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Justin Trudeau snubs Boeing, unveils plan to buy used Australian jets

The Trudeau government is escalating a trade fight with Boeing, ditching plans to buy 18 Super Hornets while launching a search for new fighter jets under parameters that could hamper future bids from the US planemaker.

Canada said Tuesday it would instead pursue plans to buy 18 used Australian F-18 fighter jets to supplement its aging fleet, and launched the process to buy 88 new jets as a long-term replacement. Officials didn't specify a purchase price or maintenance cost for the Australian jets. The purchase needs approval from the US government.

It's the latest development in a dispute between the US and Canada as Boeing pursues a trade challenge against Montreal-based Bombardier Inc - and comes with a potential new wrinkle for the U.S. company. Canada created a new procurement step, saying companies that hurt the country's economy would be hard pressed to win any contracts, including the lucrative 88-jet order.

"Bidders responsible for harming Canada's economic interests will be at a distinct disadvantage," Procurement Minister Carla Qualtrough said at a press conference. "The assessment criteria will be used in future procurements."

Chicago-based Boeing launched a challenge against Bombardier over commercial planes. President Donald Trump has so far rejected calls to intervene from Prime Minister Justin Trudeau, who ruled out buying new F-18 Super Hornets in September unless Boeing dropped its challenge. Theresa May has also lobbied Trump on the issue, defending Bombardier jobs in Belfast.

The prime minister campaigned in 2015 on not buying Lockheed Martin's F-35 fighters due to the cost. Canada will now instead move to buy used jets, something its defense minister ruled out just 10 months ago. The Australian planes are of similar design and vintage to Canada's aging CF-18s, and Canada expects the first supplemental planes to be ready for service in the early 2020s.

"Looks like Canada is between a rock and a hard place," said George Ferguson, senior aerospace defense analyst for Bloomberg Intelligence. "They canned the joint strike fighter because it was too expensive," he said, referring to the F-35. "Now they are going for used rather than new F-18s. Seems like they will need to keep buying used until the memory of this fades."

Canada said it would engage with stakeholders through 2018 and 2019 as it considers its permanent replacement fleet, holding a fighter plane industry day next month to provide manufacturers with information. It expects to award a contract in 2022 and forecasts delivery of its first permanent replacement plane in 2025.

Boeing "respects the Canadian government's decision," Scott Day, a spokesman, said by email, adding the company will "continue to support all efforts to build an environment of free and fair competition marked by compliance with agreed upon rules."

Bombardier representatives didn't immediately respond to requests for comment. Ferguson doesn't expect the US planemaker to drop its Bombardier challenge to appease Canada. "Boeing is not going to back down," he said.

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