Britain's May fires warning to Boeing over Bombardier trade dispute

By William Schomberg and David Milliken

LONDON (Reuters) - Prime Minister Theresa May told U.S. planemaker Boeing on Thursday that its behaviour in a trade dispute with Canada's Bombardier was undermining its commercial relationship with Britain.

May intervened in the trade row between Canada and the United States after a complaint by Boeing led to the U.S. Department of Commerce imposing a preliminary 220-percent duty on Bombardier's CSeries jets.

The U.S. ruling puts as many as 4,200 jobs at risk at a plant in the British province of Northern Ireland, where the jets' carbon wings are made.

"We have a long-term partnership with Boeing in various aspects of government and this is not the sort of behaviour we expect from a long-term partner and it undermines that partnership," May said in response to a question at a Bank of England event.

Boeing, the world's biggest plane maker, has said it is committed to the United Kingdom.

May's criticism of Boeing indicates the importance of the plant to the small Northern Irish political party on which her government has relied since she lost her parliamentary majority in June following a botched election campaign.

Britain would nevertheless find it difficult to unpick its relationship with one of its most important defence equipment suppliers.

May also needs U.S. President Donald Trump's support as Britain prepares to sever ties with the European Union. She has pitched a new trade deal with the United States to cushion the impact of leaving the EU's tariff-free single market.

But May could find it difficult to convince Trump, who has made "America First" a theme of his administration, to get a titan of U.S. industry to back off from defending what it views as its trade rights.

May, who had raised the issue with Trump, said she would try to work with Canada to stress the importance of Bombardier to Northern Ireland.

CONTRACTS

Canada's Liberal government is refusing to go ahead with a planned purchase of 18 Boeing Super Hornet fighter jets until the U.S. company drops its challenge.

"We can't do business with companies that treat us in this manner ... we are actively looking at other options," Canadian Defence Minister Harjit Sajjan told reporters on Thursday.

On Wednesday, Boeing said it had listened to Britain's concerns but gave no indication that it might change tack.

Boeing said that since 2011 it had tripled its spending in the United Kingdom to 2.1 billion pounds ($2.8 billion) in 2016, while the firm and its suppliers accounted for more than 18,700 UK jobs.

British defence minister Michael Fallon has also criticised Boeing. He ruled out cancelling existing orders with Boeing for nine P-8 spy planes and 50 Apache helicopters, but added the U.S. firm was seeking other UK contracts.

Boeing has risen since 2000 from a relatively minor defence supplier to become one of Britain's top five following the purchase of C-17 transporters and Apache attack helicopters, according to defence analyst Francis Tusa.

Possibilities for reprisals are relatively limited in the short term but further ahead, potentially valuable requirements include the replacement of the Boeing-built Chinook helicopter.

Britain could also consider moving lucrative maintenance and support work for the C-17 transport plane from the United States to Britain, he added.

"What is going to be fascinating is that the Bombardier case will open the eyes of senior service chiefs to the fact that Britain is less important to the United States," Tusa said.

May's comments came in a question and answer session after she had delivered a robust defence of capitalism and free markets in a speech designed to halt the rising popularity of a more radical interventionist economic model espoused by her political opponents, the Labour Party.

Labour said the trade dispute should be referred to the World Trade Organization, and criticised May for "threatening to victimise Boeing."

(Additional reporting by David Ljunggren in Ottawa; Writing by William James and Tim Hepher; editing by Catherine Evans and Adrian Croft)