The global market continues distorting by The Airbus - EU Subsidies for Large Commercial Aircraft (1)
"The Large Commercial Aircraft subsidies has been everyone's concern and this has been the world attention to make the global balance to be harmonized, even the WTO (The World Trade Center) has been sought to resolve this case.

It has been too long years of suffering and freezes market ever since 36 years ago. It was everyone's wish and thought the WTO would stop also the United State of America's congress would stop this case by last year, but it is still on going battle and it is becoming the serious case by the global market system. Even President George Bush made this case has not hesitated to bring the cases when trading partners refuse to live up to their commitments. With respect to U.S. rights under the WTO, in January, USTR requested additional consultations with the European Union over subsidies to aerospace giant Airbus and in March with Canada over its countervailing duty proceedings on U.S. corn exports. In many cases, the WTO vindicated the United States' rights. In November, 2007, the WTO ruled against the European Union's barriers to U.S. agricultural products made with biotechnology. In December, the WTO concluded that a lack of uniformity in Europe's customs procedures violated WTO rules. (4)

According to the III. Bilateral and regional negotiations report, In recent year, finally, the United States has long expressed its concerns with European government subsidization of large commercial aircraft (LCA) development by Airbus. The issue has acquired new urgency in recent years as Airbus sought and received substantial new subsidies (so-called "launch aid") for the Airbus A380 super jumbo aircraft and commitments of further launch aid subsidies for its new A350 passenger aircraft. This is well known by the world and the record shows that when Airbus is delivering more aircraft than its U.S. rival, the Boeing Company at that time. The United States believes that there is no justification for continued subsidies to Airbus.

In 2004 and 2005, USTR attempted to work with the European Commission to establish a new agreement aimed at eliminating LCA subsidies. The Commission's reluctance to negotiate such an agreement led the United States to request initiation of dispute settlement procedures at the WTO (as the United States believes Airbus subsidies violate the WTO Agreement on Subsidies and Countervailing Measures).

The EU requested its own WTO dispute settlement proceeding in relation to alleged U.S. federal and state government subsidies to Boeing. Although the United States would prefer to reach a negotiated solution, it is prepared to see its WTO case through to completion if necessary.

Speaking of The EU requested its own WTO dispute settlement proceeding in relation to alleged U.S. federal and state government subsidies to Boeing, The Boeing has been committed providing more for the learning together program which will give the education and training program since the Washington State committed support Tax deduct program for the education even for the community support. In addition, the Boeing company include the 787 Program has so many partners and suppliers involving around the world. The tax deducting benefit is making sense to make the tax deduct for educating the multicultural support include the Boeing's Learning Together Program which pays the tuition for anyone who wish to learn and finish their degrees and certificate program to expand knowledge outside of what's available at Boeing. Under this program, Boeing will pay for tuition and many related expenses - including application fees, entrance exams, books, and graduate fees - for employees enrolled in accredited colleges, universities or trade schools. Employees who complete degrees are eligible for Boeing stock awards. (3)

The Washington state has the most highest quality workforce system for the multicultural and systematically well setup include many companies like the Boeing Company regardless what ethnic background we are. It is the Washington State's pride to continue to support for the Education program for multicultural and the citizens' requesting for the higher education system to have in Washington State.(2) With that, the EU is making excusing that the Boeing received subsidies from the Washington State which does not making any sense to call it subsidies. It is already well known by the world for European Union-Subsidies on large civil aircraft (DS316) On October 6, 2004, the United States requested consultations with the EU, as well as with Germany, France, the United Kingdom, and Spain, with respect to subsidies provided to Airbus, a manufacturer of large civil aircraft. The United States alleged that such subsidies violated various provisions of the SCM Agreement, as well as Article XVI:1 of the GATT 1994. Consultations were held on November 4, 2004.

On January 11, 2005, the United States and the EU agreed to a framework for the negotiation of a new agreement to end subsidies for large civil aircraft. The parties set a three-month time frame for the negotiations and agreed that, during negotiations, they would not request panel proceedings. The United States and the EU were unable to reach an agreement within the 90-day time frame. Therefore, the United States filed a request for a panel on May 31, 2005. The Panel was established on July 20, 2005. The U.S. request challenges several types of EU subsidies that appear to be prohibited, or actionable, or both. On October 17, 2005, the Deputy Director-General composed the panel as follows: Mr. Carlos Pérez del Castillo, Chair, and Mr. John Adank and Mr. Thinus Jacobsz, Members.II. The World Trade Organization

On January 31, 2006, the United States requested a second set of consultations with the EU, as well as with Germany, France, the United Kingdom, and Spain, with respect to subsidies provided to Airbus, a manufacturer of large civil aircraft. The United States alleged that such subsidies violated various provisions of the SCM Agreement, as well as Articles III:4 and XVI:1 of the GATT 1994. On April 6, 2006, the United States filed a request for a panel. The Panel was established on May 9, 2006. The U.S. request challenges several types of EU subsidies that appear to be prohibited, or actionable, or both. On July 17, 2006, the Deputy Director-General composed the panel as follows: Mr. Tim Groser, Chair, and Mr. Mario Matus and Mr. Eduardo Pérez Motta, Members. At the request of the United States, the Panel suspended its work on October 9, 2006, in order to allow the DS316 panel to complete its work first. (4)

The Trade summary shows The U.S. goods trade deficit with European Union was $116.6 billion in 2006, a decrease of $5.7 billion from $122.3 billion in 2005. U.S. goods exports in 2006 were $214.0 billion, up 14.8 percent from the previous year. Corresponding U.S. imports from European Union were $330.6 billion, up 7.1 percent. European Union countries, together, rank 2nd behind Canada as an export market for the United States in 2006. U.S. exports of private commercial services (i.e., excluding military and government) to the European Union were $127.8 billion in 2005 (latest data available), and U.S. imports were $105.9 million. Sales of services in the European Union by majority U.S.-owned affiliates were $249.1 billion in 2004 (latest data available), while sales of services in the United States by majority European Union owned firms were $224.3 billion. (4) .

According to the The 2007 Trade Policy Agenda and 2006 Annual Report of the President of the United States on the Trade Agreements, Program Services imports by the United States increased in 2006 by 9 percent to $342 billion (table 1). The other private services category accounted for roughly 59 percent of the $27 billion growth in U.S. imports of services in 2006. It was also the category which exhibited the largest percentage import growth rates in 2006, up 16 percent. U.S. services imports accounted for 15 percent of the level of U.S. goods and services imports in 2006.

Since 1994, services imports grew by 157 percent or $209 billion. This growth was driven by the other private services category (accounting for 40 percent of the increase) and the other transportation category (accounting for 19 percent of the increase). All of the major service categories grew since 1994. U.S. payments (imports) of royalties and licensing fees have quadrupled, while imports of other private services and direct defense expenditures have more than tripled.

Table 1 Program Services imports by the United States increased in 2006 by 9 percent to $342 billion (table 1)

U.S. Service Imports

Imports:	1994 2004 2005 2006* 05-06* 05-06* Billions of Dollars Percent Change
Total (BOP basis)	133.1	290.3	314.6	342.0	8.7%	157.1%
Travel	43.8	65.8	69.2	73.0	5.5%	66.7%
Passenger Fares	13.1	23.7	26.1	27.2	4.5%	108.5%
Other Transportation	26.0	54.2	62.1	65.8	6.0%	153.0%
Royalties and Licensing Fees	5.9	23.2	24.5	26.1	6.4%	345.3%
Other Private Services	31.6	90.4	98.7	114.8	16.3%	263.6%
Direct Defense Expenditures	10.2	29.3	30.1	31.1	3.6%	204.7%
U.S. Government Miscellaneous Services	2.6	3.8	4.0	4.0	1.5%	57.7%

 

 

 

 

 

 

 

 

 

 

* Annualized based on January-November 2006 data
Source: U.S. Department of Commerce, Balance of Payments Basis.

Regardless the EU subsidies, the report shows  the import sector, the United Kingdom remained the largest supplier of private services, providing $35 billion to the United States in 2005. This accounted for 13% of total U.S. imports of private services in 2005.  The United States imported $22 billion from both Japan, our second largest supplier, and Canada our third largest supplier. Germany and Bermuda were our fourth and fifth largest import suppliers, exporting $19 and $15 billion, respectively, worth of services to the U.S. in 2005.  Regionally, the U.S. imported $106 billion of services from the EU-25 in 2005, $68 billion from the Asia/Pacific region ($39 billion excluding Japan and China), $37 billion from NAFTA, and $13 billion from Latin America (excluding Mexico).

EU governments have spent hundreds of millions of euros to create infrastructure needed for Airbus programs, including 751 million euros from the City of Hamburg to purchase land that Airbus is using for the Airbus A380 “superjumbo” project and 182 million euros from French authorities to create the AeroConstellation site, which contains the Airbus facilities for the A380. With more than $6 billion in subsidies, the Airbus A380 is the most heavily subsidized aircraft in history. EU governments have also made legally binding commitments of launch aid for the new Airbus A350 aircraft, even though Airbus has not yet repaid any of the financing it received for the A380..

The WTO established the panel on July 20, 2005, and panel proceedings are currently ongoing. U.S. officials have consistently noted their willingness to negotiate a new bilateral agreement on large civil aircraft, even while the WTO litigation proceeds, but have insisted that any such agreement must end launch aid and other direct subsidies for the development and production of such aircraft.

On 20 January 2006, the European Communities requested the establishment of a panel. Having deferred the establishment of a panel on 2 February 2006, the DSB established a panel at its meeting on 17 February 2006. Australia, Brazil, Canada, China and Japan reserved their third-party rights at the meeting. Subsequently, Korea reserved its third-party rights. On 17 November 2006, the European Communities requested the Director-General to determine the composition of the Panel. On 22 November 2006, Deputy Director-General Alejandro Jara composed the Panel, on behalf of the Director-General.

On 18 May 2007, the Chairman of the Panel informed the DSB that it would not be possible for the Panel to complete its work within six months of the date of composition in light of the substantive and procedural complexities of this dispute. The Panel expected to complete its work in July 2008.

United States Continued to insist that its trading partners honor their WTO and bilateral commitments, using a range of formal and informal options to monitor and enforce compliance with trade agreements.

The World Trade Organization(WTO) is the international organization responsible for global rules governing trade among nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. Like its predicessor, the General Agreement on Tariffs and Trade (GATT), the WTO serves as the forum for on-going multilateral trade negotiations aimed at liberalizing world trade and administration of the resulting trade agreements.

WTO trade agreements are reached based upon a consensus of participating members and are ratified domestically by each Member. WTO members are responsible for monitoring compliance with these far reaching trade agreements and setting the organization's course. The WTO also has a dispute settlement system designed reduce trade friction through interpretation of the agreements and commitments. The Director General of the WTO is Dr. Supachai Panitclpakdi, of Thailand, and there are four Deputy Directors General.

For detailed information, you can see at the WTO home page.

February 8, 2007, In Brussels, officials said the EU response will say the U.S. was wrong to take the years 2001 and 2002 as a case study to highlight their claims since this was a time when the entire aviation industry suffered from the after effects of the Sept. 11 terrorist attacks and the SARS flu epidemic in Asia which recalls Patty Murray's Commission on the Future of the United States Aerospace Industry(9):

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It is very clear that the world wants to see stop LONG TIME UNFAIR EU SUBSIDIES. 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. The global market is not healed yet. The world still is in the ice which has to be break and bland together by the harmonized well global market system. The communities, businesses are circulated by well managed global market especially the world is becoming more multicultural global world. (5)..

 

References:

1)   http://www.ustr.gov/assets/Document_Library/Reports_Publications/2006/2006_Trade_Policy_Agenda/asset_upload_file936_9071.pdf?ht=

2) http://www.wa.gov/ddc/State%20Plan.htm

3) The Boeing Company Education Resources Career Growth

4) 2007 Trade Policy Agenda and 2006 Annual Report

of the President of the United States on the Trade Agreements Program 

5) The World can Save Global Market And America When the subsidies End A310 to A380
From the Airbus “Unfair European Union Subsidies Ending will make
Harmonize the Global Market”

7) TRADE SUMMARY  

8)  Acknowledgement

9) Executive Summary: Final Report of the Commission on the Future of the United States Aerospace Industry

July 13, 2007

United States – Measures Affecting Trade in Large Civil Aircraft

(Second Complaint)

10) US — Large Civil Aircraft (2nd complaint)

http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds353_e.htm

http://www.ustr.gov/assets/Trade_Agreements/Monitoring_Enforcement/Dispute_
Settlement/WTO/Dispute_Settlement_Listings/asset_upload_file930_13177.pdf?ht=

 http://catch4all.com/positive/2006/EUsubsidies11.htm

Reported by Catch4all.com, Sandra Englund, January 20th, 2008