Canada cancels fighter-jet purchase from Boeing over trade dispute with US

The new F/A-18 fighter jets would have been a temporary measure for Canada, to allow the country to meet its commitments to the North Atlantic Treaty Organization (NATO) and the North American Aerospace Defense Command (NORAD). Image via Commonwealth of Australia, Department of Defence.

The Canadian government is contemplating buying used F/A-18 Hornets from Australia instead of procuring new Super Hornet planes directly from Boeing, a move that would be a major blow to the company's fresh new aircraft line, Defense News reports.

In September, Boeing International president Marc Allen, talking to the Globe and Mail, invoked Boeing's $4 billion worth of annual business and 17,000 jobs in Canada, and said: "If Canada kicks Boeing out, I think that will be deeply unfortunate for us both".

Canada is likely to ditch its deal with Boeing in favor of purchasing planes from Australia following Boeing's accusations of unfair trade practices by their rival Canadian company, Bombardier.

The government's decision to buy Australian fighter jets stands to increase tensions with Boeing, which has repeatedly warned that billions of dollars in business activity in Canada are at stake in the ongoing dispute. "Canada expects to receive a response by the end of this year that will provide details regarding the availability and cost of the aircraft and associated parts that Canada is considering", the PSPC noted at the time.

It is understood the Royal Canadian Air Force needs 28 to 30 used F/A-18 fighter jets to fulfil its worldwide commitments to the North American Aerospace Defense Command (NORAD) and the North Atlantic Treaty Organization (NATO).

Boeing complained to the US government that Bombardier was receiving subsidies, which in turn allowed it to sell its C-Series civilian passenger aircraft at below-market prices.

A formation of U.S. Navy F-18E Super Hornets flies over northern Iraq, Sept. 23, 2014.

The U.S. ruled in favour of the American aerospace giant and as a result, Bombardier will face duties of nearly 300 per cent.