The Canadian government has told the Reagan administration it is not backing down on its offer of subsidized financing for a controversial $650 million deal to sell subway cars to New York City, unless Canada's major competitor, the French government, also backs down on its subsidies.
The Ottawa government is seeking "substantial and clear movements by the French" to rescind the export credit subsidies it offered to obtain the lucrative deal, before Canada will consider changing its financing package, a Canadian embassy spokesman said. U.S. labor, business and government groups have accused Canada of violating international agreements and affecting thousands of U.S. jobs.
Canadian and U.S. officials met yesterday to discuss the subway-car deal that has become a rallying point for labor and other buy-American advocates. U.S. representatives said merely that there was a useful exchange of information and that another meeting will be held later, possibly within the next 10 days.
In addition, the AFL-CIO Industrial Union Department yesterday filed an unfair trade practices complaint against the Canadian government regarding the subway-car deal, asking the president to restrict the importation of the disputed cars. The Budd Co. of Troy Mich., a wholly owned subsidiary of a German firm whose bid was rejected by New York, yesterday filed a petition with the Commerce Department asking the government to levy duties against the Canadian company equal to the alleged unfair subsidy.
The transit authority and Bombardier Corp. of Quebec hope to make the offer final in several weeks unless Budd or the union succeed in blocking it.
The transit authority tentatively awarded the contract to build 825 subway cars to Bombadier over bids by Budd and France's Francorail. The Canadian company's bid allowed the transit authority to borrow 85 percent of the cost of the cars at a 9.7 percent interest rate, which is below the 11.4 percent rate agreed upon as a minimum by the major industrialized nations. The financing was to be provided by a Canadian financing agency.
However, the Canadians said they only made that bid to compete with Francorail, which made a similar offer.
"Neither of us is happy about using taxpayers' money to subsidize export sales," the Canadian official said.