But with limits as shown below-- page 99
Appendix 6: State Aid and Reimbursements
Under the terms of the bilateral agreement of 1992 between the U.S. and the European Union
concerning trade in large civil aircraft, the amounts of direct and indirect state support that either party can
provide to the development of a large transport aircraft are limited. Direct government support must not
exceed 33 per cent (33%) of the total development cost. Indirect support must not exceed three per cent
(3%) of the total annual revenues of the civil air transport manufacturing industry in a party’s domain. No
government support for production is permitted.
6.1: Direct Support
Development costs qualifying for direct support are defined under the Agreement to include:
· Preliminary design
· Engineering design
· Wind-tunnel, structural, system and laboratory tests
· Engineering simulations
· Equipment development work, except for work directly financed by equipment and engine
manufacturers
· Flight tests, including associated ground support, and analysis necessary to obtain certification
· Documentation required for certification
· The cost of manufacture of prototypes and test aircraft, including spares and such. Modifications
as may be necessary to obtain certification, less the estimated fair market value of flight aircraft
after refurbishment
· Jigs and tools, except machine tools, for use on specific programs
All direct support must be repaid. An amount equal to 25 per cent (25%) of the total development
cost (75% of direct support) must be recouped through royalty payments at an interest rate no less than the
cost of borrowing to the government; the remaining eight per cent (8%) (25% of direct support) with
royalties at that interest rate plus one per cent (cf. Exhibit 6-1). Both royalty streams must be repaid “within
no more than 17 years.”
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