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EU
UNFAIR
SUBSIDIES
MUST STOP
THE WORLD FINANCE INVESTERS, BANKERS,
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Boeing,
Airbus see WTO subsidies ruling next week
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March 17, 2010:GENEVA (AP) -- The Boeing Co. and Airbus are bracing for next week's decision on the first half of their epic dispute over plane subsidies, when the World Trade Organization is expected to confirm findings that European governments unfairly financed Airbus' rise to world No. 1 planemaker. The verdict is almost a formality, although it will only be delivered confidentially to the parties and then made public sometime in the coming months, but it comes amid trans-Atlantic tension over a disputed U.S. military contract and as European governments finalize funding for Airbus' next big plane. While the WTO's report won't halt European subsidies for Airbus, it could combine with a coming ruling on U.S. payments to Boeing to provide benchmarks for how far governments can go in supporting companies in a market worth more than $3 trillion over the next two decades. With emerging powers such as China looking to break the two-company dominance of the airliner industry, clearer rules on public support will become even more important in the future. Officials say a WTO "interim" decision in September found that Airbus won market share through European government subsidies in the form of risk-free loans, research funding and infrastructure support. WTO panels nearly always maintain their interim findings in so-called "final" rulings, after which the United States and the European Union can lodge appeals. "This marks a significant step in the U.S. challenge: a final panel decision will establish clear guidelines for European governments and other countries about what type of financing is or isn't appropriate when building airplanes," said Bob Novick, a former U.S. trade official advising Boeing on WTO matters. "We don't expect the decision will change anything dramatically from the interim ruling," he said. The ruling could pressure Europe to rethink how it funds a strategic company that employs 52,000 people and provides work for numerous suppliers. It also arguably played a role in the U.S. Air Force's $35 billion contract for refueling tankers, for which Airbus' parent EADS pulled out of the running last week. EADS had partnered with Northrop Grumman to vie for the 179-tanker order, but their consortium said the terms of the deal appeared designed to eliminate its design in favor of a smaller jet offered by Chicago-based Boeing Co. French President Nicolas Sarkozy is expected to raise concerns that the bidding is anticompetitive when he visits President Barack Obama later this month. The EU, representing Britain, France, Germany and Spain in the WTO dispute, is also upset that a ruling on alleged U.S. subsidies for Boeing is lagging nearly a year behind the investigation of Airbus' funding. A first decision isn't expected before June on whether Boeing benefited from billions of dollars in backdoor funding from NASA and the U.S. Defense Department. "This is a never ending story. With appeals coming and going we are years away from final rulings, while we all know that in the end we'll have to sit down and negotiate," said Airbus spokeswoman Maggie Bergsma. "Lets see if Boeing's supporters are still as enthusiastic about WTO compliance when their subsidy report will come out in summer." Airbus beat rival Boeing in aircraft production in 2009, delivering a record 498 aircraft and maintaining its place as the world's largest planemaker, compared with Boeing's 481. It also posted 271 orders, beating Boeing's 142. The No. 2 position has rankled Boeing, which saw its Toulouse, France-based competitor use hundreds of millions of euros in low-interest government loans to develop the A380 superjumbo. Now, it wants the WTO ruling to stop European governments from using the same strategy to fund its midsize, long-haul A350 XWB that aims to compete with Boeing's 787 Dreamliner. Brussels says these loans known as "launch aid" are legal because Airbus repays them as new planes are sold. Washington argues these are subsidies because they allow Airbus to write off production setbacks and losses if sales don't meet forecasts. "It would be troubling if the European governments were to go ahead and provide launch aid for the A350 if launch aid was just ruled illegal for another plane's development," Novick said. The United States originally brought the dispute to WTO in 2004 after pulling out of a 1992 agreement limiting subsidies in the aviation industry. Brussels responded with its countersuit. The Geneva trade body can't force countries or companies to eliminate subsidies, but it can authorize retaliatory sanctions against countries that fail to comply with rulings. It generally takes years to reach that stage, and based on the record slowness of this case, sanctions could be more than a decade away. --------------------
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| Boeing, U.S. Seen Winning WTO Case on European Aid to Airbus |
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Sept. 3 (Bloomberg) -- Boeing Co. and the U.S. are set to win a case at the World Trade Organization over $15 billion in European government loans to Airbus SAS, the world's largest aircraft maker, U.S. trade lawyers and former officials said. A panel of WTO judges is scheduled to rule tomorrow on a U.S. complaint over loans that the U.K., Spain, Germany and France provided Airbus over four decades. It will be a preliminary ruling in a five-year dispute over aid between Toulouse, France-based Airbus and Chicago-based Boeing. "If it's a straightforward reading of the rules, the panel should find against Airbus," former U.S. Trade Representative Susan Schwab said in an interview. The case is the biggest in the 14-year history of the WTO, and could cast a cloud over the commercial relationship between the U.S. and Europe, the world's largest. It may also reshape funding for the two largest plane makers. WTO judges are scheduled to rule within six months on a European Union counter-claim against U.S. assistance that helped Boeing develop the new 787 Dreamliner and other aircraft. The EU cited military contracts, NASA research grants and state tax breaks. Claude Barfield, a resident scholar at the American Enterprise Institute, a public-policy research group in Washington, said he expects the WTO eventually to rule against both Boeing and Airbus. That means at some point both governments will need to sit down and craft an agreement on what aid is permissible, Barfield said. 'Most Subsidized Aircraft' "It's easy to speculate about the outcomes of a match when not even the first half is over," said Maggie Bergsma, a spokeswoman for Airbus, in an e-mailed statement. "The 787 remains the most subsidized aircraft in the history of aviation." The immediate impact of the preliminary ruling depends on terms of the decision, which may be hundreds of pages long, and on how each government reacts. The judges' findings can be appealed, a process that in some WTO cases has taken years. The WTO judges may also say whether aid provided since the case was filed in 2004 is covered by the ruling. Airbus has received commitments from European governments for $4.2 billion in loans to help it produce its new A350 aircraft, scheduled to enter service in 2013. While that plane wasn't part of the case before the WTO, the U.S. argued to the international trade arbiter that a ruling against previous disbursements would prohibit all such "launch aid." Aid to A350 The current case should have no effect on aid to the A350, Lutz Guellner, a spokesman for the European Commission, the 27- nation EU's executive arm in Brussels, said Aug. 28. The U.S. also argued that EU loans were used to boost exports of Airbus jets, making them "prohibited subsidies" in the legal terminology of the WTO. "The key factor is whether so-called launch aid is found to be prohibited or not," John Magnus, a lawyer at Miller & Chevalier in Washington and an expert on WTO subsidies disputes, said in an interview. "If so, it will very quickly become very ugly for the European side." Magnus said he expects the WTO to find against the EU in some fashion. Labeling the aid a prohibited subsidy would force bigger changes by the EU in order to comply, he said. The WTO can't force a country to change its policies. Instead, after appeals are exhausted, it can authorize retaliation against products from countries found in violation. The effect of a ruling against Airbus "depends on what the U.S. politicians want to do with it," Richard Aboulafia, an analyst at the Fairfax, Virginia-based Teal Group, which publishes research on aerospace and defense companies, said in an interview. Tanker Contract Airbus is a unit of European Aeronautic, Defence & Space Co., which is bidding in the U.S. with Northrop Grumman Corp. for a $35 billion Pentagon project to build refueling tankers. Its top rival for the contract is Boeing. "Boeing's political supporters could be able to use a WTO victory as an effective weapon to stop any decision to give Northrop/EADS a tanker contract," Aboulafia said. Both the EU and U.S. would need to make an effort to comply with the WTO's decisions on aircraft aid, according to William Reinsch, president of the National Foreign Trade Council, a Washington-based organization that represents the largest U.S. exporters, including Boeing. Otherwise the countries risk undercutting their ability to get future trade decisions upheld against countries such as China or India, he said. "This is going to cause them, no doubt, some political complication," said Reinsch, a former Commerce Department trade official. 'But if they flout the rules, it would compromise the institution." To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net ----------------- Everyone remembers that the former secretary of state Wynne announced Boeing did not win the KC-45A contract. The communities and the tax payers were relying on a big major company like the Boeing Company. The KC 767/777 tankers would made Amerian jobs more than nine thousands jobs and global partners and suppliers would actively work and expend the financial support around the world. Well, as soon as a big contract canceled for the Boeing Company, The Boeing had to let go (lay off) more than 10,000 people for Boeing Employees. Now the ripple action increased for the recession became the worst economic crisis and for the global economic crises got into worse. The financial institutions and the world banks are not in function which would make sense unfair EU subsidies would be part of this problem, who knows that started since 37 years ago and crashed...- global crisis...: Loan Free, forgiving loan, and etc. The Marshall Plan of 1947 caused lending practices at the bank to be altered, as many European countries received aid that competed directly with World Bank loans. The Marshall Plan (from its enactment, officially the European Recovery Program, ERP) was the primary plan of the United States for rebuilding and creating a stronger foundation for the countries of Western Europe, and repelling communism after World War II. WTO document shows that the Large civil aircraft industry is dominated by Airbus and Boeing. Airbus's world market share has increased steadily since the early 1970s; it currently exceeds 50% of all new orders (Eurostat, 2006c), Manufacture of Aerospace equipment in the European Union). The United States hopes the trade body will condemn the European Union, representing Britain, France, Germany and Spain, for providing what it calls illegal subsidies that give Airbus, based in Toulouse, France, an advantage in a market worth US$3 trillion over the next two decades. In September 2009, the New York Times reported that the World Trade Organization would likely rule against Airbus on most, but not all, of Boeing's complaints; the practial effect of this ruling would likely be blunted by the large number of international partners engaged by both plane makers. For example, 35% of the Boeing 787 is manufactured in Japan. Thus, some experts are advocating a negotiated settlement. Tensions increased by the support for the Airbus A380 have erupted into a potential trade war due to the launch of the Airbus A350. The A350 competes with Boeing's most successful project in recent years, the 787 Dreamliner. The WTO has 153 members, representing more than 95% of total world trade and 30 observers, most seeking membership. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland.
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