WTO rules on subsidies

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Verbal
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WTO rules on subsidies

Postby Verbal » Thu Mar 31, 2011 6:22 pm

Boeing press release.

http://boeing.mediaroom.com/index.php?s=43&item=1685
CHICAGO, March 31, 2011 /PRNewswire/ -- A World Trade Organization final case ruling published today confirms the massive market advantage Airbus has enjoyed from billions in illegal government subsidies provided to fund the company's commercial airplane product line since its inception more than 40 years ago.

"This WTO ruling shatters the convenient myth that European governments must illegally subsidize Airbus to counter U.S. government assistance to Boeing," said J. Michael Luttig, Boeing (NYSE:BA) executive vice president and general counsel. "The ruling rejects 80 percent of the EU's claims against the U.S., finding no more than $2.7 billion of impermissible subsidies to Boeing not previously remedied. That amount includes $2.6 billion in NASA R&D funding, which is but a small fraction of the total amount challenged," Luttig said.

Today's ruling resulted from the European Union's attempt to counter a U.S. case that successfully challenged illegal subsidies to Airbus. Last June, the WTO upheld approximately 80% of the U.S. claim, finding Airbus had received more than $20 billion in illegal government subsidies, which harmed the U.S. aerospace industry and resulted in the loss of billions in exports and tens of thousands of U.S. jobs.

Illegal government subsidies to Airbus included:

* $1.5 billion in R&D subsidies,
* $1.7 billion in infrastructure subsidies,
* $2.2 billion in equity infusions, and
* $15 billion in launch aid (including $4 billion for the A380) – a subsidy that is unique to Airbus and is the most pernicious and market-distorting subsidy under the law.

"Comparing today's decision with the decision last June reveals a market distorted by Airbus' practices, with illegal launch aid being the key discriminator," Luttig said. "The WTO ruling on launch aid goes to the heart of the Airbus business model, which now must change. In contrast, there are no comparable findings or consequences to the U.S. or Boeing from today's decision, as the WTO has now fully and finally rejected most of the EU's claims."

Both sides may appeal today's ruling. Once any appeal concludes, Boeing will support whatever steps the U.S. government deems necessary to fulfill its WTO obligations, and expects the same commitment to compliance from Airbus and its sponsor governments.

"Illegal launch aid must end. Airbus must take immediate steps to withdraw the outstanding prohibited subsidies provided to the A380, and it must finance the A350 and all other future programs on commercial terms," Luttig said.

"With $16.6 billion of cash on hand, EADS/Airbus can, and now must, develop its products without illegal government subsidies," he added.

Luttig said the WTO had done an outstanding job adjudicating the subsidy dispute.

"An impartial arbiter has spoken, and has set important precedents for all nations with ambitions to grow their aerospace industries. Compliance with WTO rules is essential to fair play and to the public's confidence in the global trading system," he said.
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Re: WTO rules on subsidies

Postby flyboy2548m » Thu Mar 31, 2011 6:32 pm

So, now what? If, in fact, Airbus business model is not sustainable without subsidies, what happens to them? Do they shrivel up and go away?
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Ancient Mariner
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Re: WTO rules on subsidies

Postby Ancient Mariner » Thu Mar 31, 2011 6:48 pm

Compliance with WTO rules is essential to fair play and to the public's confidence in the global trading system," he said.
Maybe he should read up on US export/import history, Boeing's not least. Americans beating their chest and talking about free trade..............ho, hum.
Per

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Re: WTO rules on subsidies

Postby flyboy2548m » Thu Mar 31, 2011 7:20 pm

Compliance with WTO rules is essential to fair play and to the public's confidence in the global trading system," he said.
Maybe he should read up on US export/import history, Boeing's not least. Americans beating their chest and talking about free trade..............ho, hum.
Per
Yeah, we should take Norway's lead on being subsidy-free.
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Re: WTO rules on subsidies

Postby Ancient Mariner » Fri Apr 01, 2011 7:03 am

Compliance with WTO rules is essential to fair play and to the public's confidence in the global trading system," he said.
Maybe he should read up on US export/import history, Boeing's not least. Americans beating their chest and talking about free trade..............ho, hum.
Per
Yeah, we should take Norway's lead on being subsidy-free.
Bad idea, we subsidize anyone who cries long and hard enough, although for all our politicians and bureaucrats faults and fails it is done within the framework and rules of WTO, EU/EEC and whatever else.
Per

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Re: WTO rules on subsidies

Postby Peter_K » Fri Apr 01, 2011 7:51 pm

Boeing press release.
Another press release from the opposite side of the pond, from the same date, concerning the same WTO case, but somewhat different interpretation.
EU wins key WTO case proving Boeing received billions in subsidies from United States

EU wins key WTO case proving Boeing received billions in subsidies from United States The European Commission welcomes the WTO Panel report published today which found that billions of dollars in US Federal and State subsidies granted to Boeing are illegal under WTO rules. This landmark ruling has clearly confirmed the EU’s position on all of its main claims, Notably that between 1989 and 2006 the US Federal and State governments granted WTO-incompatible subsidies to Boeing amounting to at least US$ 5.3 billion. Planned future subsidies are estimated to be worth between US$ 3 to 4 billion.
Illustration credit: Caribb

"This WTO Panel report clearly shows that Boeing has received huge subsidies in the past and continues to receive significant subsidies today. The US began this dispute in 2004 and now finds itself with a crystal clear ruling that exposes its long-running multi-billion dollar subsidisation of Boeing through Federal and State programmes as illegal.", said EU Trade Commissioner Karel De Gucht. "These subsidies have resulted in substantial harm to EU interests, causing Airbus to lose sales, depress its aircraft prices and unfairly lose market share to Boeing. The detrimental costs to EU industry from this lengthy and onerous subsidisation run into billions of euro. We therefore welcome the WTO Panel's report and call on the US Government to take the appropriate steps that may assist to achieve a mutually agreed solution to this dispute.", Commissioner De Gucht added.

The report is supported by clear and solid findings from the Panel covering each of the main sources of subsidisation provided by the US, including: (i) R&D programmes funds granted by NASA and the US Department of Defense (DoD) to Boeing amounting to US$1.3 - 2 billion; (ii) NASA and DoD "general support" to the tune of US$ 1.5 billion; (iii) Foreign Sales Corporation (FSC) export subsidies – US$ 2.2 billion; and (iv) Washington State tax breaks to a value of up to US$ 4 billion for the period 2006-24.

All of these subsidies are in violation of WTO Rules since they constitute actionable subsidies which cause adverse effects to the interests of the EU and Airbus. The panel also confirmed that the federal FSC/ETI tax breaks for Boeing amount to prohibited subsidies, which according to WTO rules must be withdrawn by the US without delay.

These massive subsidies from multiple US Government sources have enabled Boeing to develop new aircraft, and in particular the 787 "Dreamliner", at much lower cost than would otherwise have been the case.

In contrast to the Panel in the Airbus case, this Panel quantified the amount of WTO-incompatible subsidies granted to Boeing. Support to Boeing has been and continues to be in the form of non-repayable grants or free access to government facilities, as opposed to that in the Airbus case where the most important instrument, Repayable Launch Investment (RLI), was considered to be WTO-compatible in principle, with the subsidy element being, for certain cases, solely the difference in conditions provided in comparison to other repayable commercial financing.
Background to the WTO Aircraft Cases

Since October 2004, the EU and US have been contesting at the WTO their Governments' respective support to their aerospace industries. Both WTO challenges relate to alleged illegal WTO support to respectively Airbus and Boeing over a 20 to 30 year period.

Prior to these WTO challenges, US and EU government support to their aircraft producers had been regulated by the so-called "Bilateral EU-US Agreement on Trade in Large Civil Aircraft". This agreement, concluded in 1992, allowed each party to provide a certain level of support to their respective aircraft industry. In the case of the EU, the agreement permitted granting of so-called "Repayable Launch Investment" to Airbus i.e. loans repaid with interest under terms specified in the Agreement. In the case of the US, it allowed a certain level of government financed R&D support to the US aerospace producer, Boeing. In order to monitor compliance with the terms of the bilateral agreement, annual meetings and regular exchanges of information took place.

On the 6 October 2004, the United States quite unexpectedly and unilaterally announced its withdrawal from the 1992 Agreement and immediately filed a challenge at the WTO of all EU support ever granted to Airbus, even though the US had previously agreed to this support.
In turn, the EU was left with little option than to respond itself immediately with a parallel WTO challenge of US government support to US aerospace industry (i.e. Boeing) by Federal, State and local authorities, including benefits to Boeing under the so-called US Foreign Sales Corporation Scheme, which the US government had continued to provide to Boeing, despite these subsidies having repeatedly been found to violate WTO rules.

These two parallel WTO challenges, the "Airbus case" (DS 316: the US challenge of EU support for Airbus) and the "Boeing case" (DS 353: the EU challenge of US support to Boeing), despite having been initiated on the same day (6 October 2004), have followed different timetables due to a number of delays at the WTO. In the "Airbus case", the WTO panel made its report public on 30 June 2010 whereas in the "Boeing case", the panel only issued its final public report on 31 March 2011.

As a result of the delays of the DS 353 panel, there is now close to a year's gap between the two WTO proceedings, a fact which the EU has continuously expressed its dissatisfaction with. On 23 July 2010 the EU appealed the panel's findings in DS316 and these proceedings are expected to be completed in the first half of 2011.
http://trade.ec.europa.eu/doclib/press/index.cfm?id=695

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Re: WTO rules on subsidies

Postby Hazmat » Fri Apr 01, 2011 11:50 pm

So, what's the ratio of lawyers vs engineers at Airbus and Boeing these days ??? 2 to 1, 3 to 1, 6 to1 ?

This whole thing has gone beyond ridiculous long time ago.

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Re: WTO rules on subsidies

Postby AndyToop » Mon Apr 11, 2011 9:55 pm

Boeing press release.

http://boeing.mediaroom.com/index.php?s=43&item=1685
CHICAGO, March 31, 2011 /PRNewswire/ -- A World Trade Organization final case ruling published today confirms the massive market advantage Airbus has enjoyed from billions in illegal government subsidies provided to fund the company's commercial airplane product line since its inception more than 40 years ago.
Wow - thats good propoganda.
The case ruling was on the EU case against illegal subsidies provided to Boeing!
The ruling confirms that Boeing has enjoyed billions in illegal government subsidies provided to fund the company's commercial airplane product line since more than 40 years ago.

The spin from Boeing about Airbus having an advantage is because this ruling compared to the one last year would indicate that Airbus has had between 2 and 4 times as much, but what it really shows is what we all know anyway. The US and EU governments are as crooked as any tin pot dictator when it comes to free trade.

The real reason that this all kicked off was because the US Government either had to match the EU subsidy or call time on the game. Calling time was the cheaper option, and realistically the better one for Boeing in the long run. Funny how neither side really puts it that way though.

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Verbal
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Re: WTO rules on subsidies

Postby Verbal » Tue Jul 17, 2012 6:25 pm

More eurocommie lies and distortions. Incredible.
European Lies About Airbus Subsidies Set Stage For Major U.S. Retaliation
Forbes Online 07/16/2012
Author: Loren Thompson

With all the bad things being written about China’s export subsidies, currency manipulation and theft of intellectual property, most trade experts probably think that if Washington is going to get into a trade war anytime soon, it will be with Beijing. Well guess again. The Obama Administration has been systematically building the case for major trade sanctions against Europe of all places, and chances are you don’t even know why.

The issue is a multi-decade pattern of illegal subsidies that the European Union and four member countries have given to commercial-transport producer Airbus, mainly in the form of “launch aid” that eases the challenge of developing and marketing new jetliners. A World Trade Organization (WTO) panel ruled in 2010 that the launch aid was incompatible with trade treaties, and an appellate body confirmed that finding last year, directing that the subsidies must be withdrawn or restructured.

The reason Washington and Brussels are now hurtling towards confrontation is that European governments have failed to comply with the WTO rulings. In fact, European governments have repeatedly lied in public forums about what the trade body found while providing additional billions of euros in illegal financing to Airbus so that it can launch a new widebody airliner designated the A350 that will compete with Boeing‘s 777 and 787 Dreamliner. The top sales executive at Airbus says the 777 will be obsolete “the day we deliver the first A350.”

It’s that latter point that has the U.S. Trade Representative and other federal agencies worked up. The European violation of trade treaties is no academic matter — it is the main reason why America has gone from being the dominant supplier of jetliners around the world with three domestic producers to a faltering competitor of Europe with only one domestic producer (Boeing). WTO found that without a continuous stream of illegal aid to Airbus, Europe couldn’t have accomplished that feat; in fact, to quote a June filing of the U.S. Trade Representative with the WTO, in the absence of illegal aid Airbus “quite probably would not have existed at all.”

Thus, the failure of the Europeans to comply with trade treaties has cost the U.S. economy hundreds of billions of dollars in exports and destroyed tens of thousands of jobs. So of course federal trade officials are up in arms, and it isn’t just the Democrats. The current case began during the Bush Administration, when officials decided bringing a formal case before the world’s preeminent trade body was the only way of making Europe meet its obligations.

So far, though, the European response has been a case study in public dishonesty. First the Europeans alleged that their subsidies were legal and had done no harm to the U.S. Then they claimed Boeing had received even larger amounts of improper aid from Washington. When successive WTO decisions demolished these arguments, the European governments misled the public as to what the trade body had found and wrongly stated they had modified their practices to come into compliance with treaty obligations.

In reality, the Europeans have continued a forty-year pattern of conveying massive illegal aid to Airbus aimed at destroying Boeing and dislodging America from its global leadership in the aerospace business. The financing Airbus gets is much more liberal than what could be obtained from commercial sources, and doesn’t need to be repaid at all unless new jetliners are commercial successes. Boeing finances development of its own airliners through the marketplace, and thus is placed at a considerable disadvantage in terms of risks and returns.

The only nice thing that can be said about this situation is that it has made Boeing a highly disciplined company. Many aviation experts believe that Boeing aircraft are better designed, and the company has avoided pursuing prestige projects like the super-jumbo A380 that lack a well-defined market. But that is cold comfort for managers that see tens of billions of dollars in sales going to their competitor each year mainly because it is not subject to the same constraints in developing and marketing its products.

The indifference of European governments to the damage they are doing in America was on display at last week’s Farnborough airshow in England, when Britain, France, Germany and Spain held a press conference asserting that “the WTO appeal process had confirmed that the mechanisms of Repayable Launch investment offered by European nations were not incompatible with WTO rules.” This misleading interpretation of what the WTO decided, clearly crafted to influence world opinion, was coupled with a disingenuous plea that America comply with the rulings of the trade body.

The actual state of play is that European governments have failed to comply with repeated WTO requests to remedy $15 billion in illegal launch aid, while the U.S. government is moving to remedy more modest infractions totaling about $3 billion over three decades. The trade body found that most of the improper aid Europe alleged had been given to Boeing during that period was either non-existent or legal. The statement of European governments at Farnborough thus is the latest installment in a long-running public relations campaign designed to obscure the fact that Airbus’ success depends on the continuous distortion of market forces, while Boeing is a market-driven enterprise.

It is a curious feature of the WTO case that conservative think tanks opposed to the recent reauthorization of Export-Import Bank financing have had little to say about the far more egregious violations of free-market principles committed by European backers of Airbus. Ex-Im Bank financing has been used in recent years largely to level a global playing field made uneven by the market-distorting practices of other nations, and yet it has been subjected to much more intense criticism by free-enterprise proponents in Washington than the quasi-socialist practices of European governments subsidizing Airbus.

Fortunately, this kind of myopic double standard doesn’t exist in the Obama Administration, and probably won’t hold sway in a Romney Administration if there is one. Real trade experts in both parties have little difficulty grasping the practical consequences of Europe’s illegal launch subsidies. So even though you may not have heard about the U.S. Trade Representative’s June complaint filed with the World Trade Organization, it is the next step in a process leading to punishing trade sanctions against Airbus. Some European governments may not take their trade obligations seriously, but Washington is steadily advancing through the WTO process to a point where either fairness prevails or unfair traders pay dearly for their transgressions.
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Re: WTO rules on subsidies

Postby Sickbag » Tue Jul 17, 2012 10:10 pm

http://www.youtube.com/watch?v=r3BO6GP9NMY

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within 18 months...

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Re: WTO rules on subsidies

Postby Marc 1 » Thu Jul 19, 2012 1:58 am

I predict that this will end by both Boeing and Airbus equipping their aircraft with AMRAAM's that will fire at the compeitors product automatically when within range. Should make life interesting for ramp rats at major airports.

Total Aviation airport disaster

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Re: WTO rules on subsidies

Postby PurduePilot » Sun Jul 22, 2012 5:49 am

I predict that this will end by both Boeing and Airbus equipping their aircraft with AMRAAM's that will fire at the compeitors product automatically when within range. Should make life interesting for ramp rats at major airports.

Total Aviation airport disaster
Boeing has a head start.

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Re: WTO rules on subsidies

Postby Rabbi O'Genius » Mon Nov 28, 2016 1:00 pm

In the never ending saga.....

http://www.bbc.com/news/business-38131611
......never send to know for whom the bell tolls; it tolls for thee. – John Donne

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Re: WTO rules on subsidies

Postby Not_Karl » Mon Nov 28, 2016 6:01 pm

Will we finally see Verbie behind bars?
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Re: WTO rules on subsidies

Postby Sickbag » Tue Dec 06, 2016 11:04 pm

Will we finally see Verbie behind bars?

Sometime after January 20th I predict.
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Re: WTO rules on subsidies

Postby Rabbi O'Genius » Mon Sep 04, 2017 7:43 pm

......never send to know for whom the bell tolls; it tolls for thee. – John Donne


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