Fallon Warns Boeing

[charliegolf]

http://www.telegraph.co.uk/news/2017/09/27/bombardier-tariff-completely-unjustifiable-dup-leader-arlene/

What do we buy from Boeing? Other than our 2 main helicopters? Without which we might be, er, in the poo.

CG

[Cows getting bigger]

US action in Bombardier dispute 'could jeopardise' future Boeing defence contracts, Sir Michael Fallon says (http://www.telegraph.co.uk/news/2017/09/27/bombardier-tariff-completely-unjustifiable-dup-leader-arlene/)

What do we buy from Boeing? Other than our 2 main helicopters? Without which we might be, er, in the poo.

CG

Err indirectly, P8, AWACS, RJ.

[charliegolf]

Oh, it gets better! That'll learn 'em!

CG

[Mil-26Man]

Err indirectly, P8, AWACS, RJ.

C-17, and quite a bit more besides in terms of services etc Boeing: Boeing UK - Defence (http://www.boeing.co.uk/products-services/defence.page?)

[skippedonce]

And considering Boeing's legal department is probably larger than DE&S, I'm sure they'll be quaking in their boots!

[VinRouge]

So where are all the post Brexit trade deals going to come from? Oh that's right, there aren't any.

[ORAC]

You should realise that Boeing does an awful lot of business with the government on an annual basis other than aircraft related.....

[KenV]

Wait, what??!! Boeing should ignore clearly illegal practices because it might offend a customer? A customer more dependent on Boeing than Boeing is dependent on the customer? In what universe would this make sense?

[woptb]

As in A330 v's 767?

[langleybaston]

The current disfunctional Tory one.

[BEagle]

Oh my, KenV, do you really think that ol' Bubba Boeing won't be given some behind-the-scenes federal aid funding to sort out the latest KC-46A 'Pigosaurus' problems?

It'll happen somehow...:hmm:

Illegal subsidies and bribes. That would never happen in the Land of the Free now, would it....:rolleyes:

[Lonewolf_50]

The R&N thread, (http://www.pprune.org/rumours-news/600028-us-dept-commerce-slaps-220-tax-bombardier-c-series.html)related to this topic. Perhaps the handbags can be taken there for a few swings.
As to facts, this commerce department proposal still has to get reviewed by another government body. It's not a done deal.
If I may quote from a post therein:
Before the taxes are actually imposed, the US International Trade Commission (a separate organization from the Department of Commerce) has to rule on it. As I pointed out: the ball's still in play. Time still on the clock.

[West Coast]

Beagle

Is this about no subsidies or an even playing ground? Euroland has been know to play the same games iso it's industrial complex.

[typerated]

We understand it is business - No problems.

Same as when we have defence technology contracts with North Korea:O

[Just This Once...]

The idea that Europe governments supports its aviation industry whilst the US government does not is dependent on the careful application of a US-prism.

Given the simplistic transparency of European financial support it is easy to point a finger, but in truth the US Federal support for the US aviation industry dwarfs that of Europe. Indeed, you can only bend the truth to expose Europe by ignoring the direct support of US aviation and only counting the final cost under the badged work of the manufacturer.

US commercial aviation has had direct support since inception. From subsidies of airmail, airports, air traffic, safety monitoring and regulation through to tax breaks, direct financial bailouts, government loans (remember "Boeing's Bank"), export assistance, tariffs on imports, directed purchases from domestic manufacturers and domestic content clauses.

Aviation R&D has always been hugely expensive and European governments have provided direct support of start-up costs. In the US the Federal Government conducts cutting-edge R&D under the banner of NASA, DARPA, DOD programs and a number of others. The US viewpoint has a habit of ignoring these costs to the US Government when these technologies appear on US commercial aircraft. Looking at the last mile of aircraft production under the OEM banner is not an accurate way of determining the subsidies provided by the governments concerned.

Although it would be unfair to attribute it as a direct subsidy the US Government's might when it comes to its purchasing power does give it an advantage. Equally the political and financial support for the defence industry also bends the market. This political/industrial mix looks odd to European eyes but the US Congress is happy to purchase systems that are not needed or wanted just to support their own causes. Even now M1 Abrams are being manufactured and mothballed just to keep the money flowing. As a result no other tank manufacturer could compete for an international sale at the knock-down prices of an M1.

I am in no way critical of the US Government support of it's aviation industry but if we are genuinely seeking to establish the level of state funding between US and European products we have to include all costs. Please excuse me if I appear jaundiced when a US viewpoint carefully forgets the direct and indirect government support provided to US commercial aviation.

[George K Lee]

Also - as has been pointed out by the Economist and others - for Boeing to complain about airliners being sold below cost is amusing in the light of the first 400 or so 787s.

[Easy Street]

It's already been said, but I feel like repeating it anyway: choosing the KC767 over the A330? Really? :yuk:

[Blacksheep]

You'd be surprised at the number of pies Boeing has its fingers in. They even used to own a large shareholding in Bombardier, but sold it off for reasons best known to themselves.

Boeing has been in a hate-hate relationship with Canadian aerospace companies for a long time and managed to shut-down de Havilland of Canada and Canadair along the way. Hard to understand since neither they nor Bombardier are or were direct competitors. Mind you, Canadair had the cheek to select Airbus aircraft over Boeing amid allegations of bribery, despite all the shares Boeing had acquired in the company.

[KenV]

Oh my, KenV, do you really think that ol' Bubba Boeing won't be given some behind-the-scenes federal aid funding to sort out the latest KC-46A 'Pigosaurus' problems?Actually, no. It's a firm fixed price contract. Boeing has already written down millions for this program. But nice try.

Illegal subsidies and bribes. That would never happen in the Land of the Free now, would it....:rolleyes:No one, including me, remotely suggested Boeing is pure and clean and free from corruption. But neither are they stoopid. They know how to work the system and will take advantage of whatever legal avenues are available to them. Sorry if my pointing that out offends you. Again.

[KenV]

Also - as has been pointed out by the Economist and others - for Boeing to complain about airliners being sold below cost is amusing in the light of the first 400 or so 787s.There is nothing illegal about selling commercial articles below cost (so long as "dumping" rules are not violated, which they aren't) It happens in everything from computer chips, smart phones, automobiles, to airplanes. There is a LOT illegal in receiving government subsidies for commercial products. That is what Boeing is alleging and the US Commerce Department agrees. (and in the case of Airbus airliners, the US Commerce Department and WTO agree.) Interestingly, neither Canada nor the UK is denying that the illegal subsidies happened, but are instead attempting to strong arm Boeing to drop their lawsuit. So far, Boeing is hanging tough, in both the Airbus and Bombardier cases.

[KenV]

It's already been said, but I feel like repeating it anyway: choosing the KC767 over the A330? Really? :yuk:
Two comments:
1. May I ask how that that military contract remotely relates to illegal government subsidies for commercial products? The answer is not at all. In other words, a red herring.

2. In the case of the KC-767 and A330 MRTT contest, Airbus chose to provide a non conforming bid (no freighter door and no freighter floor.) And on top of that Boeing underbid Airbus. This being a fixed price contract, Boeing is now reaping the rewards of a low bid by having to write off many tens of millions in cost overruns.

[KenV]

The idea that Europe governments supports its aviation industry whilst the US government does not is dependent on the careful application of a US-prism......etc etc.The WTO disagreed. Repeatedly.

Even now M1 Abrams are being manufactured and mothballed just to keep the money flowing. As a result no other tank manufacturer could compete for an international sale at the knock-down prices of an M1.This is an entirely different animal. 1. The M1 is a purely military product, not commercial. Boeing's lawsuit is about a commercial product. 2. There is only one production line and one manufacturer for the M1 and Congress wants to preserve the industrial base to produce tanks. Unlike various UK governments that were/are content to be entirely dependent on foreign manufacturers for all sorts of military equipment, the US government wants to preserve the domestic industrial base for certain military equipment. Tanks being one of them. Fighters also.

[Heathrow Harry]

This is a pointless argument - all sides find ways to suport their aerospace industries when they want to so let's just cut out all teh name calling please.

The issue is can the UK actually threaten Boeing? I think not - there really is no choice............ this is what happens when you have a monopoly supplier - be it Mr B, BAe or whoever.

[Icare9]

... but for Boeing to shriek hysterically about an airliner (that doesn't compete with their model range) surely speaks volumes that the C series is a terrific aircraft, which is more likely the reason for the complaint.
For the M1 tank argument that a Government wants to support an industry, then that argument equally applies to Bombardier support from Canada and UK....
I think we all realise that there are "assists" from all Governments at times to support R&D and service introduction, be it military or commercial.
Are the new generation Chinese airliners "correctly" priced?

What the US have done by imposing a 220% tariff is to expose themselves to ridicule and pot/kettle comparisons. This is America under Trump where bluster and hyperbole count more than facts and truth.

... but what do I know? 4,000 jobs in NI and UK on the line? Let's see a sensible compromise.... uh oh, perhaps sensible is too much to ask of politicians....

[Just This Once...]

The WTO disagreed. Repeatedly.

Do you really think that?

Their site is here:

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e.htm

8.1 Conclusions

8.1. In light of the findings in the foregoing sections of the Report, and with respect to the aerospace tax measures at issue, as amended and extended through Washington State's Engrossed Substitute Senate Bill (ESSB 5952), the Panel concludes that:

a. Each of the seven aerospace tax measures at issue in the present case constitutes a subsidy within the meaning of Article 1 of the SCM Agreement;

b. Regarding the European Union's claim that the aerospace tax measures at issue are subsidies de jure contingent upon the use of domestic over imported goods within the meaning of Article 3.1(b) of the SCM Agreement:

i. The European Union has not demonstrated that the aerospace tax measures are de jure contingent upon the use of domestic over imported goods with respect to the First Siting Provision in ESSB 5952 considered separately;

c. With respect to the First Siting Provision and the Second Siting Provision in ESSB 5952, considered jointly, the B&O aerospace tax rate for the manufacturing or sale of commercial airplanes under the 777X programme is a subsidy de facto contingent upon the use of domestic over imported goods within the meaning of Article 3.1(b) of the SCM Agreement.

8.2. Having found that the B&O aerospace tax rate for the manufacturing or sale of commercial airplanes under the 777X programme is inconsistent with Article 3.1(b) of the SCM Agreement, the Panel also finds that the United States has acted inconsistently with Article 3.2 of the SCM Agreement.

8.3. Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. We conclude that, to the extent that the United States has acted inconsistently with the SCM Agreement, it has nullified or impaired benefits accruing to the European Union under that Agreement.

8.2 Recommendation

8.4. Article 4.7 of the SCM Agreement provides that, having found a measure in dispute to be a prohibited subsidy:

[T]he panel shall recommend that the subsidizing Member withdraw the subsidy without delay. In this regard, the panel shall specify in its recommendation the time period within which the measure must be withdrawn.

8.5. The Panel has found that the European Union has demonstrated that the B&O aerospace tax rate for the manufacturing or sale of commercial airplanes under the 777X programme, pursuant to ESSB 5952, is a subsidy contingent upon the use of domestic over imported goods, prohibited under Articles 3.1(b) and 3.2 of the SCM Agreement.

8.6. Accordingly, taking into account the nature of the prohibited subsidy found in this dispute, the Panel recommends that the United States withdraw it without delay and within 90 days.

Again, I am no apologist for either side as it is clear that both sides provide assistance to their aviation industry and WTO rulings seem to go back and forth. Throwing emotive words around like 'illegal' does not really reflect what has been going on in the US for decades.

As for the current situation the US has decided to make a ruling outside of the WTO and have drafted unilateral penalties. I am not sure the WTO would approve of such methods, so good luck.

[KenV]

Do you really think that?Yes, I believe that the complaint does not require application of a US prism and that the WTO agreed.

[Lonewolf_50]

What the US have done by imposing a 220% tariff is to expose themselves to ridicule and pot/kettle comparisons. This is America under Trump where bluster and hyperbole count more than facts and truth.

... but what do I know? 4,000 jobs in NI and UK on the line? Let's see a sensible compromise.... uh oh, perhaps sensible is too much to ask of politicians.... What you seem to not know is how to read.

Would it be too much to ask you to bother to read the thread, and the link I provided to the R&N thread before you engage in hysterics? The USITC (look it up, I did) has yet to review this, and the ball is still in play. No tariff increase is in place (so far) and there is plenty of time to challenge this proposal. (As I am sure is being done.)


Now, go back to the first page of this thread, read my post, and then go to the link @R&N where a few wiser heads have made some point about this being *a game still with time on the clock and the ball in play* among the noise and crying, rending of teeth, and gnashing of garments. (Hmm, or the other way around).


For the record, I am not sure of all that's behind this. I don't like tariff wars. They are too often a case of lose/lose. This appears to me to be a negotiating tactic, or an attempt to slip one by that got caught. Not sure). As I see it, Boeing seems to have pulled the old "never hurts to try" and we'll see whether or not they succeed.

[Rosevidney1]

It might not be entirely true, but I've heard it said that Boeing has more corporate lawyers than designers.

[Davef68]

TThere is a LOT illegal in receiving government subsidies for commercial products.

Illegal? Depends on who wites the laws

[BEagle]

West Coast wrote: Is this about no subsidies or an even playing ground? Euroland has been know to play the same games iso it's industrial complex.

Indeed, Westie. I very much doubt whether any of the major manufacturers has been entirely squeaky clean over such matters.

As for our own dear BWoS, see https://www.caat.org.uk/resources/publications/corruption/goodwin-5-web.pdf (Not that I support CAAT!!)

:rolleyes:

[Heathrow Harry]

"I very much doubt whether any of the major manufacturers has been entirely squeaky clean over such matters."

the art of British understatement..................

[Just This Once...]

Yes, I believe that the complaint does not require application of a US prism and that the WTO agreed.

The multilateral process with the WTO takes years and despite Boeing's efforts the 3 substantive cases they have undertaken against Airbus have resulted in 1 x US withdrawal, 1 x mutual withdrawal and 1 x sanction against Boeing (777X).

Not exactly a great set of results for Boeing and quite a lot of money and years wasted on both sides.

For this international argument Boeing has utilised a US and thereby unilateral body to hear the case and it is difficult to see how other nations will accept the judgement of a potentially biased body.

The concern for the US should be the opportunity they have handed to other countries to take similar unilateral measures against Boeing or indeed any major US industry.

I do share the view expressed by Lonewolf that this unilateral penalty is far from certain or even beneficial to the US. But it has already achieved reputational damage for Boeing and the US government. Unilateral punitive tariffs are rather frowned upon by the WTO, to say the least.

http://www.stltoday.com/business/local/analysts-pan-boeing-strategy-in-pushing-for-tariffs-on-canada/article_f8990f97-636c-5523-ba46-122567040f24.html#tncms-source=infinity-scroll-summary-siderail-latest

[ShotOne]

Bearing in mind that negotiating clout is touted as a principal reason for retaining EU membership, the silence from that organisation has been deafening.

[Heathrow Harry]

Doesn't affect the EU tho' does it? - just the UK - who have said they want nothing to do with the EU and all its evils...............

So don't be surprised if they just shrug and walk on by and save their powder for the next time Mr B comes after Airbus................... would be different if we were committed to staying in

[engineer(retard)]

The multilateral process with the WTO takes years and despite Boeing's efforts the 3 substantive cases they have undertaken against Airbus have resulted in 1 x US withdrawal, 1 x mutual withdrawal and 1 x sanction against Boeing (777X).

Are you sure that’s the latest score?


Boeing declares victory in Airbus subsidies dispute - BBC News (http://www.bbc.co.uk/news/business-41152544)

[Just This Once...]

It is a game without end.

[tdracer]

It might not be entirely true, but I've heard it said that Boeing has more corporate lawyers than designers.
Not even remotely true - off by several orders of magnitude...

[ShotOne]

"Doesn't affect the EU..." except we're in the EU fully paid-up and committed to remaining so for at least three years. If you're right why don't we just save the cash?

[ORAC]

Doesn’t affect the EU = Doesn’t affect German industry.

[Heathrow Harry]

"we're in the EU fully paid-up and committed to remaining so for at least three years"

and we slag them off at every opportunity..

Do you REALLY expect people to bust a gut for soemone who is (supposedly) desperate to leave the club?

As the poor sods in NI are finding out it's a big, cold, world out there and our "friends" may not be that friendly

[ShotOne]

We're not "out there", yet it's clear the supposed bloc protection is illusory. And far from slagging the EU off, the government has so far been unfailingly polite -despite a stream of hectoring and insults

[thunderbird7]

We're not "out there", yet it's clear the supposed bloc protection is illusory. And far from slagging the EU off, the government has so far been unfailingly polite -despite a stream of hectoring and insults

Hmmm. And Boris is a saint...

[Heathrow Harry]

like a divorce - once one party goes to the lawyers the other one opens a seperate bank account .... if they're wise

[ShotOne]

I'm sure you're right. So why have we agreed to continue paying billions into the joint account?

[Rosevidney1]

tdracer sent:
Originally Posted by Rosevidney1
It might not be entirely true, but I've heard it said that Boeing has more corporate lawyers than designers.

Not even remotely true - off by several orders of magnitude...

So you say, however I was told this by an American whose firm was taken over by Bully Boy Boeing as he called them.

[pr00ne]

Rosevidney1,

I can assure you, having been involved with Boeing legal and the UK Government Legal Dept, that tdracer IS right...

[West Coast]

So you say, however I was told this by an American whose firm was taken over by Bully Boy Boeing as he called them.

A good friend works at Boeing, been there about 5 years. Says weekly that he learns of companies that Boeing own that he never knew about. Just because a mate tells you something about a mega corporation such as Boeing doesn’t make it true.

Now, if you need it to be true, run with it. I’ll introduce you to a lighthouse story that’ll make your day.

[tdracer]

Rosevidney1, just to pile on a bit...
Boeing has something around 20,000 designers/engineers. The corporate office building has several hundred employees, total.


Do the math...

[Blacksheep]

Says weekly that he learns of companies that Boeing own that he never knew about. Then there are the ones that Boeing only owns a piece of - like Monarch Aircraft Engineering Ltd. of which Boeing has a 37% slice. With MAEL having survived yet another Monarch debacle, one doesn't appreciate Mr. Fallon putting one's job in jeopardy.

[Not_a_boffin]

Speaking of doing the maths.


Contract values of $3Bn and $2.5Bn over several years, set against Boeing annual sales of $30Bn+ and a distinct absence of credible alternatives to P8 and AH64, do not seem to put Mr Fallon in a particularly strong position....

[Heathrow Harry]

Yes but he's expected to sound off - especially the week before the Party Conference.................

[Wander00]

Fallon warns Boeing - a bit like the class weed threatening the year group bully

[Rosevidney1]

Please read the very start of my very short message:

It might not be entirely true,

Should I also start correcting every piece of information that others write with their tongue firmly in cheek - or should I be really critical? Perhaps it is a trend.

[tdracer]

Please read the very start of my very short message:

It might not be entirely true,

Should I also start correcting every piece of information that others write with their tongue firmly in cheek - or should I be really critical? Perhaps it is a trend.

And my reply (which you quoted):
Not even remotely true - off by several orders of magnitude...


It was YOU that decided to keep digging.

[Martin the Martian]

Comment piece in today's Times:

Boeing is committed to the UK and values the partnership, which stretches back almost 80 years. All of us at the company here in the UK are proud of the excellent support we have provided to the armed forces since the 1930s. We remain dedicated to that spirit of service in the future for those that risk everything to keep us safe. Furthermore, Boeing has doubled our employment here since 2011 and tripled our spending with the UK supply chain over the same period, to £2.1 billion in 2016. Indeed, approximately 18,700 jobs in this country are at Boeing or in our tier one supply chain.

In July 2016, Boeing and the UK government announced a long-term initiative for prosperity and growth. We remain committed to that vision and have begun to deliver on it already. For example, Boeing broke ground for our first factory in Europe, in Sheffield, in September 2017.

Boeing understands the concerns of the government about jobs in Northern Ireland. We share the government’s commitment to free and fair trade. Our petition to the International Trade Commission in the United States seeks to restore a level playing field in the US single-aisle aeroplane market. Brazil, in support of its aircraft-maker Embraer, has also raised a case at the World Trade Organisation against Canada and Bombardier in February of this year. The legal process will play out on this issue.

Boeing welcomes competition and Bombardier can sell its aircraft anywhere in the world. But sales must be made according to globally-accepted trade rules. We believe that global trade only works if everyone abides by the same rules of the road, and that’s a principle that ultimately creates the greatest value for the United Kingdom, Canada, the United States, and our respective aerospace industries.

We have no objection to competition, indeed it makes us better as we strive to continue to improve, to produce the best products and services to win. But competition must be on a level playing field. That is what this case is about. Boeing will continue to defend a level playing field around the world. Ultimately these shared values and rules of the road are what will deliver the greatest value to all in our industry, here in the UK and globally. This is why we have taken the action that we have. It is the right thing to do.

Sir Michael Arthur is president of Boeing Europe and managing director of Boeing UK and Ireland

I'm amazed he can write that with a straight face.

[Heathrow Harry]

" But competition must be on a level playing field" Brings tears to the eyes.................