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US threatens WTO action on Airbus

Old 14th Aug 2004, 12:40
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US threatens WTO action on Airbus

US threatens WTO action on Airbus

Saturday 14 August 2004 4:34 AM GMT

Boeing hopes the subsidies issue will be resolved by September

US President George Bush has warned European aircraft maker Airbus Industries of World Trade Organisation action in September because of "unfair" government subsidies.

Bush told reporters on Friday he had instructed Trade Representative Bob Zoellick to "pursue all options to end these subsidies".

The president's election-year threat to go to the WTO came after he met there behind closed doors workers at Boeing, Airbus' archrival, during a campaign swing.

"Airbus was founded about 30 years ago and has received, in those 30 years, large government subsidies from European nations, and continues to receive them," said Bush.

"I think it's unfair to this American company that these European governments continue to subsidise Airbus," said Bush. "I believe if our country is treated fairly, we can compete with anybody, anytime, anywhere."

Government support

Under a 1992 US-European Union agreement, European support for new aircraft programmes - provided in royalty-based loans - was limited to 33% of the total cost, repayable with interest within 17 years.

On the other hand, indirect US support through NASA or military programmes was limited to 3% of turnover for the US large commercial aircraft industry.

Boeing has charged that the arrangement allows Airbus to get state money virtually on demand and welcomed approaching the WTO.

Boeing reaction

Boeing president and chief executive officer Harry Stonecipher said: "We are pleased that the president is determined to see US negotiators create a more appropriate framework with their EU counterparts.

"The current framework cannot be justified and needs to be changed immediately," he said.

Zoellick has recently stepped up pressure for an overhaul of the 1992 deal, telling reporters at a news conference on 8 July that the agreement was outdated.

Airbus is jointly owned by the European Aeronautic Defence and Space Co, which holds 80%, and Britain's BAE Systems, which holds the remainder.

rotornut is offline  
Old 14th Aug 2004, 18:42
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Boeing will have to be careful about who they go round winding up.

At the last count there are no 777s delivered to US airlines since one to American in June 2003, well over 12 months ago, and there are none on the near horizon either. Meanwhile over this period there are 10 -300s going to Air France (3 delivered, 7 to go in the next few months). It must be one of Boeing's biggest orders in recent times. And Air France is state owned by the very government the US is setting the WTO on.

So watch out, Harry "loudmouth" Stonecipher. You seem to be trying to bite the hand that feeds you. Maybe just as well the Boeing board announced your retirement recently; having brought McDonnell Douglas to their knees it would be a shame if you repeated it with Boeing.

Phil Condit would never have been so naive.
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Old 14th Aug 2004, 19:49
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Is there an Election this year in the USA?

Just wondering.
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Old 14th Aug 2004, 20:13
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How very predictable and how very pathetic.

Boeing has been dying a slow death as a new airframe manufacturer for the past decade, because somebody else has had a better idea.. and even their home airlines are buying Airbus.
When your last tangible foothold on the European market is Ryanair perhaps it is time to stick to military hardware.

Hopefully these idiots will not be around to see their case get thrown out of court.. unless of course the court happens to be American owned.
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Old 14th Aug 2004, 21:10
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TEN -300s........ WOW!!! Yeah that's it, run around snivelling after crumbs rather than go after the cake. "But if someone takes our crumbs away we'll be hunnnn-greeeeee...."

Makes a lot of sense WHBM, great logic.

Always amazes me the head-in-the-arse attitude some are keen to display about "superior" products. Having flown both I'm happy to see the playing field levelled and look forward to the day I will never again be in danger of being shunted onto a plastic POS just because it happens to cost less than the quality aircraft offered by the people down the road.

current boss operates both but the plastic wonders are going because they just don't pack the gear and everyone here knows it.

What's the "better idea", TEDDY??? Tables for pilots??? obviously has airbus shares and been dreading the day they have to stand up for themselves and their crap plastic pox-buckets.
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Old 14th Aug 2004, 22:29
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I think that the dried out Ivy League cowboy may have air-hag's vote, so that's allright then.

Methinks dreamliner is injection moulded and may not be to air-hags taste?
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Old 14th Aug 2004, 22:35
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Government Intervention

Would I be wrong in thinking that the “soft” loans that the EU member states have extended to Airbus over the years are not too dissimilar to the financial assistance packages that the US government has extended to distressed US carriers over recent years? This propping up of the airlines has effectively meant back door support, both for Boeing and Airbus by ensuring that leasing payments etc. can continue to be meet.

If the WTO take the EU to task on this one, the EU response should be simple; all areas of government financial assistance in aviation are to be included in discussions including foreign ownership of carriers, financial assistance to airlines and so on.

Aviation is best served by two or more airframe manufacturers, an Airbus or Boeing monopoly is undesirable, operators both in the US and else ware need choice.

If you want a level playing field, lets have one both for airframe manufacturers, but airlines at the same time. If you don’t like this prospect, please explain why one subsidy acceptable, and the other is not?
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Old 14th Aug 2004, 22:35
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There are very few level playing fields. Just take a look at the protection offered by Chapter 11 for instance!
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Old 14th Aug 2004, 23:37
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Well now.

Perhaps the Americans should look at the protection given to the US steel industry before they start pointing the finger at Airbus.

A case of the pot calling the kettle black..............?

And does anybody understand 'air-hags' last post?

I dont.

If they do, would they explain it please.
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Old 15th Aug 2004, 02:10
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It's very simple, air hag is almost certainly an American who like Boeings but doesn't like the Airbus because it isn't made in America (pretty typical American attitude).

Of course, air hag seems to overlook the "quality" of the Boeing product is such that some of them roll onto their backs and dive into the ground, some of them deploy reversers in flight, some lose large sections of fuselage, others shed flap sections at regular intervals, and so on and so forth.

Looking at the comparative safety records... well, it's hard to choose really....
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Old 15th Aug 2004, 05:14
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....not to mention the vertical fin going bye-bye, and the nose gear collapsing because the 'logic' was wrong with full flaps.....opps, these weren't Boeings.
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Old 15th Aug 2004, 06:01
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Don't forget rolling over on its back and killing all aboard during a test flight as well.
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Old 15th Aug 2004, 06:19
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Am I the only one to find the trend of this exchange to be heading in a rather infantile direction?

I have the distinct impression that the U.S. now wants to change the rules that worked rather well for them for years - but it certainly looks like the "pitch" was never level during those years.

It would be more interesting to hear a bit about how governments have used a range of measures to support both manufacturers. Anyone out there have the "lowdown" on how they compare?
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Old 15th Aug 2004, 09:03
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Thumbs down

I can already hear all the Boeing workers yell: "Yeahhhhhh, GO USA, GO USA, GO USA!!!" while ´Dubayu´ is trying his best to blurt out one complete sentence in front of the rolling cameras.

I´m flying Boeing now, both -300 classics and -700 NG´s. Both are good and solid aircraft with nice handling characteristics, but completely outdated (even the NG!) for as far as avionics, ergonomics and user-friendliness are concerned. I used to be a big Boeing fan, but now I completely understand why Scarebus has been selling so many aircraft.

Boeing missed it´s slot for the 21st century. Let´s hope that Boeing (with the aid of some government subsidies/lucrative defense contracts from W Bush! ) will be able close the gap with the 7E7 as a duopoly is always better than a monopoly.
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Old 15th Aug 2004, 10:07
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I knew that this topic would end up in mud wrestling between Boeing and Airbus. And there's always someone from both sides of the pond saying "mine is bigger than yours". Grow up , guys. Both companies received/are receiving subsidies, every project have flaws (and sometimes, unfortunately, casualties). For me me, it's plain to see that this is a desperate move by Dubia to get some votes.
If you prefer a monopoly over a "duopoly" than either you have shares of that company or you have your head stuck where the sun doesn't shine.
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Old 15th Aug 2004, 10:24
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Seems like a case of only wanting a level playing field for some industries and not others.
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Old 15th Aug 2004, 10:29
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Nice post GGV. It would be nice to have all the info out in the open.

Why is it that, given all the faults in the real world, the aviation world makes the same mistakes and is constantly dragged down to base level by the incessant bickering.

In the real world the two main religions are supported (?) by fanatics and bigots who want nothing less than the total destruction of the other.

This is echoed in aviation between Boeing and Airbus.

All we get are flame wars and sniping due to the pathetic mentality of those that refuse to engage brain before opening mouth.

It is easy to see those that consider themselves to be the 'High Priests' of the aviation religions by the content, tone and structure of the posts that are made on various threads within PPRuNe. I am amazed that they are unable to see what they have become and that the diatribes continue to be emitted from whichever orifice is pointing in the required direction.

Can the subject not be debated without throwing the toys out of the cot?

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Old 15th Aug 2004, 16:30
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Boeing may be crying fowl over Airbus but a large number of USA based aircraft equipment companys may not be quite so keen on calling in the WTO as Airbus is the USA equipment industrys biggest export customer !.

The whole thing with Bush is just electioneering on a grand scale and aimed at the middle american voter who will never understand the aircraft industry , on the part of Boeing it is just a wonderfull bit of opertunisum to jump on this bandwaggon.
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Old 15th Aug 2004, 16:41
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So we won’t mention anything about the back door subsidies that Boeing cross fertilises from the military programmes, especially those that they get from Pentagon employees like Michael Sears, and Darleen Druyun then?

That’s tooohhhtally different, yeah.
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Old 15th Aug 2004, 18:54
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EU subsidies will decrease naturally

Commercial airplane industry has always been and still is an industry that employs many workers. Historically this industry is inside the military-industrial complex. Since this industry generated so much employment, in the past governments have been subsidizing it. Although commercial airplane industry is young, it is now entering maturity. Maturity means cost reduction and rationalization.

New materials, new manufacturing techniques will increase the productivity of aircraft development and production more rapidly than what we have seen in automotive industry. As the industry requires less and less manpower, governments will be less and less interested to subsidy airplane manufacturing. So, the first reason why EU governments will reduce subsidy to commercial airplane manufacturing industry is the fact that the next all new airplane will be developed and built with LESS workers (my first estimate is that there will be a redundancy of 50% in the next five years).

The second reason is that many skilled workers are available worldwide in aerospace industry (Japanese, Russians and so on). Many factories are available worldwide to build parts of aircraft cheaply. Wind tunnels and research facilities are readily available worldwide. Any new aircraft will be without any doubt very international, just like cars are. Airplane parts (lighting, cables, equipment, interior, etc.) will be standardized and built in countries where production costs are lowest. The content of any new European aircraft will be less European than it has been before. EU governments are certainly not interested in subsidizing foreign workers or foreign factories. In other words it is GLOBALIZATION.

The third reason is that European subsidy can be diverted easily to subsidy non-European projects. EU financed research on fuel cell APU in Madrid done by Spanish universities FOR BOEING is a good example. Is this financing for European interest or is it for BOEING ? Research on fuel cell based APU spin off can be interesting for automotive industries as well, but the first who will take benefit of the research organized by Boeing is Boeing itself.

The long term strategy of US aerospace industry is naturally to sip this European financing by establishing Europe based research centers. The second way is to use more and more EU firms to build parts of US product. Let us not forget that these suppliers had developed their capability using indirect EU financing. Is EU interested in subsidizing firms working for foreign interests ? What is the level of benefit EU can get by continuing the subsidy to such firms ?
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