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WTO Ruling on Boeing (Read 623 times)
Jul 9th, 2010 at 4:16pm

OVERLORD_CHRIS   Offline
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Quote:
WTO Delays Ruling On EU-U.S. Case


Jul 9, 2010

By Robert Wall, Amy Butler

Airbus will have to wait until September to learn if the World Trade Organization dispute resolution panel will come out against subsidies Boeing allegedly receives from the U.S. government.

The panel this week was due to issue preliminary findings, the first formal word on the case the European Union has filed against the U.S. Airbus officials are increasingly frustrated because the WTO has already issued a final ruling supporting U.S. claims against alleged Airbus subsidies, but has yet to act on the counter case.

�We are surprised and disappointed by the last-minute announcement of yet another delay by the Boeing subsidies panel,� says Airbus President Tom Enders, adding that �we are, however, not surprised by the apparent difficulties the WTO is faced with. We have said time and again that the complexity, interconnectedness and industrial significance of the Boeing and Airbus cases would strain the capabilities of the WTO.�

Allan McArtor, chairman of Airbus Americas, says that the delay timing �stinks like last week�s fish� and that the dispute resolution has �somehow gotten off track.� He adds that the U.S. Trade Representative may have pressured the WTO to delay the announcement to enable Boeing to debut its 787 at next week�s Farnborough Air Show unfettered by the news.

The European Commission also voiced disappointment. Part of the frustration stems from efforts in the U.S. to tie the WTO dispute to discussions over the U.S. Air Force KC-X tanker replacement program. (See story, P. 3.)

Airbus officials were encouraged by some of the wording in the case against them as suggesting the EU case against Boeing would prevail, but a senior industry official points out the case is handled by different panel members, so their judgment may differ.

http://www.aviationweek.com/aw/generic/story.jsp?id=news/avd/2010/07/09/02.xml&h...


More to Come as the story heats up.
 

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Reply #1 - Feb 3rd, 2011 at 6:50am

OVERLORD_CHRIS   Offline
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Quote:
WTO report said to condemn Boeing subsidies


(Reuters) - Plane maker Boeing (BA.N) received unfair subsidies from the U.S. government, a World Trade Organization report said on Monday, according to Boeing's European rival Airbus (EAD.PA).

The two companies disagreed over the extent of the subsidies outlined in the report, which was delivered to the U.S. government and the EU Commission but not released publicly.

Airbus said the report showed Boeing had received at least $5 billion in illegal subsidies and was only able to launch its 787 Dreamliner with such support. Boeing denied the assertions.

The United States and European Union, both trading superpowers, have been fighting cases against each other in the WTO for more than six years over each other's subsidies for large passenger aircraft.

Boeing's stock, a Dow component, showed little reaction to the WTO report. Shares were up just 8 cents at $69.31.

"I don't think there's clarity as to what this really means. It seems to be a lot of noise," said Alex Hamilton, managing director of EarlyBirdCapital, a boutique investment bank.

Monday's report by WTO experts marked the latest stage in the dispute as Airbus and Boeing battle for the $1.7 trillion market.

The report is still confidential, but even Boeing acknowledges that the WTO has backed some of the EU claims. However, the two sides disagreed strongly over the amount of condemned Boeing subsidies and how they compared with those given to Airbus.

The findings came as a U.S. Air Force decision was expected within weeks on whether to award Boeing or Airbus parent EADS a contract worth $25 billion to $50 billion for refuelling tankers. But EarlyBird's Hamilton said the WTO report was likely to have little impact on the U.S. government decision.

Both plane makers have supporters in the U.S. Congress, as Boeing would build and finish the tanker in Washington state and Kansas while Airbus would assemble it in Alabama.

Senator Richard Shelby of Alabama said that the WTO report "unquestionably states that Boeing received significant government subsidies prohibited by the WTO."

"Today's decision should end Boeing supporters' attempt to derail the tanker competition by arguing that the trade dispute is one-sided," Shelby said in a statement.

On the other side, Senator Pat Roberts of Kansas said: "Attempts to skew this ruling in the EU's favour are an exercise in distraction. Once this ruling is made public in the near future, the sunshine will refute much of the claims by the EU and truly indicate where the market-distorting benefits flowed."

With no end to the litigation in sight, both sides have periodically called for a negotiated end to the dispute, as EU Trade Commissioner Karel De Gucht did in September when an interim version of the report was issued.

His spokesman said on Monday the report confirmed those initial findings, in comments suggesting Brussels was not keen to raise the stakes, or wanted to play down a previous WTO ruling that condemned its own support for Airbus.

"This solid report sheds further light on the negative consequences for the EU industry of these U.S. subsidies and provides a timely element of balance in this long-running dispute," spokesman John Clancy said in a statement.

One EU diplomat said a political solution was preferable.

"Given the state of the global airline industry today, a political agreement is important for both sides of the Atlantic," the diplomat said.

The ruling, like the interim report, was handed only to the parties. It will not be published for several weeks while being translated into French and Spanish.

U.S. Trade Representative Ron Kirk's office said it could not provide detailed comment now as the report was confidential.

"Despite that the EU has publicly commented on the report, at this time we will simply say that the United States is confident that the WTO will confirm the U.S. view that European subsidies to Airbus dwarf any subsidies that the United States provided to Boeing," spokeswoman Nefeterius McPherson said.

MASSIVE SUBSIDIES

Airbus said the report would show Boeing had received billions of dollars in illegal subsidies, depriving Airbus of $45 billion in sales, an indication of what the EU could seek in sanctions if the case moved to retaliation.

But Boeing disputed Airbus's figures and said the ruling would not require any change in policy or practice as far as Boeing was concerned.

WTO experts found last year that Airbus received illegal export subsidies from European governments and both sides have appealed against that ruling.

Appeals involving prohibited export subsidies are supposed to be dealt with in 60 days under WTO rules, but this case is so complicated that the WTO's appellate body has said it will not come to a conclusion until some time this year.

Boeing says the research and development grants it received pale into insignificance beside the support for Airbus.

In the Airbus case, WTO judges found the company had been able to launch a series of passenger aircraft only thanks to the government support and called for an end to export subsidies.

Both sides have an interest in clarifying the rules for how governments can facilitate the development of new aircraft in a fair manner.

It could take until much later this year for the appeals process in both cases to run its course, but the two governments, aware that Brazil, Canada, China, India, Japan and Russia have an eye on the market, are eventually likely to negotiate a settlement. (Additional reporting by Kyle Peterson in Chicago; Editing by Mark Trevelyan, Gary Hill)

http://www.reuters.com/article/2011/02/01/uk-trade-boeing-idUKLNE70U03N20110201
 

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Reply #2 - Feb 3rd, 2011 at 6:52am

OVERLORD_CHRIS   Offline
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Quote:
Boeing Got $5B in Subsidies, WTO Rules

The World Trade Organization confirmed its interim ruling last September, finding that Boeing received roughly$5 billion in illegal subsidies for some of its civilian aircraft. Airbus, who designed and built the plane that EADS NA hopes to modify for the coming KC-X airborne tanker program. Sen. Maria Cantwell of Washington, a vigorous Boeing supporter, said the latest ruling proved that the EADS NA offering did benefit from subsidies.

�There is a stark contrast between the WTO�s ruling today and their ruling last year against the EU. Today, reports say the WTO upheld their interim ruling and dismissed over three-quarters of the EU�s allegations, identified most of it as associated with U.S. export tax policies repealed in 2004 and reiterated their finding that Boeing did not receive any existing prohibited subsidies,� she said in a statement. �But last year, the WTO was unambiguous in ruling that Airbus had received an illegal subsidy of billions of dollars for aircraft-specific launch aid, including the airframe Airbus put forward as the basis for its tanker bid, and that that subsidy caused direct harm to the U.S. aerospace industry. This final ruling today confirms what we have been saying all along: It is EADS/Airbus that has benefitted from illegal subsidies relating to the Air Force tanker competition.�

Here is the New York Times� lead on the story:

    �A panel at theWorld Trade Organization ruled on Monday that Boeing had received up to $5 billion in improper subsidies for its 787 Dreamliner and other jets , giving it an unfair advantage against its European rival, Airbus, European officials said.

    �The confidential ruling affirmed the W.T.O�s interim ruling in September in response to a longstanding complaint by Europe over United States government support of Boeing, officials briefed on the decision said.�

The paper goes on to quote Nefeterius Akeli McPherson, a spokeswoman for the United States trade representative, who �said officials in Washington remained �confident that the W.T.O. will confirm the U.S. view that European subsidies to Airbus dwarf any subsidies that the United States provided to Boeing.�

So the line appears to be that the European subsidies were bigger than the American subsidies. This does not provide a terribly solid ethical baseline for any future discussions since both sides engaged in illegal subsidies, whomever pumped more in. Please just let the contract be awarded to the company with the best product that can be built with a reasonable mix of risk and capability.

http://www.dodbuzz.com/2011/01/31/boeing-got-5b-in-subsidies-wto-rules/
 

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Reply #3 - Feb 3rd, 2011 at 9:49pm

specter177   Offline
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Wait, so the WTO condemns Boeing for taking subsidies, but doesn't care if Airbus gets them?
 

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Reply #4 - Feb 4th, 2011 at 10:42pm

OVERLORD_CHRIS   Offline
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specter177 wrote on Feb 3rd, 2011 at 9:49pm:
Wait, so the WTO condemns Boeing for taking subsidies, but doesn't care if Airbus gets them?
They mainly condemned them because Boeing claimed they got nothing all these years, yet they did.

But they already made a ruling on Airbus, stating that they would not have been able to be where they are to day if it was not for the Unfair Start up money they got.

And that the A300, A310, and A380 were heavily subsidies, and have been ordered to pay back a huge amount. Also the As yet built A350XWB already has illegal loans and has been ordered to give back the money also.
 

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Reply #5 - Apr 1st, 2011 at 2:13pm

OVERLORD_CHRIS   Offline
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Quote:
WTO Faults Boeing Subsidies


Apr 1, 2011

By Robert Wall

The World Trade Organization has determined that Boeing benefited from state aid that violates international trade rules to the tune of several billion dollars.

In publishing its findings on the case the European Union brought against the U.S. (DS353), the WTO did not calculate the entire level of harm done by the illegal state aid, which it will do later, but found that assistance provided by NASA, U.S. federal and state governments and the U.S. Defense Department (DOD) all benefited Boeing in a way that was not acceptable.

The ruling on DS353 states that �(a) the panel estimated the total amount of these subsidies between 1989 and 2006 to have been at least $5.3 billion; (b) the FSC/ETI [extra-territorial income and foreign sales corporation provisions of the U.S. tax code] and successor act subsidies constituted prohibited export subsidies; and (c) some of the specific subsidies (i.e. the NASA and DOD aeronautics research and development subsidies, the FSC/ETI and successor act subsidies and the Washington state and municipal business and occupation tax subsidies) caused adverse effects to the European Communities� interests in the form of serious prejudice, finding that the effect of these subsidies was displacement and impedance (or threat thereof) of Airbus large civil aircraft from third-country markets, significant price suppression and significant lost sales.�

However, the WTO also �rejected the European Communities� claims that (a) the other challenged measures constituted specific subsidies and/or that they caused serious prejudice; [and] (b) the Washington state taxation measures enacted under HB 2294 were prohibited export subsidies.�

The WTO, in an earlier ruling on a U.S. claim, ruled that Airbus received illegal state aid. That case is under appeal.

The case against the U.S. is also set for appeal. In fact, the EU is looking to appeal the case quickly, although officials suggest they are happy with the overall result. The move to file an appeal quickly is largely tactical. The European side has been frustrated that the U.S. offensive case is several months more advanced, which the EU believes is a handicap in the public debate. Appealing the case quickly should reduce the gap; the U.S., which is likely to appeal as well, would otherwise have weeks to lodge its appeal.

Boeing and Airbus are now left to squabble over whose subsidies are more egregious. Airbus says that if the effect of the subsidies were translated into the actual level of competitive harm done, the figure would be $45 billion. Boeing says Airbus is receiving $20 billion in aid, while the WTO links $2.7 billion in aid to Boeing. The WTO will settle that issue once the appeals process is exhausted and the matter moves to the enforcement stage.

The WTO appeals body is expected to issue its ruling on the case against Airbus in the coming months.

http://www.aviationweek.com/aw/generic/story.jsp?id=news/avd/2011/04/01/03.xml&h...
 

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Reply #6 - Apr 1st, 2011 at 2:16pm

OVERLORD_CHRIS   Offline
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Quote:
Airbus: WTO condemns massive illegal Boeing subsidies/Boeing: WTO Ruling Exposes Massive Airbus Advantage From Illegal Subsidies


March 31, 2011 by Rob Vogelaar

Boeing received �at least $5.3 billion� in �pervasive� and �distortive� subsidies causing $45 billion in harm
31 March 2011 � The World Trade Organisation (WTO) today publicly condemned the United States for giving Boeing massive illegal subsidies that caused Airbus to lose $45 billion in sales. This follows years of unfounded accusations and attempts to demonise Airbus, especially during the protracted campaign to win the US Air Force contract for Tanker aircraft.

�Finally the truth emerges: Boeing has received and continues to receive subsidies which have a significantly greater distortive effect than the Reimbursable Loans to Airbus, � said Rainer Ohler, Airbus� Head of Public Affairs and Communications. �Taking the cases together, the WTO has now specifically green-lighted the continued use of government loans in Europe and ordered Boeing to end its illegal cash support from US taxpayers. It�s time for Boeing to stop denying or minimizing the massive illegal subsidies it gets�.

The WTO-report published today confirms Airbus�s earlier predictions:

1 � Boeing would not have been able to launch the 787 without illegal subsidies.

�What is clear to us is that, absent the aeronautics R&D subsidies, Boeing would not have been able to launch an aircraft incorporating all of the technologies that are incorporated on the 787�� (para. 7.1775)

�[T]he R&D subsidies � contributed in a genuine and substantial way to Boeing�s development of technologies for the 787.� (paras. 7.1754, 7.1773 and 7.1794).

2 � Boeing has received �at least $5.3 billion� of US taxpayer dollars which has been determined illegal.�

�[W]e have estimated that the amount of these subsidies to Boeing�s LCA division was at least $5.3 billion.� (para. 7.1433).

3 � An additional over $2 billion in state and local subsidies that Boeing will receive in the future are illegal.

�[T]he Panel finds that the Washington [tax credits] are specific subsidies to Boeing.� �[W]e recommend that � the United States �take appropriate measures to � withdraw the subsidy�.� (Paras. 7.302, 8.9).

4 � The effect of the subsidies is significantly larger than the face value of the subsidies in light of their particularly pervasive nature.

�Precisely because the nature of this kind of subsidy is that it is intended to multiply the benefit from a given expenditure, the Panel considers it unlikely that the effects of such expenditure � would be reducible to its face amount.� (para. 7.1760)

5 � The pervasive subsidies have thoroughly distorted competition within the aviation industry, directly resulting in significant harm to the European aerospace industry.

�[W]e would characterize the NASA R&D subsidies as strategically-focused R&D programmes with a significant and pervasive commercial dimension.� (para. 7.1764)

�[The subsidies] enabled Boeing to lower its prices beyond the level that would otherwise have been economically justifiable�. [T]his led to it securing sales that it would not otherwise have made, while in other cases, it led to Airbus being able to secure the sale only at a reduced price.� (para. 7.1818)

6 � The effect of these subsidies will continue in the future, putting Airbus at a significant disadvantage.

�We note further that, to the extent that these subsidies have enabled Boeing to win sales from Airbus in the past, they have served to entrench Boeing as the incumbent supplier, thereby putting it at an important switching cost advantage over Airbus in future sales.� (para. 7.1818)

�Boeing has shot themselves in the foot with the WTO proceedings,� indicates Rainer Ohler. �The company has achieved a massive condemnation of its U.S. funding mechanisms � provided the U.S. is willing to implement the ruling � while the European mechanism has been approved as a legal instrument. The only result of this anachronistic battle is that it limits America�s and Europe�s ability to compete with emerging competitors that have access to unlimited government funding.�

Airbus is pleased with the findings of the WTO report, but understands that the European Commission may appeal a number of issues relating to legal interpretation.� Airbus fully supports the European Commission in this respect.� ��

Full version of the report: www.wto.org (search item DS353)

Part 2 too Follow:


 

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Reply #7 - Apr 1st, 2011 at 2:20pm

OVERLORD_CHRIS   Offline
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Quote:
Part 2

Boeing: WTO Ruling Exposes Massive Airbus Advantage From Illegal Subsidies
- Trade court rejects nearly 80% of EU claim of improper support for Boeing; finds no U.S. equivalent for billions in illegal European launch aid provided to Airbus
- Final rulings in U.S. and EU cases now public; findings show Airbus received more than $20 billion in impermissible funding versus $2.7 billion for Boeing.
- Boeing reiterates call for Airbus to fund A350 and other new programs on commercial terms, and remedy prohibited export subsidies on the A380

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.

Source: Airbus and Boeing


http://www.aviationnews.eu/2011/03/31/airbus-wto-condemns-massive-illegal-boeing...
 

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