in the dispute. The Montreal-based company has large facilities in Northern Ireland, where C Series wings are manufactured and assembled.

"We have discussed today how we can work together and see a resolution of this issue," Ms. May said. "From my point of view, I want to see a resolution that protects those jobs in Northern Ireland."

Both Ms. May and Mr. Trudeau promised to raise the matter with the U.S. President in the near future, hoping that Donald Trump will put additional pressure on Boeing to drop its trade complaints against Bombardier.

Ms. May and Mr. Trudeau also discussed the consequences of Brexit on trade between the two countries, with both prime ministers vowing to ensure a smooth transition if and when Britain leaves the European Union. They both agreed that the Canada-EU trade deal, known as the Comprehensive Economic and Trade Agreement (CETA), could be used as a framework for a Canada-Britain deal.

"We want to ensure that when we leave the European Union, for businesses and people, that change is as smooth and orderly as possible. And working on CETA as becoming the first of the bilateral trade relationships between the U.K. and Canada, that means that seamless transition can take place," Ms. May said.

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Mr. Trudeau added that CETA would form the basis of a future bilateral deal, while acknowledging that some tweaks may be necessary.

"There will obviously be opportunities for us to look at particular details that could be improved upon for the specific needs and opportunities in the bilateral relationship between the U.K. and Canada. But as a strong basis for a smooth transition, CETA is perfectly designed and will be able to ensure for investors, for companies and for workers and consumers a smooth transition," he said.

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