The Global Market and The Boeing Company Hope that Ending EU Over Unfair Airbus Subsidies

The Unfair European Union Subsidies Ending will make
Harmonize the Global Market
"The use of government money as a competitive weapon must be stopped,"

"EU subsidies Behind the world, what leads to Unfair EU subsidie for Airbus"

We need Break the ICE "Long Time Unfair EU Subsidies for Airbus"

U.S. to Request WTO Dispute Settlement panel over Airbus

According to The United States Mission to the European Union News, Date: May 30, 2005 Below is a joint statement on the Boeing/Airbus conflict issued by U.S. Trade Representative Rob Portman and European Trade Commissioner Peter Mandelson, followed by a press release from the office of the U.S. Trade Representative:

Joint statement:

Joint Statement of USTR Rob Portman and EU Trade Commissioner Peter Mandelson Regarding the dispute over Airbus/Boeing and the WTO

"We remain united in our determination that this dispute shall not affect our cooperation on wider bilateral and multilateral trade issues. We have worked together well so far, and intend to continue to do so."

Press release:

United States Takes Next Step in Airbus WTO Litigation

WASHINGTON - In light of the European Commission's unwillingness to halt new subsidies for large civil aircraft, and with EU Member States preparing to commit $1.7 billion in new risk-free launch aid subsidies for Airbus, the United States announced today that it will file a request for the establishment of a World Trade Organization (WTO) dispute settlement panel to resolve the dispute. The panel request will be filed on Tuesday, May 31.

"For almost a year, the United States has tried to convince the EU to negotiate an end to subsidies for large civil aircraft," said U.S. Trade Representative Rob Portman. "So we were pleased when, on January 11th of this year, the EU agreed to a standstill on launch aid while we negotiated an end to subsidies. Unfortunately, at this point, the EU is no longer willing to hold off on launch aid, and has only proposed to reduce subsidies, not end them."

"We continue to prefer a negotiated solution, and we would rather not have to go back to the WTO. But the EU's insistence on moving forward with new launch aid is forcing our hand," added Portman.

By requesting the panel, the United States is providing time for the EU to reconsider its plans to provide new subsidies and recommit to the agreed January 11th U.S.-EU agreement for negotiations. This would include an immediate halt to any further steps toward providing new launch aid and a recommitment that the purpose of the negotiations is to end new subsidies for Large Civil Aircraft (LCA), and not merely to reduce them.

"We still believe that a bilateral negotiated solution is possible," said Portman, who noted that out of the 100 concluded WTO cases involving the U.S. since the WTO was founded, more than a third were satisfactorily resolved following negotiation. "But the negotiations won't succeed unless the EU recommits to ending subsidies."

The United States believes this dispute must be managed in a constructive manner and not be allowed to spill over into other issues. Seeking a decision from a neutral WTO panel is the best way to accomplish this goal, as has been the case in other high profile disputes (e.g., biotech, steel safeguards) in which the United States and the EU were able to continue to work on shared goals as litigation proceeded.

Background:

The WTO Case Against Airbus

The U.S. case alleges that the launch aid for the A350, the A380, and earlier aircraft and other government support to Airbus qualifies as subsidies under the Agreement on Subsidies and Countervailing Measures (SCM) and that the subsidies are "actionable" because they cause "adverse effects," or "prohibited" because they are export-contingent, or both.

The first step in the WTO process is to file a request for consultations. The United States took that step on October 6, 2004. The United States and the EU held WTO consultations on November 4, 2004, but the consultations failed to resolve the dispute. On Tuesday, the United States will take the next step by requesting the formation of a WTO dispute settlement panel.

Subsidies to Airbus Airbus

S.A.S. ("Airbus") was established in 1970 as a European consortium of French, German, and later, Spanish and U.K. companies. In 2001, Airbus formally became a single integrated company. The European Aeronautic Defence and Space Company ("EADS") and BAE SYSTEMS of the U.K. transferred all of their Airbus-related assets to the newly incorporated company and became 80 percent and 20 percent, respectively, owners of the company. The operating results of Airbus are fully consolidated in the EADS balance sheet.

Over its 35 year history, Airbus has benefited from massive amounts of EU member state and EU subsidies that have enabled the company to create a full product line of aircraft and gain a 50 percent share of LCA sales and a 60 percent share of the global order book. Every major Airbus aircraft model was financed, in whole or in part, with EU government subsidies taking the form of "launch aid" - financing with no or low rates of interest, and repayment tied to sales of the aircraft. If the sales of a particular model are less than expected, Airbus does not have to repay the remainder of the financing. EU governments have forgiven Airbus debt; provided equity infusions; provided dedicated infrastructure support; and provided substantial amounts of research and development funds for civil aircraft projects.

Since 1985, the United States has been involved in several major rounds of negotiations with the Airbus partner governments and the Commission with the objective of achieving greater disciplines over the subsidies provided to Airbus.

In July 1992 the two sides negotiated a bilateral agreement limiting government support for LCA programs. The agreement included a prohibition of future production support and a limitation on the share of government support for the development of new aircraft programs to 33 percent of the project's total development costs.

Although the United States expected the 1992 agreement to lead to a progressive reduction of subsidies, it became instead an excuse for EU governments to continue subsidizing Airbus. The $3.7 billion in launch aid that EU governments committed for the new Airbus A380 was the largest amount of funds committed for a single project. The EU provided further loans and infrastructure that has pushed the total amount of A380 subsidies to approximately $6.5 billion. Airbus is now preparing to launch another competitor (A350) to the recently-launched Boeing 787, and it has requested $1.7 billion for that aircraft as well, even though it has stated publicly that it could easily finance the project itself.

In 1995, the WTO Subsidies Agreement entered into force. The agreement applies in full to subsidies for LCA. Therefore, if a Member provides a subsidy that is inconsistent with the agreement's terms, it is subject to challenge at the WTO.

In 1997, the EC conditioned approval of the merger of Boeing and McDonnell Douglas on a commitment by Boeing to license to Airbus any "government-funded patent" that could be used in the manufacture or sale of LCA. Airbus has no similar commitment to share the fruits of government-funded technology with Boeing. The United States has sought to include a mutual commitment of this kind in a new bilateral agreement.

Efforts to Negotiate a New Bilateral Agreement

The Administration's current effort to end the subsidization of Airbus began early last year, when it became apparent that EU Member States were considering subsidies for the A350. U.S. and EU officials had extensive conversations in the late spring and early summer, and two sets of meetings in July and then again in September, as the United States sought an EU agreement to negotiate an end to subsidies. President Bush instructed USTR to pursue all options to end the subsidization of Airbus, including the filing of a WTO case, if need be. The U.S. industry fully supported this approach.

Unfortunately, the EU was not willing to agree to the goal of ending new subsidies, much less on how to achieve this goal. Therefore, on October 6, 2004, the United States initiated the first stage of dispute settlement proceedings at the WTO by requesting consultations with the EU. The EU responded by requesting consultations on alleged U.S. subsidies to Boeing. The United States also exercised its right to terminate the 1992 Agreement at that time. The United States held WTO consultations with the EU in November, but did not resolve its concerns. Then, on January 11, 2005, when the United States was on the verge of requesting the formation of a dispute settlement panel, the two sides reached agreement on a framework for negotiating an end to subsidies. The framework included a 90-day time frame for the negotiations. It also included a common goal of ending subsidies, as defined by the WTO Subsidies Agreement. The agreement applied equally to the United States and the EU.

In March of this year, the EU introduced a new set of conditions for the negotiations and turned away from the agreed objective of ending subsidies. They began to focus instead on merely "reducing" subsidies, with the possibility of eliminating them at some point in the future. The EU appears to have changed its position because certain EU Member States want to continue providing launch aid subsidies to Airbus, in particular for the Airbus A350.

Earlier this month, Airbus confirmed that it has applied to all four governments for A350 launch aid, and that it is seeking a decision by mid-June. According to the British press, "Whitehall insiders" have stated that the U.K. government will announce a $700 million commitment of launch aid at the Paris Air Show, which will be held June 9-13. Officials of the European Commission have stated that launch aid is permissible, in their view, and that it is up to the Member States to decide whether to provide it. On May 24, a French government official stated that "[t]he French state has given its financial support to the A380 programme and we expect to continue in this vein . . . ."

While the United States remains committed to resolving this matter through the negotiation of a new bilateral agreement, we have concluded that filing a WTO panel request at this time is necessary to ensure that, one way or another, the playing field is leveled. The WTO offers an agreed multilateral forum for resolving trade disputes according to agreed rules. (1)

So many media have been reported that The Boeing Company Board CEO Lewis Platt wants to see that "Launch Aid Stop for unfair EU subsidies for Airbus".

European Union Trade Commissioner Peter Mandelson seems want to resolve without WTO (World Trade Organization) and mentioned that there is adequate room for both to prosper in the global market. (2) Only way to make prosper in the global market is when EU STOP UNFAIR SUBSIDIES FOR AIRBUS. AIRBUS IS NOT A NONPROFIT ORGANIZATION.

"The US should be clear that Airbus intends to produce the A350," Mandelson said. "The EU remains ready to negotiate a balanced, phased agreement to reduce and eventually eliminate subsidies for large civil aircraft production." (3) It makes sense if EU stop right now for unfair EU subsidies!

During 2005 Annual Investors Conference yesterday, The Boeing Company Board CEO, Lewis Platt emphasized again that "We want Launch Aid Stop First! That is condition of good discussion. The leaders of the Boeing Company continue to set out to build a global aerospace enterprise. Lew Platt, Board CEO made very clear over and over again that he hopes the negotiations will be successful, but he wants to make sure that EU understand that he is prepare to support it WTO case, if the US government decides proceed with one. And they will proceed with one; if we can not get launch aid eliminate it. He is very confident that The Boeing Company has very strong case. Boeing does not shone competition from Airbus or anyone else. But, we will take the necessary steps to protect ourselves against predatory trade practices. This is a basic right that is recognized under WTO rules. And it is ultimately good for the entire aviation industry. All we are asking for is level playing field where all the parties compete under merits of their products.

The annual event is an opportunity for senior Boeing executives to share Boeing's outlook and performance with investors and securities analysts who help shape the market's perception of Boeing. "Over the last decade, the leaders of this company set out to build a global aerospace enterprise of unrivaled breadth and balance, combined with the discipline of always running healthy core businesses.

It is very clear that the world wants to see stop LONG TIME UNFAIR EU SUBSIDIES. WE NEED BREAK THE ICE. It was absolutely unfair for a long time like a cold war............very snicky way and acted like supporting the world but didn't support the world at all, instead, what have EU done? MONOPOLY GAME - EURO DOMINATING AND THE GLOBAL MARKET CRASHED.......IT IS TIME TO BREAK THE ICE AND BALANCE THE GLOBAL MARKET. It is very important to recognize the World Trade Organization is the biggest and the most powerful organization in the world, more than 124 countries actively involved world trade organization.

In the mean time 25 EU nations have done only hurting the economic around the world. More than 30 years of frizzed world market with continuing unfair EU subsidies and blaming on nonprofit organization bank loan. Airbus is not a nonprofit organization, it is private company. Over 30 years of back support by EU subsidies. It is too much hurting the world and too much.... include the Boeing Company and other industries around the world.

EU excuses, about the Washington state tax credits and military contracts so on....there are no doubt about EU will be back traped at them when they keep finger pointing at the Boeing. It is the fact that the world knows about EU subsidies are completely different issue. Just stop unfair EU subsidies.....

The 1992 agreement was negotiated, Airbus accounted for only about 30 percent of the global market. It now represents more than 50 percent of this market. Clearly, the 1992 agreement has outlived its usefulness.(4) It is absolutely unfair for the Boeing Company and for other industries for a long time......

Per STATEMENT BY THE PRESS SECRETARY: The annual U.S.-EU Summit will take place in Washington, D.C. President Bush will host the Summit on June 20, 2005. The United States and the European Union have an important and expanding agenda of global cooperation. The President looks forward to this opportunity to discuss our transatlantic agenda with European Council President Jean-Claude Juncker and European Commission President Jose Manuel Barroso. (6)

The Sixth WTO Ministerial Conference will be held in Hong Kong, China from 13 to 18 December 2005. The Ministerial Conference is the top most body of the WTO under the governance structure set up by the �Agreement establishing the WTO�. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.(4)

Taking cases to the WTO (World Trade Organisation) is, in my view, not the appropriate way to deal with a dispute between two hugely successful companies for whom there is adequate room for both to prosper in the global market," European Union Trade Commissioner Peter Mandelson said. (2)

Boeing is fighting back against Airbus after losing the lead in plane deliveries in 2003. It had previously dominated the market for decades. Washington has warned it could resume a World Trade Organization case, suspended in January, aimed at getting the government loans declared illegal under global trade rules.

Boeing has seen its share of market sales drop to 48 percent from 73 percent in 1993, losing its title as the leader in the $50 billion-a-year airliner market in 2003, when Airbus outsold it by 305 aircraft to 281. (2)

EADS and BAE Systems of the U.K. incorporated 80 percent and 20 percent with different owners of the company and the Airbus are fully consolidated in the EADS balance sheet. Airbus S.A.S. ("Airbus") was established in 1970 as a European consortium of French, German, and later, Spanish and U.K. companies. In 2001, Airbus formally became a single integrated company. (5)

It is shame but, It is not surprised to see this, over 30 years of dominating the EURO marketing on this behind the world, finally the media talks about it (WE CAN NOT LET THIS CONTINUE AND frizzes the ice around the world). WE MUST BREAK THE ICE, STOP UNFAIR EU SUBSIDIES, AND BALANCE THE GLOBAL MARKET..............

Per seattletime.com, dated May 29, 2005: Discovering that Airbus was receiving Marshall Plan money was one such instance. Sixty years after World War II, the Marshall Plan money is still around because Germany has charged interest on loans to successful companies.

The searchers found Germany has loaned the money - officially called the European Recovery Plan - several times to benefit Airbus. Germany also invests it in engine manufacturing, technical research and other projects in the nation's aerospace industry.

The Europeans at points have hinted they might be willing to halt launch aid, but only after the A350 gets some. "It's a tactic to slip one more airplane under the door," said Boeing's Platt, who took up the cause after Stonecipher was fired in March as a result of improper conduct related to an affair with an employee. "We reject that." Now that Airbus is going public with requests for aid, the United States must make its decision. Said John Veroneau, lead negotiator at the U.S. Trade Representative's Office until he left for private practice in February, "There is no question in my mind that the USTR and the White House are serious about bringing this case." A lawyer who helped lead the Boeing research effort from his home base in Berlin Chairman of Airbus (7).

You need serious balls to demand billions of euros in "repayable" loans from taxpayers. (What Airbus calls "repayable" loans are actually risk-free loans at below-market rates that don't have to be repaid if the airplane is a commercial failure.)

NEW YORK � As they discuss a possible merger, US Airways (search) and America West (AWA) are near a deal for a $250 million loan from Airbus (search) as part of a 20-jet order for the aircraft maker's new A350 (search) model, according to a newspaper report.

Why does Airbus need billions to build the A350 when they have cash on hand to loan airlines? This is outrageous, and I doubt very much that US trade representatives will sit on their hands. Airbus is $35 billion in debt to European governments for past projects (including the A380), and much of the older debt was simply written off their books. $4 billion "forgiven" by Germany in 1997-1998 alone. (8)

In fact that global maket was non existed among the EU subsidies and EURO market area and so on............

Per EU Referendum, blogger says (9) "Suffice to say that, under certain circumstances, the pursuit of patriotism is the antithesis of prosperity. Did we fight Hitler to get rich?

Another lie follows in quick succession: "Our role as a leading member of the EU is a crucial part of securing that." He attempts to justify that lie by telling us that:

Few would argue that the European single market � the world's largest with a population of 450 million � helps creates thousands of jobs, and makes our economy stronger in the world. There is a need, of course, to make Europe more competitive and more prosperous. I am pleased we have got a European Commission which has made deregulation and economic reform its first priority.

This is not the time or place for a long essay on the WTO, but how does help us if we submerge our voice and our influence in the "common position" of 25 member states � so often dominated by France � in order to talk to other countries about trade, in the forum of the WTO? The "advantage" is illusory.

As for the "European single market", the lie her is so obvious that one wonders why Straw keeps repeating it. Firstly, the market may be open to us, but our market is also open to "them". Before we joined the ten "common market" we had a trading surplus with the EU countries. Since we joined, we have sustained a massive and continuing deficit arising from that infamous "unlevel playing field".

We can not be blinded, we have to do something about it, U.S and The world starting to recognizing what is the behind about this EU monopoly game.....

The Boeing Company and other industries should receive economic healing recovery and make the displinary action to stop unfair EU subsidies for AIRBUS by WTO when it is not stop EU subsidies and not resolving the trade issues for the world global maket needs. This is not only the Boeing Company critical issues but also U.S economy and around the world global market critical issue.

It is positive see that WTO is there to be able to handle for fair global market and and handle the justice for around the world. WTO ( more than 124 countries) under the governance structure and will be able to set up by the �Agreement establishing the WTO�.

President Bush will host the Summit on June 20, 2005. The United States and the European Union have an important and expanding agenda of global cooperation. Hope and pray that EU would Stop illegal under global trade rules for Unfair EU Subsidies at this critical time and cooperate and Stop EU subsidies for a long time unfair subsidies and harmonize the worldwide global market.