A bipartisan US trade panel on Friday blocked the government's decision to impose nearly 300 percent punitive tariffs on airplanes manufactured by Canada's Bombardier, in a dispute that has inflamed relations with Ottawa.
The US International Trade Commission voted 4-0 that there was no injury to US manufacturers, which effectively forces President Donald Trump's Commerce Department to reverse course on the retaliatory measures designed to protect Boeing.
The failure to back up the Commerce Department was a rare move by the panel, but it will not release an explanation of its reasoning until March.
Boeing filed a trade complaint after Delta Air Lines placed an order for 75 of the CSeries jets, which can seat between 100 and 150 passengers, and found a receptive ear in the Trump administration, which has ratcheted up adversarial trade actions.
Although none of the planes have been delivered, the Commerce Department ruled that the aircraft benefitted from unfair subsidies and were sold at below cost, allowing Bombardier to have an advantage over Boeing.
"Today's decision is a victory for innovation, competition, and the rule of law. It is also a victory for US airlines and the US traveling public," Bombardier said in a statement shortly after the vote.
Canadian Foreign Minister Chrystia Freeland said Ottawa was likewise "very pleased" with the ruling.
"The government of Canada will always vigorously defend the Canadian aerospace industry and its workers against protectionist trade policies," she said in a statement.
The ruling comes as fraught talks are underway this week in Montreal to renegotiate the North American Free Trade Agreement between the United States, Canada and Mexico.
- 'Disappointed' -
Shares in Bombardier jumped higher on the news, finishing up more than 15 percent in Toronto.
Boeing said the company was "disappointed" with the decision by the commission, which "did not recognize the harm that Boeing has suffered from the billions of dollars in illegal government subsidies" Bombardier received.
"Those violations have harmed the US aerospace industry, and we are feeling the effects of those unfair business practices in the market every day."
A Boeing spokesman told AFP the company would review the commission's reasoned decision early next month before deciding on the next step.
The company could appeal the ruling in US federal courts.
Bombardier argued that Boeing suffered no harm because it did not offer a comparable size jet to compete for Delta's business.
In addition, the Canadian firm has since struck a bargain with European manufacturer Airbus, giving the latter a controlling stake in the CSeries jets and allowing them to be manufactured duty-free in Alabama.
"With this matter behind us, we are moving full speed ahead with finalizing our partnership with Airbus," Bombardier said.
"Integration planning is going well and we look forward to delivering the CSeries to the US market."
The aircraft case is one of several that have soured the Trump White House's relations with Canada, which last month lodged a wide-ranging complaint with the World Trade Organization, challenging US moves to impose punitive tariffs.
As tensions turned raw last year, the Canadian government scrapped plans to buy 18 Super Hornet fighter jets, which are manufactured by Boeing.
The ITC is an independent federal agency and its commissioners are balanced between Republicans and Democrats, although it currently has only four instead of the usual six members.
Unlike the Commerce Department, ITC investigations determine whether US industry is injured or threatened with harm by the imports in question. Both agencies have to rule for punitive tariffs to take effect.
