Airbus subsidies illegal

[cldrvr]

WTO report (http://www.wto.org/english/news_e/news10_e/316r_e.htm)

Quote:

that the German, Spanish and UK A380 LA/MSF measures are subsidies
contingent in fact upon anticipated export performance, and therefore
prohibited export subsidies within the meaning of Article 3.1(a) and
footnote 4 of the SCM Agreement.


And the list goes on.

[11Fan]

Airbus Press Release:

The WTO panel report in the US case against the EU published today confirms Airbus’s earlier predictions: 70 percent of the US claims were rejected and wild allegations have been proven wrong. Neither jobs nor any profits were lost as a result of reimbursable loans to Airbus.

Airbus alerts on counter case on Boeing subsidies while WTO panel rejects US claims (http://www.airbus.com/en/presscentre/pressreleases/press-release/?tx_ttnews%5Btt_news%5D=4216&tx_ttnews%5BbackPid%5D=1683&cHash=89b4801f4e)

[kwateow]

Let's not be duped and treated like children.

All this WTO stuff is sickening as it only exists to make very rich those people who never made any object for the good of mankind: lawyers.

[cldrvr]

It is funny though how Airbus highlights on their website the items that the panel has found were not proven and ignores the items that were proven. For a balanced argument here I copy the items that were proven:


8.1 In light of the findings set out in the foregoing sections of our Report, we conclude that the United States has established the following concerning the existence of subsidies:

(a) concerning the provision of LA/MSF;
(i) that each of the challenged LA/MSF measures constitutes a specific subsidy
within the meaning of Articles 1 and 2 of the SCM Agreement, and
(ii) that the German, Spanish and UK A380 LA/MSF measures are subsidies
contingent in fact upon anticipated export performance, and therefore
prohibited export subsidies within the meaning of Article 3.1(a) and
footnote 4 of the SCM Agreement.

(b) concerning the provision of infrastructure and infrastructure-related grants;
(i) that the provision of the Mühlenberger Loch site constitutes a specific
subsidy within the meaning of Articles 1 and 2 of the SCM Agreement,
(ii) that the provision of the lengthened Bremen Airport Runway constitutes a
specific subsidy within the meaning of Articles 1 and 2 of the
SCM Agreement,
(iii) that the provision of the ZAC Aéroconstellation site and associated EIG
facilities constitutes a specific subsidy within the meaning of Articles 1 and 2
of the SCM Agreement, and
(iv) that challenged grants provided by authorities in Germany and Spain for the
construction of manufacturing and assembly facilities in Nordenham,
Germany, and Sevilla, La Rinconada, Toledo, Puerto de Santa Maria and
Puerto Real, Spain, and by the governments of Andalusia and Castilla-La
Mancha to Airbus in Puerto Real, Sevilla, and Illescas (Toledo) are specific
subsidies within the meaning of Articles 1 and 2 of the SCM Agreement.

(c) concerning the German government's transfer of its ownership share in Deutsche
Airbus to the Daimler Group;
(i) that the 1989 acquisition by KfW of a 20 percent equity interest in Deutsche
Airbus is a specific subsidy within the meaning of Articles 1 and 2 of the
SCM Agreement, and
(ii) that the 1992 transfer by KfW of its 20 percent equity interest in Deutsche
Airbus to MBB is a specific subsidy within the meaning of Articles 1 and 2
of the SCM Agreement.

(d) concerning the equity infusions that the French government and Crédit Lyonnais
provided to Aérospatiale;
(i) that the 1987, 1988, 1992 and 1994 equity infusions to Aérospatiale are
specific subsidies within the meaning of Articles 1 and 2 of the
SCM Agreement, and
(ii) that the 1998 transfer by the French government of its 45.76 percent interest
in Dassault Aviation to Aérospatiale is a specific subsidy within the meaning
of Articles 1 and 2 of the SCM Agreement.

(e) concerning the research and technological development funding provided by the
European Communities and certain EC member States;
(i) that grants under the Second, Third, Fourth, Fifth and Sixth EC Framework
Programmes identified in Annexes I.1, I.2, I.3, I.4 and I.5 are specific
subsidies within the meaning of Articles 1 and 2 of the SCM Agreement,
(ii) that French government grants amounting to a maximum of EUR 391 million
between 1986 and 1993 and EUR [***] between 1994 and 2005 are specific
subsidies within the meaning of Articles 1 and 2 of the SCM Agreement,
(iii) that German Federal government grants under the LuFo I, LuFo II and LuFo
III programmes amounting to EUR [***] are specific subsidies within the
meaning of Articles 1 and 2 of the SCM Agreement,
(iv) that German sub-Federal government grants amounting to EUR [***] from
the Bavarian authorities under the OZB and Bayerisches
Luftfahrtforschungsprogramm, EUR 11 million from the Bremen authorities
under the AMST programmes, and EUR [***] from the Hamburg authorities
under the Luftfahrtforschungsprogramm are specific subsidies within the
meaning of Articles 1 and 2 of the SCM Agreement,
(v) that loans under the Spanish government PROFIT and PTA programmes
amounting to, respectively, EUR 62.2 million and EUR [***], are specific
subsidies within the meaning of Articles 1 and 2 of the SCM Agreement, and
(vi) that UK government grants under the CARAD and ARP programmes
amounting to GBP [***] are specific subsidies within the meaning of
Articles 1 and 2 of the SCM Agreement.


8.2 Furthermore, in light of the findings set out in the foregoing sections of our Report, we
conclude that the United States has established the following with respect to adverse effects:

(a) that the effect of the subsidies is to displace the imports of a like product of the
United States into the European market within the meaning of Article 6.3(a) of the
SCM Agreement, constituting serious prejudice to the interests of the United States
within the meaning of Article 5(c) of the SCM Agreement,

(b) that the effect of the subsidies is to displace the exports of a like product of the
United States from the markets of Australia, Brazil, China, Chinese Taipei, Korea,
Mexico, and Singapore within the meaning of Article 6.3(b) of the SCM Agreement,
constituting serious prejudice to the interests of the United States within the meaning
of Article 5(c) of the SCM Agreement,

(c) that the effect of the subsidies is likely displacement of exports of a like product of the United States from the market of India within the meaning of Article 6.3(b) of the SCM Agreement, constituting a threat of serious prejudice to the interests of the
United States within the meaning of Article 5(c) of the SCM Agreement, and

(d) that the effect of the subsidies is significant lost sales in the same market within the meaning of Article 6.3(c) of the SCM Agreement, constituting serious prejudice to the interests of the United States within the meaning of Article 5(c) of the
SCM Agreement.

[ShotOne]

Like the short snappy post, cldvr. How about mentioning the enormous government assistance handed to the US aviation industry by the Feds; hefty local tax breaks, research data from NASA, huge defence contracts - Boeing entered the jet age on the back of a massive order for the KC135 tanker, from which the 707 derived (not the other way round), Bilateral agreements which give subsidised US carriers the free run of Europe but severely limit EU airlines in the USA, Their overtly discriminatory Fly America policy...

Perhaps there wasn't room to mention these issues in your brief post!

[Type1106]

Spot on!!! In particular, the point about the KC135/707 is very well made. As someone once said..."Not a lot of people know that..."

In my experience very few Americans will accept this explanation and continue to rage against European 'subsidies'. Many of them also believe as Gospel that BA is heavily subsidised by the British government.

I hope this will not be construed by my American friends as 'Yank Bashing', it is not; I have lived and worked in the US and have the greatest respect for your country but you are sometimes blind to the facts if they do not fit your world view.

[GobonaStick]

The best bits of the entire 1,000-page document are the '[***]' symbols which feature every time something interesting threatened to appear. :(

[Wino]

Shotone

Arguing about the 707 is really funny, and complete crap.

That was 60 years ago! 3 generations of workers have come and gone since then. We might as well be complaining about the resources that Europe stole from America before American Independence.

The fact is that Airbus gets more research and tax breaks then Boeing does now, PLUS the launch aid. Just the value of the governments picking up the health coverage of all the European workers is in the billions of dollars...

Cheers
Wino

[panda-k-bear]

The fact is that Airbus gets more research and tax breaks then Boeing does now

Well, up to the point that a 767 tanker contract is awarded at vastly inflated pricing, anyway. That should pay off any 787 cost overruns, shouldn't it?

How about:

FAA'S $125M "CLEEN" PROGRAM
FAA awarded 5-year agreements to Boeing, GE Aviation, Honeywell, Pratt & Whitney, and Rolls-Royce to develop environmentally-friendly airframe/engine technologies over next five years under its Continuous Lower Energy, Emissions and Noise (CLEEN) program to accelerate introduction of green technology into aviation.

Hmm?

p-k-b

[beardy]

Europe stole from America before American Independence.


How can you 'steal' from something that belongs to you?

Perhaps reparations from the insurgents would be more in order?:rolleyes:

[Ptimat31]

It's a typical discussion that'll go nowhere... Both companies have been and are still supported by their own government. WTO will issue soon (July then October) a report accusing Boeing of exatcly the same issue. At the end, there will be a negociated agreement between those 2 like it was before and they will be really eager to reach it because they are now threatened by the chinese, brasilians and canadians. Airbus and Boeing will soon be very good friends again. For now we are just watching some flexed muscles to impress the journalists. Don't be naive. Mat

[IGh]

The USA recognized the necessity of government support: BAT accepted mail contracts (subsidized), continued manufacturing; then was broken-up in 1934 by govt' (see, men of our industry have quit in disgust since 1934):
HistoryLink.org- the Free Online Encyclopedia of Washington State History (http://www.historylink.org/index.cfm?DisplayPage=output.cfm&file_id=403)
HistoryLink.org- the Free Online Encyclopedia of Washington State History (http://www.historylink.org/index.cfm?DisplayPage=output.cfm&file_id=3546)
HistoryLink.org- the Free Online Encyclopedia of Washington State History (http://www.historylink.org/index.cfm?DisplayPage=output.cfm&file_id=7311)

[slf4life]

If 'subsidies' of whatever kind results in quality, safe aircraft from both manufacturers, and it certainly appears so, who cares?

[Skylion]

As has been said above, support for Boeing's development costs has been built into military orders ever since the Boeing 707. Without Airbus coming on the scene all airlines would have had to pay whatever Boeing and the US manufacturers demanded over the last 60 years and accept whatever products and technology they decided to provide.
Similarly the "Open Skies" agreements which allow US carriers to fly to all points beyond EU cities (eg points in the Europe,Middle East, Asia, Africa -including other EU cities which could reasonably be defined as domestics) have a far greater potential value for US carriers than points beyond the USA for EU carriers. Simple geography dictates that. Where is the USA on the direct track to that cant be flown faster and more conveniently via other routes? Also don't forget that apart from the very limited and unattractive facilitity at LAX for NZ bound transits the USA doesn't do facilities for international to international airside transfers or transits in the way most of the rest of the world apart from Nigeria does.
Airbus aren't about to roll over on this one -and nor should they.

[barry lloyd]

Now let me see - when is Farnborough? Ah about three weeks away - now isn't that a coincidence?:rolleyes:

[11Fan]

One wonders what impact this will have on the USAF Tanker selection, as well as the launch funding for the A350.

[BEagle]

Would that be the American tanker with:

A high risk 7-late-7 flight deck modified for military needs.
An unsolved wing flutter problem.
AAR pods which simply do not meet the customer's requirements.
A dismal despatch reliability rate.
Questionable runway performance.


Or a proven design ordered by Australia, Saudi Arabia, UAE and the UK which not only has fully functioning AAR systems and no wing flutter or buffet problems, but also vastly superior AAR capability and runway performance?

Ol' Bubba Boeing is squirming hard to keep the 767NoGo tanker programme alive. Just ask the Italian Air Force about all Boeing's delivery promises....:uhoh:

Still, if the USAF really is stupid enough to order the 767NoGo, they'll deserve all they get...:rolleyes:

[Rwy in Sight]

I am not sure I follow the news correctly; a couple of months ago there was another ruling (or a leaked document) against Airbus brought by the US government. What is the news now?

Sorry to interrupt the flow of an excellent debate but I am at a loss?


Rwy in Sight

[11Fan]

Gosh BEagle, still on the fence there? :}

I was thinking along the lines of these two elements.

US lawmakers proposed a bill Thursday forcing the Pentagon (http://inform.com/topic/The+Pentagon) to factor in allegedly illegal Airbus (http://inform.com/topic/Airbus+SAS) subsidies when it chooses between the European firm and Boeing (http://inform.com/topic/Boeing+Company) for a major Air Force tanker contract.

US bill ties tanker bid to WTO Airbus-Boeing ruling - Inform (http://inform.com/business/bill-ties-tanker-bid-wto-airbusboeing-ruling-932942a)

Aug. 28 (Bloomberg) -- The European Union signaled governments will proceed with subsidies for the Airbus SAS (http://www.bloomberg.com/apps/quote?ticker=EAD:FP) A350 even if a pending World Trade Organization decision finds previous aid to the biggest planemaker was illegal.

Airbus A350 Loans Unrelated to WTO Ruling, EU Says (Update1) - Bloomberg (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6iZdKqBH90E)

[protectthehornet]

one wonders if there even would be an airbus (formerly known as the Joint European Transport...JET get it?) if it weren't for the Boeing Company's decision to develop the B17 on its own...Boeing bet the farm on it and it SAVED EUROPE FROM THE NAZIS if you might recall.

While there were many other helpful parties to the defeat of the AXIS, AIRBUS wasn't one of them.

So, lighten up out there in airbus land.

[wozzo]

one wonders if there even would be an airbus (formerly known as the Joint European Transport...JET get it?) if it weren't for the Boeing Company's decision to develop the B17 on its own...Boeing bet the farm on it and it SAVED EUROPE FROM THE NAZIS if you might recall

Maybe the Republicans can introduce another bill forcing the Pentagon to factor in that into the decision. I'm sure FoxNews would be enthusiastic.

[protectthehornet]

let's see....berlin was destroyed by B17's and saved by Douglas C47's and C54's (DC3/DC4). And Douglas was purchased by Boeing.

AS A US TAXPAYER, I would prefer to buy Boeing. AS a pilot, I would prefer Boeing to Airbus...esp anything derived from the AB330.

[toowaxy]

No doubt both companies receive some form of aid, but the aid should be even. Both companies have military and space contracts, so lets call that even. As far as launch aid, Airbus does appear to have an advantage. So the US government needs to be convinced to help Boeing with similar launch aid. No doubt that would speed up the 737 replacement if aid was provided.

[11Fan]

So the US government needs to be convinced to help Boeing with similar launch aid. No doubt that would speed up the 737 replacement if aid was provided.

Let's review that thought.

GM and Chrysler. Both received Federal Aid - both going down the tubes.

Ford, no aid, doing great.

I lean towards the latter, thank you very much.

My current Bumper Sticker - bit of a thread drift.

http://i294.photobucket.com/albums/mm107/APC11Fan/Ford.png

[kijangnim]

Greetings,

protectthehornet
Anyone at one stage was saved from something, history books are full of stories, and there is a nice one about Lafayette, so there is nothing to brag about.

[wozzo]

let's see....berlin was destroyed by B17's and saved by Douglas C47's and C54's (DC3/DC4). And Douglas was purchased by Boeing.

From my perspective, I could say that the first ones helped to save me from growing up in a Nazi country, and the second ones helped me to live in a free and democratic city.

AS A US TAXPAYER, I would prefer to buy Boeing. AS a pilot, I would prefer Boeing to Airbus...esp anything derived from the AB330.As a taxpayer, I would prefer the Air Force of my country to have the machinery they want (for a reasonable price). I remember, when the Pentagon made public its initial decision for Airbus tankers some time ago, my first reaction was "Wow! Brave move!", and then "This will never happen." Looks like I was right.

[protectthehornet]

but lafayette wasn't a company making airplanes.

believe me, I think the French are great. Statue of Liberty, Lafayette, the french fleet...everything.

but the planes...not so much

[kijangnim]

protectthehornet
Good :ok:, in that case, stick to the subject, no need to go to ugly territories :hmm:

[protectthehornet]

kijangnim

don't get me wrong...I love the French. I am damn proud of our friendship and hated when certain people in my country made fun of the french. When I hear the French national anthem (les marseilles?) I practially cry with pride. I love two french movies..."the young girls of rochefort" and "umbrellas of cherbourg" both with michele le grand music and directed by jonathan demme

Did you know that some French navy pilots are qualified to land on US Navy Aircraft Carriers? vive le France and I mean it!

let the planes be judged for their aeronautical qualities and not subsidies...both sides.

[auh_to_auh]

let the planes be judged for their aeronautical qualities and not subsidies...both sides.

They were and Airbus won the initial contract until Boeing used it's influence in DC to have it cancelled.

AUH

[kijangnim]

protectthehornet

I agree no subsidies both sides :ok:, and no brides both sides , let the craft do the talking :E (the pilots will take care of the bitching :ouch:)
This is my last post since I have asked to be unsubscribed from the forum, technical forum is great but the bitching and mud digging of the other ones ( middle east in particular) is a big NO NO :=.
All the best to you, and to the beauty all the beast.

[Gretchenfrage]

let the planes be judged for their aeronautical qualities and not subsidies...both sides

Remember when for the first time a T7 flew the same route, same day as a A345 (it was EK)?
The company then stalled all A346 orders.
Instead of bettering the fuel guzzlers (they had no spare engineer capacity, all on the new mega-guzzler) Airbus simply promised all 345/6 customers to cover for the extra burn if they still took the birds.

Now where does this money come from?
Isn't that a form of subsidized price cutting?
Is it even legal, in WTO respects?

To the least it does not correspond at all with the above quote.

Thanks European tax payers ....

[vapilot2004]

Fair competition is key to a healthy marketplace. What is fair? Depends on who you ask.

[Groundloop]

Airbus simply promised all 345/6 customers to cover for the extra burn if they still took the birds.

Exactly the same with McDonnell Douglas and early MD-11 operators!

[toowaxy]

Right, and the MD11 helped drive McDonnel Douglas out of the commercial airplane business. MD sure could have used launch aid....

[potkettleblack]

The yanks bleating on about illegal subsidies is laughable whilst it is commonplace for their carriers to regularly hide behind Chapter 11 protections and continue to fly internationally when they would have been bust in any other jurisdiction across the world.

[11Fan]

So you're suggesting that a legal action by one justifies an illegal action by another?

Just wondering.

[protectthehornet]

MD...was purchased by boeing.

AS for chapter 11...well, we don't have debtors prisons here either.

I wish MD and Lockheed were still in the commercial airliner business. 2 of the best.

[TOFFAIR]

I remembered Bombardier and Embraer had a dispute some time ago, result?
:ooh:
I think instead of throwing mud at another they should get over it between themselves...
I guess China and Russian companies are not develloping anything without subsidies either, so whos losing after all?
I guess the Taxpayers!

[steve wilson]

If the USA is worried about anti-competative practice then maybe they should look at all the Military Equipment (such as Body Armour and Helmets) which is manufactured at 25c per hour by prisoners in US Jails. Approx 80% of all IPE equipment manufactured in the USA comes from Federal Penetentiaries.

[steve wilson]

Forgot to mention this one too:

European Governments should withdraw aid to Airbus when the US Government no-longer allows its airlines to be protected by Chapetr11!

Can open-worms everywhere!

Steve

[11Fan]

If the USA is worried about anti-competative practice then maybe they should look at all the Military Equipment (such as Body Armour and Helmets) which is manufactured at 25c per hour by prisoners in US Jails. Approx 80% of all IPE equipment manufactured in the USA comes from Federal Penetentiaries.


More like a can of "red herring" Steve.

So, is Chapter 11 illegal? Is having prisioners work illegal?

Or maybe you want to take a shot at this question I posed earlier.

So you're suggesting that a legal action by one justifies an illegal action by another?

[glhcarl]

It does not matter who won or who lost. The World Trade Organization has no real power to compel either Boeing or Airbus stop doing what they have done in the past.

Addtionally, the WTO cannot levy fines if either company wants to continues doing what they have been ordered to stop doing. Like most civil trials the only winner...the lawyers.

[11Fan]

Interesting Google Ad placement on this thread. You may have to refresh the page to get it to come up though.

http://i294.photobucket.com/albums/mm107/APC11Fan/GoogleAd.png

[Merlyn]

Slightly off topic but how you would you like to be a prisoner in New Hampshire, stamping out license plates all day that say "Live Free or Die"?

[EXLEFTSEAT]

"Forgot to mention this one too:

European Governments should withdraw aid to Airbus when the US Government no-longer allows its airlines to be protected by Chapetr11!

Can open-worms everywhere!"



Seems you don't remember that Airbus was quite happy to provide USAir with exit financing ( and receiving substantial equipment orders in return ) when that carrier was in Chapter 11.

[robertbartsch]

I have been a free market capitalist since the 80s. Unfortunately, when governments allow 8 or so healthy commercial aircraft manufacturors to merge down so only two manufacturors on the planet are left standing, free market capitalism no longer functions and EVERYONE gets burned.

You have heard of financial institutions that are too big to fail and the problems this causes; well, now we also have two aircraft manufacturors that are too big and each should be broken up!

How come overcapacity in the industry has lead to countless carrier issues including bankruptcy, restructuring, insolvencies, liquidations, downsizing, etc, but the aircraft manufacturors and leasing companies are largely left unscathed?

[Jig Peter]

I think you've got your "overcapacities" mixed up. The layoffs, bankruptcies you speak of were airline problems. Easy(ish) access to finance led to orders to the manufacturers, who obliged - so who's to blame there, apart from the financial optimism of past years?

As far as manufacturers go, the capital needed and risk involved grew excessive for many, if not most, of the 8 manufacturers you mention, like Douglas (pre their takeover in MDD guise of Boeing) or Lockheed. In Europe manufacturers were able to continue with smaller aircraft, like the 146 or ATR, but cooperation was judged to be the answer for bigger stuff (as in the military field as well).

I won't descend into the political field, but just mention that governments (including the US) don't feel comfortable when big-ticket items like airliners can only be obtained from one country whose aircraft builders wield considerable open (and covert) influence with their government.

[Cymmon]

Just the value of the governments picking up the health coverage of all the European workers is in the billions of dollars...

It´s called the National Health service, a European norm.

Wasn´t something similar just announced quietly by the US?
Therefore the US will do the same as Europe, pick up huge tabs for health coverage!

Subsidy? or human right?

[Ptimat31]

Chapter 11 is not illegal but is an unfair advantage that the yanks would complain about should it be used in europe. Boeing is arrogant now as the complaint filed by EU againts the illegal subsidies / research being done by Nasa and Pentagon is not issued yet. When it is published and Boeing busted, they just go for a negotiated solution. For info, we are using boeing planes in the french army.

[robertbartsch]

What is wrong with Chapter 11 reorganization under U.S. law?

....makes perfect "cents" to me if a troubled company must prove to the court that creditors would be better off in re-organizing the company's finances rather than to liquidate the net assets of the company in a fire sale.

The only bad thing I see is that upon emergence, the "new" company typically has a clean balanace sheet with little or no debt and that other companies in the same businesss who have not reorganized may be adversely impacted. Frankly, that is the way capitalism is supposed to work, however.

I don't see any reason why the world needs only two manufacturors. If you think there is true market competition for commercial birds, I have a bridge I would like you to buy.

[Rob Courtney]

let's see....berlin was destroyed by B17's


Think you may find a certain Avro product destroyed more of Berlin than the B17 which didnt really start going after the big city until mid 1944:ok:

[davidibiza]

And please note that the US did not come to Spain to save us from the nazis. No one came!. It was easier to use our bases again the Russian threat. So please stop using that :mad:. I also have good american friends, but they sometimes (as some of us here too) tend to stop thinking by themselves.

Fight the common enemy: Politicians!