Canada seeks tough line on Boeing jets but sends mixed message

Canada, embroiled in a dispute with Boeing Corp, tried to hit out at the U.S. firm for the second day in a row on Thursday but stumbled over whether talks over a proposed jet purchase had been suspended or not.

The Liberal government, angry that Boeing has launched a trade challenge against Canadian plane-maker Bombardier Inc, is threatening to scrap plans to buy 18 Boeing Super Hornet fighters.

Steven MacKinnon, parliamentary secretary to Public Services and Procurement Minister Judy Foote, told reporters that Boeing "is not acting like a valued partner right now so we've suspended discussions with that partner."

Minutes later, Foote spokeswoman Annie Trepanier said that while government ministers were not talking to the company, "there is no formal suspension."

Earlier in the day Boeing scrapped an announcement about the jets, a day after Defense Minister Harjit Sajjan objected to the firm's behavior in the dispute against Bombardier.

The company had been due to announce which Canadian companies would benefit if the purchase went ahead. Boeing has 560 suppliers in Canada.

"Due to the current climate, today is not the most opportune time to share this good news story," Boeing spokesman Scott Day said in a statement issued at an Ottawa defense show.

While he did not specifically refer to the trade dispute, his comments appeared to be a reference to growing tensions between Ottawa and the firm.

The Boeing saga has increased tensions between Canada and the United States in the run-up to talks on renewing the North American Free Trade Agreement.

Last month, Canada said it "strongly disagrees" with the U.S. Commerce Department decision to investigate Boeing's claims that Bombardier sold planes below cost in the United States and benefited unfairly from Canadian government subsidies.

Even lower-level Canadian officials were not visiting the company's stand at the Ottawa defense show, said one source familiar with the matter who did not want to be identified given the sensitivity of the situation.

Sajjan on Wednesday said the firm would be a trusted military ally in decades to come, but he complained the anti-dumping petition against Bombardier was "not the behavior we expect of a trusted partner".

Canada says it needs the Super Hornets as a stopgap until it can launch an open competition to replace its fleet of aging Boeing CF-18 planes.

A Super Hornet deal would generate new in-service support contracts for industry in Canada's aerospace hub of Quebec, where existing CF-18s are now maintained.

(Leah Schnurr - Reuters)