100-150 Seat Large Civil Aircraft from Canada Conference 05-18-2017
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UNITED STATES INTERNATIONAL TRADE COMMISSION In the Matter of: ) Investigation Nos.: 100-TO 150-SEAT LARGE CIVIL AIRCRAFT ) 701-TA-578 AND FROM CANADA ) 731-TTA-1368 (PRELIMINARY) Pages: 1 -289 Place: Washington, D.C. Date: Thursday, May 18, 2017 Ace-Federal Reporters, Inc. Stenotype Reporters 1625 I Street, NW Suite 790 Washington, D.C. 20006 202-347-3700 Nationwide Coverage www.acefederal.com 1 1 THE UNITED STATES INTERNATIONAL TRADE COMMISSION 2 In the Matter of: ) Investigation Nos.: 701-TA-578 3 100-TO 150-SEAT ) and 731-TA-1368 4 LARGE CIVIL AIRCRAFT ) (Preliminary) 5 FROM CANADA ) 6 7 Thursday, May 18, 2017 8 Main Hearing Room 9 U.S. International 10 Trade Commission 11 500 E Street, S.W. 12 Washington, D.C. 13 The meeting commenced, pursuant to notice, at 14 9:30 a.m., before the United States International Trade 15 Commission Investigative Staff. Michael Anderson, 16 Supervisory Investigator, presiding. 17 18 APPEARANCES: 19 On behalf of the International Trade Commission: 20 Michael Anderson, Director of Investigations, 21 (presiding) 22 Douglas Corkran, Supervisory Investigator 23 Carolyn Carlson, Investigator 24 Nannette Christ, International Economist 25 Ace‐Federal Reporters, Inc. 202‐347‐3700 2 1 APPEARANCES (Continued): 2 Charles Yost, Accountant/Auditor 3 Karl von Schriltz, Attorney/Advisor 4 Russell Duncan, Statistician 5 6 William R. Bishop, Supervisory Hearings and 7 Information Officer 8 Sharon Bellamy, Records Management Specialist 9 Tyrell Burch, Legal Document Assistant 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ace‐Federal Reporters, Inc. 202‐347‐3700 3 1 OPENING REMARKS: 2 Petitioners (Robert T. Novick, Wilmer Cutler Picering Hale 3 and Dorr LLP) 4 Respondents (Peter Lichtenbaum, Covington & Burling LLP) 5 6 In Support of the Imposition of Antidumping and 7 Countervailing Duty Orders: 8 Wilmer Cutler Pickering Hale and Dorr LLP 9 Washington, DC 10 On behalf of: 11 The Boeing Company 12 Raymond L. Conner, Vice Chairman, The Boeing 13 Company 14 Charles Anderson, Principal, Capital Trade 15 Professor Jerry Nickelsburg, University of 16 California Los Angeles 17 Robert T. Novick ) 18 Patrick J. McLain ) 19 Jeffrey I. Kessler ) -- OF COUNSEL 20 Stephanie Hartmann ) 21 William Desmond ) 22 Sarah Licht ) 23 24 25 Ace‐Federal Reporters, Inc. 202‐347‐3700 4 1 In Opposition to the Imposition of Antidumping and 2 Countervailing Duty Orders: 3 Dentons US LLP 4 Washington, DC 5 On behalf of: 6 Delta Air Lines, Inc. 7 Greg May, Senior Vice President, Supply Chain 8 Management & Fleet, Delta Air Lines, Inc. 9 Joe Esposito, Vice President, Network Planning, 10 Americas, Delta Air Lines, Inc. 11 Scott McClain, Associate General Counsel, Delta 12 Air Lines, Inc. 13 Yohai Baisburd ) 14 ) -- OF COUNSEL 15 Daniel Morris ) 16 17 Covington & Burling LLP 18 Washington, DC 19 On behalf of: 20 Bombardier Inc. 21 22 Sebastien Mullot, Director, C Series Program, 23 Commercial Aircraft Division, Bombardier Inc. 24 Ross Mitchell, Vice President, Commercial 25 Operations, Commercial Division, Bombardier, Inc. Ace‐Federal Reporters, Inc. 202‐347‐3700 5 1 Shara L. Aranoff ) 2 ) -- OF COUNSEL 3 Peter Lichtenbaum ) 4 Curtis, Mallet-Prevost, Colt & Mosle LLP 5 Washington, LLP 6 On behalf of: 7 Government of Canada 8 Colin Bird, Minister-Counsellor, Economic and 9 Trade, Embassy of Canada 10 Daniel L. Porter ) 11 ) -- OF COUNSEL 12 James P. Durling ) 13 14 REBUTTAL/CLOSING REMARKS: 15 Petitioner (Robert T. Novick, Wilmer Cutler Pickering Hale 16 and Dorr LLP) 17 Respondents (Peter Lichtenbaum, Covington & Burling LLP and 18 Yohai Baisburd, Dentons US LLP) 19 20 21 22 23 24 25 Ace‐Federal Reporters, Inc. 202‐347‐3700 6 1 I N D E X 2 Page 3 OPENING REMARKS: 4 Petitioner (Robert T. Novick, Wilmer Cutler Pickering 5 Hale and Dorr LLP 9 6 7 Respondents (Peter Lichtenbaum, Covington & 8 Burling LLP) 13 9 10 Raymond L. Conner, Vice Chairman, The Boeing Company 23 11 12 Professor Jerry Nickelsburg, University of California Los 13 Angeles 32 14 15 Charles Anderson, Principal, Capital Trade 44 16 17 Patrick J. McLain (Wilmer Cutler Pickering Hale and Dorr 18 LLP) 54 19 20 Sebastien Mullot, Director, C Series Program, 21 Commercial 153 22 23 Ross Mitchell, Vice President, Commercial Operations, 24 Commercial Division, Bombardier, Inc. 160 25 Ace‐Federal Reporters, Inc. 202‐347‐3700 7 1 I N D E X 2 Page 3 Joe Esposito, Vice President, Network Planning, Americas, 4 Delta Air Lines, Inc. 168 5 6 Greg May, Senior Vice President, Supply Chain Management & 7 Fleet, Delta Air Lines, Inc. 174 8 9 Shara L. Aranoff, Covington & Burling LLP 183 10 11 CLOSING REMARKS: 12 Robert T. Novick, Wilmer Cutler Pickering Hale 13 and Dorr LLP 274 14 15 Peter Lichtenbaum, Covington & Burling LLP 279 16 17 Yohai Baisburd, Dentons US LLP 285 18 19 20 21 22 23 24 25 Ace‐Federal Reporters, Inc. 202‐347‐3700 8 1 P R O C C E D I N G S 2 MS. BELLAMY: Would the room please come to 3 order? 4 CHAIRMAN ANDERSON: Good morning, and welcome to 5 the U.S. International Trade Commission's conference with 6 preliminary phase of antidumping and countervailing duty 7 investigations number 701^^TA^^578 and 731^^TA^^1368 8 concerning 100 to 150 seat large civil aircraft from Canada. 9 My name is Michael Anderson. I'm the director 10 of the Office of Investigations and I'll be presiding at 11 this conference. Among those present from the Commission 12 staff are from my far left, our supervisor investigator Mr. 13 Douglas Corkran, or investigator Carolyn Carlson, and our 14 attorney adviser who should be here momentarily is Karl Von 15 Schriltz, and our economist, Nannette Christ. And to her 16 right is our accountant and auditor, Charles Yost, and 17 finally our statistician Russell Duncan. 18 I understand the parties are aware of the time 19 allocations. Any questions regarding the time allocations 20 should be addressed with the Secretary. 21 I would remind all speakers that -- not to refer 22 to business proprietary remarks when you speak. And when 23 you do speak, please identify yourself and speak clearly 24 into the microphone for the benefit of the reporter -- court 25 reporter. Ace‐Federal Reporters, Inc. 202‐347‐3700 9 1 It's also very important if you're on the sides, 2 they cannot always see your name tag, so please speak 3 clearly and state your name. 4 All witnesses must be sworn in before presenting 5 testimony. Are there any questions? Hearing none, we will 6 proceed with opening remarks. 7 MS. BELLAMY: Opening remarks on behalf of 8 petitioner Robert T. Novick, Wilmer Cutler Pickering Hale 9 and Dorr, LLP. 10 STATEMENT OF ROBERT T. NOVICK 11 MR. NOVICK: Good morning. My name is Bob 12 Novick with Wilmer Hale, counsel to the Boeing Company. 13 This investigation arises because Bombardier made a 14 conscious decision to dump the C series in the U.S. market. 15 Having previously manufactured only regional jets, 16 Bombardier designed the C series for the 100 to 150 seat 17 large civil aircraft market and explicitly targeted Boeing's 18 737^^700 and Airbus' 8319. 19 But Bombardier failed for over a decade to gain 20 real traction offering the C series in the U.S. market at 21 real market prices. But after receiving $2.5 billion in 22 equity infusions from Quebec to augment the one^^half 23 billion dollars in risk free launch it had already received, 24 Bombardier began to dump its product into the U.S. market, 25 which we saw in with particularly in its sale to Delta. And Ace‐Federal Reporters, Inc. 202‐347‐3700 10 1 that's why we're here today. 2 This investigation involves one of the most 3 capital intensive products the Commission will have examined 4 to date. In past cases involving large capital goods, the 5 Commission has recognized that Congress' intent is to ensure 6 that orders are issued whereas the House said, and I quote, 7 "in large capital equipment cases, the loss of a single sale 8 can cause immediate economic harm and where it may be 9 impossible to offer meaningful relief if the investigation 10 is not initiated until after importation takes place." And 11 as the Senate said at the same time, "A sale for importation 12 is sufficient to find injury or threat thereof." 13 In this investigation, the Commission has before 14 it just such a sale, the Bombardier sale to Delta. The 15 confirmed pricing and imminent imports from the sale require 16 no speculation on the Commission's part. Beyond that, it 17 has compelling information in the record regarding United's 18 sales campaign, where direct competition between the CS-100 19 and the 737^^700 caused Boeing to have to drop prices 20 significantly below any prior levels. 21 But the Commission has more on the record to 22 confirm the threat to the U.S. industry. It has likely 23 sales for importation as evidenced by confidential 24 information in the record about near term additional 25 campaigns. If Bombardier's practices are not addressed now, Ace‐Federal Reporters, Inc. 202‐347‐3700 11 1 Boeing will either have to offer severely depressed prices 2 or forfeit additional market share, causing further injury. 3 The sale from Bombardier to Delta caused 4 immediate economic harm. First, it's significantly 5 depressed prices and those depressed prices will affect 6 future competitions. Second, it deprived Boeing of sales 7 opportunities at Delta in the 100 to 150 seat market.