Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Airbus Does (will) Get Subsidies!  
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Posted (9 years 10 months 3 weeks 4 days 9 hours ago) and read 4637 times:

well...this might put some questions to an end as to if Airbus gets or will get subsidies...

"Airbus chief executive Noel Forgeard has said he would seek reimbursable loans from the four Airbus partners -- Britain, France, Germany and Spain -- to finance a third of the development cost.
The German government, according to the Financial Times Deutschland, has allocated 650 million euros in its 2005 budget to finance a 17-year credit for Airbus."


its the the 2nd sentence which spells it out...........they can put any spin on to it, but the bottome line is.......Airbus=subsidies

http://www.ttc.org/200412050307.ib5372616319.htm

comments, opinions..


"Up the Irons!"
63 replies: All unread, showing first 25:
 
User currently offlineSabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 46
Reply 1, posted (9 years 10 months 3 weeks 4 days 8 hours ago) and read 4595 times:

.... reimbursable loans to finance a third of the development cost....

So in other words, 100% legal launch aid under the 1992 bilateral agreement.

I don't see your point, sorry... can we move on?


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 2, posted (9 years 10 months 3 weeks 4 days 8 hours ago) and read 4569 times:

100% proof that Europe continues to act in bad faith. The preamble (non-binding) language of the 1992 agreement indicates that both signatories aimed to eliminate state support for airliner development. The US never exercised its right to give Boeing or MDD cash to develop airplanes because we assumed : a. It is not the government's role to fund such projects and b. Europe would end "launch aid" as Airbus matured.

Airbus has at least 50% of the market and is pushing for more. Yet Europe continues to treat Airbus as a nascent firm providing with capital at below market rates even as it's parent posts record profits.

Europeans continue to point to the binding terms of the 1992 agreement and ignore the intent. America's faith was apparently misplaced when we mistook Europe for an economic partner rather than a predator gunning to take away the U.S.'s largest single export market. I do not think we will make that mistake again.


User currently offlineA319114 From Netherlands, joined Aug 2004, 541 posts, RR: 3
Reply 3, posted (9 years 10 months 3 weeks 4 days 7 hours ago) and read 4491 times:

There is a huge difference between subsidies and loans. Sure, it may be a form of aid but there's nothing wrong with giving loans to companies who a) generate thousands of jobs in your country and b) make profit. It's just a wise investment if you ask me.


Destruction leads to a very rough road but it also breeds creation
User currently offlinePetertenthije From Netherlands, joined Jul 2001, 3376 posts, RR: 12
Reply 4, posted (9 years 10 months 3 weeks 4 days 7 hours ago) and read 4491 times:

The US never exercised its right to give Boeing or MDD cash to develop airplanes

Then, should you not be complaining at the US government, rather than at the various European governments? The EU signed a treaty with the US that allows 30% launch aid. Europe sticks to that treaty, and does not break it. The US sticks to the same treaty, but chooses not to take the most out of it. So stop complaining here, and start complaining back home!

Besides, Boeing gets indirect subsidies through the military and NASA.


because we assumed

One of the laws of aviation goes that assumption is the mother of all cock-ups. That's why it starts with ass!



Attamottamotta!
User currently offlineVirginFlyer From New Zealand, joined Sep 2000, 4575 posts, RR: 41
Reply 5, posted (9 years 10 months 3 weeks 4 days 7 hours ago) and read 4446 times:

This topic is to be kept on track. Any worthless comments/flamebaits/namecalling/insults will be removed, and the users making them will be suspended. DO NOT turn this into an EU-vs-US flame war...

Please, for once, let's have an *intelligent* discussion about this issue - it can be done!

V/F



"So powerful is the light of unity that it can illuminate the whole earth." - Bahá'u'lláh
User currently offlineSabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 46
Reply 6, posted (9 years 10 months 3 weeks 4 days 6 hours ago) and read 4429 times:

The 1992 bilateral agreement is a well-balanced binding accord giving room for equal amounts of limited launch aid to aerospace companies from both sides, thus in effect leveling the playing field in this global competitive industry.

For the customers (i.e. the airlines), the 1992 bilateral in effect made sure the playing field was leveled to the higher standards if I may say so, because without doubt the agreement dramatically facilitates the development of revolutionary all-new designs.

Contrary to the EU, The US never exercised its right to give Boeing straight out cash to develop airplanes, but attacking Europe for strictly exercising its contractual right to do so is just ridiculous! You've agreed to it and you've signed it, remember?

In the US, the general feeling may be it is not up to the government to help fund large economic projects, but it should have come as no surprise to any of you most Europeans tend to think differently on this....

Knowing most -if not all- sectors of the European economy benefit to some degree from what some would call 'unfair subsidies', the general idea the launch aid for Airbus would simply end when Airbus matured, was naive to say the least, since government aid is an inherent part of the corrected free market mechanism we have as economic model in continental Europe.

The feeling Europe still sees and treats Airbus as a nascent firm and has to be convinced there is no more need for 'overprotecting' it is again very naive, since Europe very well knows Airbus has matured! The way in which European governments deal with Airbus is not that of (over)protective parents, but that of very supportive partners working together to generate as much employment as possible while at the same time making profit for the private shareholders.

In this economic process, Airbus is dealt with in exactly the same way as any other European multinational is dealt with by the governments so asking for the end to these government aids is asking to change the "socialist" or rather "social democratic" economic model we have in place in Europe, something Europeans are not ready to give up!



[Edited 2004-12-05 12:33:21]

User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 7, posted (9 years 10 months 3 weeks 4 days 6 hours ago) and read 4427 times:

I just lost some good material I had written but V/F is just doing his job. That's fine.

A319114,

What do you think about loans that don't necessarily have to be re-paid? Or are not available to other Europeans who also create employment and wealth? Why is the government acting like a bank for Airbus and not for other firms?

I am not complaining the outright cash Airbus received in the 1970s. In that context the subsidy argument is not so bad necessarily. But it is 2004, Airbus has 50+% of the market, EADS is making record profits but Airbus still asks for and receives capital at costs below market rates that does not have to be repaid necessarily. Like I said no one else gets that deal but Airbus.


Petertenthije,

See post 2 about why the US has not doled out cash. Do you realize that Airbus also benefits from EADS defense contracting and that Airbus has used U.S. funded NASA research? I think our complaints are headed in the right direction.


User currently offlineBeaucaire From Syria, joined Sep 2003, 5252 posts, RR: 25
Reply 8, posted (9 years 10 months 3 weeks 4 days 6 hours ago) and read 4408 times:

The new Airbus A 380 will contain 40 % of goods ,materials and software that are produced in the USA. I know about Alenia ( Italy ) beeing a Boeing subcontractor in Europe but not their current involvment in any Boeing planes beeing manufactured.
Why all this hate when it come to discuss A&B ?
Both companies benefit from certain levels of financial support ( direct or indirect is not really important ) and both companies are vital for their respective counties level of engineering excellence.Can't we just stop it there ?



Please respect animals - don't eat them...
User currently offlineSabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 46
Reply 9, posted (9 years 10 months 3 weeks 4 days 6 hours ago) and read 4390 times:

Like I said no one else gets that deal but Airbus.

The remark no one else in the EU can get similar funding aid for R&D of new technologies is completely wrong. Airbus consumes not even 20% of the annual budget spent by the EU in the R&D field, so you can forget that claim... It is not because other beneficiaries are much less spectacular (e.g. a small firm in a Flemish town which just invented a new way to weave tissue and receives a 100,000 euro check to help build a small factory and employ 5 additional people) that the EU aid program for R&D is not available to them.



[Edited 2004-12-05 12:49:03]

User currently offlineLeskova From Germany, joined Oct 2003, 6075 posts, RR: 70
Reply 10, posted (9 years 10 months 3 weeks 4 days 6 hours ago) and read 4377 times:

N79969, actually, it's not just Airbus receiving government money - one of the largest recipient of subsidies from Germany was, in recent years (not sure if it's still the case) DaimlerChrysler - and that was not for their aerospace division.

When I see the amounts that this country's government alone gives out to large corporations - some of which use every trick in the book to pay little or no taxes - it, quite frankly, makes me sick.

I'll reiterate that I'd prefer companies in general - not just aerospace - to compete on their own respective merits, not on government money: the problem is that most governments seem to be more willing to use subsidies (by whatever name) to address shortcomings in their own country's economic framework than to do what would make much more sense: address the shortcomings.

Why give companies lots of money so they can compete against foreign companies residing in countries where the taxes are more favorable? Why not think about adjusting your own taxes?

Personally, I think the fact that Boeing has recently expressed the willingness to resume talking with Airbus as a big step forward - saying that a WTO solution would, most likely, hurt both companies more than it would help... actually amazingly similar to what some of us (not "us" as in "Europeans", but "us" as in "a.net members") have been saying all along.

Solve this problem by talking, and solve it so both sides agree at the end: if there is something you want to be achieved by the agreement, then have it expressed in plain wording, not by implied intent.

Too many agreements have failed because both sides thought the agreement implied different goals - because both sides had failed to have the goals explicitly mentioned in the agreement.

Regards,
Frank

P.S.: N79969, sorry about the material that was lost - there were some quite good points in it... not that I'd necessarily agree with all of them, but they were good nonetheless...  Big grin



Smile - it confuses people!
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 11, posted (9 years 10 months 3 weeks 4 days 4 hours ago) and read 4323 times:

Sabenapilot,

I am not sure if I know what to say...but you kind of made my case for me. Thanks...I guess.

Despite all of your discussion about "corrected" free market models, European socialist ways, and what not, most businesses in Europe do not live by these rules. If they are not well run or produce a bad product, they go bankrupt. Case in point Sabena which you ought to be familiar with and which had an unnaturally long life. Other examples are Fairchild Dornier and Fokker. I am sure there are many more. But some reason Airbus is exempted from these rules. These "European ways" are fine when you are talking about health insurance or education for your continent.

You also made my point for me that Airbus is private-public partnership to create profits and jobs. The key word is "jobs." Airbus does not actually create net jobs in airplane manufacturing. It simply moved them out of the United States. The EU is using its muscle to take wealth away from United States by targeting a private firm. If it sounds outrageous that because it is an outrageous scheme. The EU is basically engaged in a form of economic warfare against the United States.

You also said more than once that the U.S. was naive. I agree with you 100%. In hindsight it is so clear. We imprudently expected that Europe would act in good faith. That is to say that when Airbus reached a level of self-sufficiency, that financial supports would be eliminated. Because of the trust we placed in Europe, we apparently saw no need to make binding terms to that effect as we trusted the EU to do the right thing. Silly us.

When Europe callously disregards the intent of the 1992 agreement and betrays our trust and then points only to the binding terms, it reinforces our deepest suspicions about European (particularly French) intentions to screw the U.S. whenever possible. This predates the days of GWB by many years.

The pattern is clearly there. The most recent and outrageous example is when Mario Monti actually complained to the Japanese PM when ANA (a private firm) purchased B737NG to replace A320. Mr. Monti felt that Europe should get half of Japan's market as a matter of almost birthright. When SAA decided to replace brand new B738 with A320s, I don't think our government reacted at all.

Now Airbus wants to supply half of the USAF's tankers. Somehow the EU and Airbus keep forgetting to set aside 50% for Boeing when it sells to Air Berlin or CSA. Perhaps you can remind them.



User currently offlineAither From South Korea, joined exactly 10 years ago today! , 859 posts, RR: 0
Reply 12, posted (9 years 10 months 3 weeks 4 days 4 hours ago) and read 4306 times:

I like when some say "an infant industry" in 1992...

Airbus was 20 years old and was assembling the A300, the A310, the A320 and the A330 and A340 were almost ready to take off. They already had some massive orders from the largest airliners in the world.

And then Boeing would have said : "it"s ok to have an unfair agreement, you know it's a small company, it deserves some help, we are nice people you know".

Come on, be serious, the deal was not and is not that unfair.

Like i already, the biggest subsidy Airbus has ever received is when Boeing & MDD have merged making Airbus the only real competitor. Having similar products, they finally got 50% of the market...



Never trust the obvious
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 13, posted (9 years 10 months 3 weeks 4 days 4 hours ago) and read 4278 times:

Leskova,

No big deal. They got sent to my email with the deletion notice so I can copy and paste if I want to re-post.

Does Daimler-Chrysler get loans that do not have to be repaid if whatever project is not profitable?

I would also like to add that many people (not you necessarily) like to say that Boeing Corporation receives military contracts and therefore Boeing Commercial Airplane Group is "subsidized." The truth is that Boeing is one of the smaller defense contractors. Well behind Lockheed, Northrop Grumman, and General Dynamics. It was even smaller before 1997 when it purchased MDD.

EADS also receives defense contracts. Big defense contracts. Airbus is part of EADS and benefits from the trickle down from being in a big and apparently very profitable family. In addition it gets capital at below commercial rates to develop specific airplanes despite having over 50% of the market. According to the Economist a while ago, one of the Airbus partner countries picked up the bill to develop Glare for the A380. That is in addition to the "repayable loans."

Airbus used U.S. taxpayer-funded NASA research for its supercritical wing on the A310. The FBW system incorporated into all Airbus airplanes was originally developed also by NASA in the early 1970s. The 5000-psi hydraulic system that will be used in the A380 was developed by the US DoD and paid for by people like me. If I took the time, I am sure I could find more examples.

I am incredulous when I hear European complaints that it is unfair for Boeing to use NASA research as if it were some unfair subsidy. I am not sure if Boeing is allowed access to European aerospace research or if it is reserved for members-only in the government-business partnership for European jobs and profits.


User currently offlinePVG From Hong Kong, joined Dec 2004, 727 posts, RR: 2
Reply 14, posted (9 years 10 months 3 weeks 4 days 4 hours ago) and read 4251 times:

I don't understand why Airbus is so happy with themselves? Firstly, it's obvious from everything that you read in the press that they have bought their market share gains. Second, Boeing's best customers in the U.S. are in bad shape financially and haven't been able to order anything for a long time, yet Boeing is still maintaining a 45-50% market share!

I like the Airbus planes as a consumer, but why are they blowing their horn?


User currently offlineAither From South Korea, joined exactly 10 years ago today! , 859 posts, RR: 0
Reply 15, posted (9 years 10 months 3 weeks 4 days 4 hours ago) and read 4255 times:

« Case in point Sabena which you ought to be familiar with and which had an unnaturally long life. Other examples are Fairchild Dornier and Fokker. I am sure there are many more. But some reason Airbus is exempted from these rules.” These "European ways"…

Can someone reminds me what’s chapter 11 ? Embarrassment

“Airbus does not actually create net jobs in airplane manufacturing. It simply moved them out of the United States. The EU is using its muscle to take wealth away from United States by targeting a private firm.”

Are you saying there is a European “conspiracy” ?  Acting devilish

I thought it was just competition.  Insane
And by the way, until 2001, Boeing has never produced so much commercial aircraft per year, even if Airbus was gaining momentum. Better blame the market and Boeing sales forces who relied too much on the US and Japanese markets.


“You also said more than once that the U.S. was naive. I agree with you 100%.”

So if Boeing was naïve  Innocent , they made a mistake and finally, they are just paying the price now…


“it reinforces our deepest suspicions about European (particularly French) intentions to screw the U.S. whenever possible.”

You really can’t stand that a 60m country sometimes says “no” to you, can you ?. This US parano scares me, god knows where it will lead us all…  Sad


“The most recent and outrageous example is when Mario Monti actually complained to the Japanese PM when ANA (a private firm) purchased B737NG to replace A320. Mr. Monti felt that Europe should get half of Japan's market as a matter of almost birthright. When SAA decided to replace brand new B738 with A320s, I don't think our government reacted at all.”

How can you compare Air Berlin or SAA to the second largest air market in the world ? Monti was not complaining about ANA but about the fact the japanese market is completely locked to Airbus by Boeing. Monti expressed doubts this lock is based on fair practices.


“Now Airbus wants to supply half of the USAF's tankers. Somehow the EU and Airbus keep forgetting to set aside 50% for Boeing when it sells to Air Berlin or CSA. Perhaps you can remind them.”

Nonsense. By the way, Europeans buy a lot of US military products while the US military market is closed to us, thus benefiting a lot to companies like Boeing.

Cordially  Smile/happy/getting dizzy



Never trust the obvious
User currently offlineA319114 From Netherlands, joined Aug 2004, 541 posts, RR: 3
Reply 16, posted (9 years 10 months 3 weeks 4 days 4 hours ago) and read 4242 times:

A319114,

What do you think about loans that don't necessarily have to be re-paid? Or are not available to other Europeans who also create employment and wealth? Why is the government acting like a bank for Airbus and not for other firms?


Like Leskova said, governments invest in other big companies, too. And even if they didn't, it's their own good right to invest in any company they like if goverments think it's a wise investment. The past has shown that investing in Airbus really is a good decision and I would be very comfortable with my tax money invested in such strong companies.
Also, your comment about US-funded designs being used in Airbus aircraft isn't very strong. Actually, it's also the other way around, like you even said yourself: Glare, developed by Europeans will be used in Boeing aircraft, too.




Destruction leads to a very rough road but it also breeds creation
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 17, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4232 times:

Aither,

Go read what EADS just said Friday about the USAF tankers. The US military and Coast Guard operates several European aircraft types and European products are in the running to supply the President's helicopter. The idea that the US market is closed to European goods is simply a myth.

ANA bought A320/321 and was not happy for some reason and decided to replace them. Airbus sold plenty of A300s in Japan. Monti's complaint was outrageous. Why should Airbus be considered to replaced A320/321?

While you are looking up the story on EADS and the tankers, I suggest also looking up the EU's efforts to create a Chapter 11 like law. In the context you use chapter 11 as a counterpoint, it makes no sense.

Boeing was not naive but complacent. The US government was the naive party. Our mistake was trusting the EU. I am not sure if that is something that you should be gloating about as a European.


User currently offlineVfw614 From Germany, joined Dec 2001, 4013 posts, RR: 5
Reply 18, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4216 times:

I think I read somewhere that there will be a major reshuffle of Boeing's senior salespeople in the coming weeks. Boeing obviously has finally come to the conclusion that their problems do not arise from alleged subsidies, but might have to do with some much simpler aspects of business life.

Finally, why did the US agree to the 1992 deal ? Surely not because they had a generous day, but because they had something hidden in their closets as well. It is give and take. You need to see the whole picture when you talk about subsidies: Direct subsidies, indirect subsidies, loans, tax reductions, grossly overpaid military equipment (including the lack of a free tendering process...), state-funded research (like national aerospace agencies), political pressure in sales negotiations etc. etc.

I suspect the next thing is that the US demands from Brazil that the EMBRAER employees are paid US wages because otherwise EMBRAER has an unfair advantage over all other aircraft-producing nations....


User currently offlineStrudders From United Kingdom, joined Dec 2004, 109 posts, RR: 0
Reply 19, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4210 times:

This seems always a them and us situation. Of course Airbus get indirect funding from EU member countries, job protection, etc. Boeing and the rest get the same spins in defense and space contracts in the US (and the allowance to prop up airlines with chapter 11). And please do not say that is a level playing field.

However for the day I have been looking at posts in the forum, it always appears that it is a US v EU battle for who has the better product and is playing the game fair. May I point out that neither company is really playing the game well, as I see it, the Airlines are the winners.

IMHO Airbus has a good, cheap (there's the killer) short haul, Low cost airline loving product. There are the added advantages of parts and training and the whole load of other issues that come with the ease of making the same tube longer, with a few more windows etc. However this does not mean that they have taken advantage it is simple luck, if boeings products where of that generation then we would be talking about something else.

Boeing will pick up The pace and fall into line. However it must be said there is NO way any shape or form that Boeing would be allowed to fail in the US. The defense of the country relies on them.

So my point is lets stop all these inane US V EU battles as my Mum would say to me and my brother. " yours as bad as each other" Then clip us round the ear.

Struds




User currently offlineSabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 46
Reply 20, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4199 times:

N79969,

I have re-read your latest post on more than one account, because it contains so many obvious thoughts and remarks which you seem to discover only right now, I simply could not believe the amplitude of your naivety so far.
Congratulations of finally having opened your eyes to reality.

However, your latest post still seems to contain some wrong thoughts too.

For instance: I am sure you did not want to say Airbus is a badly run company, producing a bad product, saved from bankruptcy thanks to repeated launch aids for the continuous stream of new products, because it would make you look very biased and would result in yet another disillusion on your account when you'd finally discover for yourself Airbus is a very well run company, building first class products which deserves every portion of the huge market share they have come to conquer.

Also, when you say a socialized free market model like we have in Europe is fine for our health insurance or education system, but should not be applied in our civil aviation industry, I wonder on what basis you decide what sectors of our economy are eligible for socialisation and what sectors should be exempted for your pleasure? If you support the idea 'this is America, and this is how we do things', then you must also be ready for a similar 'this is Europe, and we do things differently'.

Contrary to what you suggest, Airbus is not exempted from the normal methods of doing business in Europe. There is a genuine difference between keeping ill-fated companies like Fokker, Alitalia and many others alive (BTW, isn't it the US which is keeping many of its airlines -United for instance- alive whereas the EU did not intervene when some of her carriers went under?) and actively working together in a win-win situation with successful and profitable businesses like EADS to help them grow ever further.

I am pleased to see you have finally come to discover Airbus is a private-public partnership to create both profits and jobs. A brief look at the shareholders of EADS (Airbus parent company) could lead to no other conclusion: part of EADS is free floating (private shareholders), part of it is government owned (public property). Since both sides have different goals, it is clear EADS (and thus Airbus) itself must make sure to satisfy the needs of ALL of its shareholders in exactly the same way as every company should do.
When looking at their latest results, it can be said they are doing a SUPERB job.

You say the Europeans do not actually create new jobs but rather move them out of the United States by using their muscle and money and that the EU is basically engaged in a form of economic warfare against the United States. Congratulations: you have just discovered what GLOBALIZATION and WORLDWIDE COMPETITION can mean when you are on the other side of the barrier!

One third of launch aid is what is allowed under the 1992 bilateral agreement, so 1 third of launch aid is what Airbus will get for their A350, like it or not.
I'd say enough about this, can we close this topic?


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 21, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4195 times:

A319114,

I understand what you are saying. But the EU is taking jobs and money from the United States and Europe expects the United States simply accept it as "wise government" policy.

First of all the government is the goverment. Why is it a financier or investor normally. If Airbus projects were as economically wonderful as Foeregard and Leahy make them out to be, every investment bank, pension fund, private equity firm, and the rest would be tripping over themselves to put their name on it.

That professional investors and capital markets are unwilling to supply money at rates at which wants to pay is a telling sign.

I understand that you are comfortable with the way the EU has spent on your money on Airbus. That's nice.

What would you do the U.S. did the same thing to Europe? What if we decide that we preferred that the pre-1992 situation better when the U.S. had about 70-80% of the market and that the government decided to hand Boeing the cash on favorable terms to develop a family of airplanes to achieve that goal.

The indignant cries of victimhood from Europe would be simply deafening compared to the still-feeble noise coming out of country today about this issue. The EU would draw every sword available to them to allow them keep what they have essentialy seized from the U.S. in terms of an economic base.

"Glare, developed by Europeans will be used in Boeing aircraft, too."

The 7E7 won't have any Glare. It will be made mostly of carbon fiber from Toray Industries. Are you simply guessing or imagining this?


User currently offlineLeskova From Germany, joined Oct 2003, 6075 posts, RR: 70
Reply 22, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4184 times:

N79969, DaimlerChrysler doesn't get loans - they get (or got) pure subsidies: money that did and does not have to be repaid.

While I was digging around the German government's website, I came accross a document called "Subventionsbericht 2001" (report on subsidies for the year of 2001), as well as a release about the publishing of the same report in 2003 - and in both, I found a paragraph that probably explains a bit of the discussion going back and forth between the US and Europe, because it gives a definition of what is considered a subsidy:

Begriffsklärung Subvention

Der Begriff "Subventionen" steht für zwei verschiedene Dinge: Bei Finanzhilfen handelt es sich um Geldleistungen des Bundes an Stellen außerhalb der Bundesverwaltung für begrenzte Zwecke, so zum Beispiel die Finanzhilfen des Bundes für den Bergbau, Hilfen für das Wohnungswesen und für die Landwirtschaft oder die Gemeinschaftsaufgabe regionale Wirtschaftsförderung für neue und alte Bundesländer. Steuervergünstigungen sind spezielle steuerliche Ausnahmeregelungen, so zum Beispiel die Ausnahmeregelungen bei der ökologischen Steuerreform und die Entwicklung der Steuermindereinnahmen aus der Eigenheimzulage, die für den Bund zu Mindereinnahmen führen.


Unfortunately, I was not able to locate the same document in English, so I'll try out a translation here:

Explanation of the Term Subsidy

The term "Subsidy" represents two different things: in the case of financial aid, it represents monies provided by the Federal Government for specific needs, for example Federal aid for the mining industry, as well as the housing industry, agriculture or the Unionwide program of regional economic development aid for the old and new German states. Tax credits are special tax exemptions, for example exemptions introduced by the Ecological Tax Reform as well as the development of reduced Federal Tax-income caused by the Home-Owners-Tax-Credit.


This goes back to one of the previous discussions, the one where some were arguing that tax-credits weren't subsidies - while, as this paragraph shows, they are considered a subsidy in Europe.

By the way - the full document, unfortunately only in German, can be found here: http://www.bundesregierung.de/dokumente/-,413.533883/Artikel/dokument.htm.

So I guess that before any real agreement can be reached, a solution to this dilemma will have to be found - because it will be quite difficult to reach a solution without both sides agreeing on the most basic principles.

Then there's also the organisational difference between Europe and the US: the US is a country, while the EU is an organisation - although there are some quite obvious similarities: the US has a federal government that has a say in some matters, but not in all matters - the states, for example, are free to offer tax credits to companies residing withing their borders, without the Federal Government being able to block this (I hope I remember this correctly).

The EU equivalent to the US' Federal Government, for this purpose, is the EU Commission, the equivalent to the state's governments would, in this case, be the governments of the member countries of the EU - the member countries can (and do) also offer incentives to companies residing within their borders. While this is often done by states within the countries, these aid packages are almost never handled by the state alone, but practically always involve, here in Germany at least, the Federal Government: case in point, the Volkswagen-Legislation in Lower Saxony - the EU commission did not sue Lower Saxony, but Germany.

The main problem arising from these organisational differences is that, even if - for example - Hamburg gave Airbus a large tax credit, they could still be prevented from doing so by the EU, while Washington giving Boeing a tax-credit for keeping the B7e7 production in-state is, by quite a large number of peope, seen as something completely removed from any discussion about subsidies.

And this difference in the approach toward an agreement will probably be another one of the big problems: on, geographically speaking, our side, you've got the EU commission speaking for not just the member countries but also the states that these member countries are made up of, while on the US side, you've got the Federal Government speaking for itself, while later on being able to turn around and say "Well, that money isn't coming from us, that's the state giving money - and we cannot influence that".


As for European research not available to non-European companies - while I'm not sure about it, I do somehow doubt that institutes such as DLR and Max-Planck-Institut would not provide Boeing with their research if they asked for it... but, as I've mentioned, I'm not really sure about that part.

Ok - sorry that this post turned out to be a bit on the long side...

Regards,
Frank




Smile - it confuses people!
User currently offlineDynkrisolo From United States of America, joined Feb 2001, 1866 posts, RR: 7
Reply 23, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4175 times:


I like when some say "an infant industry" in 1992...

Airbus was 20 years old


It's not how old they were and how many products they had. Prior to 92, they had less than 20% of the market. Also, it was an agreement between the US and EC, not Boeing and Airbus.

Many people want to equate the repayble loans to indirect subsidies that Boeing has. The same people refuse to acknowledge that EADS and BAE SYSTEMS have more revenue from their governments than Boeing has. The US has a large budget for aerospace R&D, but it doesn't mean Boeing is getting all of it, and not all of what Boeing gets benefits their commercial programs. In fact, the EU has recently sponsored R&D for the A380. In the US, I can't think of any government sponsored R&D directly applied to a commercial product in recent history. Sponsoring long-term, high-risk R&D is the government's job, but sponsoring R&D for a commercial product is corporate welfare.

The repayable loans sound innocent, but is it really? Here's the agreement:

http://www.aviationnow.com/avnow/news/channel_awst_story.jsp?id=news/090604gatt.xml

Article 4.2(a) says 25% of the development cost can be loaned at the same cost the government borrows.

Article 4.2(b) says another 8% of the development cost can be loaned at 1% above the cost the government borrows.

Article 4.3(a) says Airbus will only need to pay back 20% of the loan for the first 40% of the forecast deliveries.

Article 4.3(b) says Airbus will only need to pay back 70% of the loan for 85% of the forecast deliveries.

First, government rate is not market rate. Second, by inflating forecast, it will further reduce the upfront cost.


User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 24, posted (9 years 10 months 3 weeks 4 days 3 hours ago) and read 4143 times:

Sabenapilot,

Your latest post affirms my earlier view from days past that you epitomize the worst of effete, condescending European arrogance. In the European view, it seems that to place trust in Europe is naive. That seems to be a consistent theme throughout your remarks in this thread. I tend to trust people to keep their word and if that makes me naive in your eyes, so be it. That is absolutely fine with me-- almost a badge of honor.

Luckily for Europe though, I think the majority of Europeans are decent, honest individuals who can be taken at their word and will not abuse a friend's (ally's) trust.

Let's talk about economics for a moment. If Europe decides to subsidize a non-traded good such as health insurance or educations for its citizens, that has no effect on the United States. It is none of our concern.

However when the EU decides to subsidized traded-goods such as airliners, that transfers wealth away from the United States. That is our concern. Europe has made this issue our business. Like I posted in my response to A319114, I guarantee EU would not tolerate it if the US were to simply emulate the EU "partnership" model.

You contradict yourself. Since you used the terms "globalization" and "competition", I would assume that you actually understood what they meant. "Globalization" refers to the declining relevance of borders in the areas of finance, information, and product flow. "Competition" means competing on merits at market conditions. In contrast, the EU-Airbus "Repayable loan" scheme and "government-business partnerships" are anachronims of a bygone era. Globalization and competition are not bywords for when one government engages in economic warfare on an ally.


By the way, have you ever wondered how Europe can afford expansive health insurance and educational systems and Airbus all at once?


25 A319114 : Come on, let's stay on aviation with this topic, there's no need to discuss about health or educational systems on this site. You want to talk about e
26 N79969 : A319114, I will be glad to stick with the issue of aviation subsidies. But that naturally leads to other areas of discussion which ought not to be nec
27 Bjg231 : "isn't it the US which is keeping many of its airlines -United for instance- alive whereas the EU did not intervene when some of her carriers went und
28 N328KF : Sabenapilot: If you don't have to pay the loans back if the project fails, then that is unfair.
29 Greaser : (BTW, isn't it the US which is keeping many of its airlines -United for instance- alive whereas the EU did not intervene when some of her carriers wen
30 Anxebla : Sometimes I think a.net is not a very good web-site for allowing threads like this. This topic is stupid, and the VirginFlyer's answer (reply nº 5) i
31 Post contains images Leskova : N79969, I guess that the hangover that I'm still feeling from that party on Friday is keeping me from expressing my thoughts as clearly as I want to e
32 Sabenapilot : N79969, So as long as it doesn't affect the US, we in Europe can do as we like, but as soon as it starts to irritate your government, we should all st
33 PVG : What about France bailing out Alstom? And Germany blocking takeovers of it's banks by foreign banks. Or, Germany trying to block vodafone from buying
34 Post contains images Aither : "I like when some say "an infant industry" in 1992... Airbus was 20 years old It's not how old they were and how many products they had. Prior to 92,
35 Aither : PVG, Don't believe the US are anything differents : it just takes different forms but the results are the sames. The political pressures, lobbying etc
36 Atmx2000 : This seems always a them and us situation. Of course Airbus get indirect funding from EU member countries, job protection, etc. Boeing and the rest ge
37 Boeing nut : I think people are being idiotic when they suggest that Boeing defense and space contracts, many of which have nothing to do with aviation, are a form
38 Post contains images Planemaker : "Airbus does not actually create net jobs in airplane manufacturing. It simply moved them out of the United States." Please, please, do not give Airbu
39 FinnWings : how could it possibly be that Airbus's costs are so much lower than Boeings' that they can consistently under-cut them on price? How can that be? Airb
40 Post contains links and images Aither : "The loans for commercial product development should stop. These are market distorting." Oh well... like Airbus said in recent statement : " "tired, o
41 Trent900 : Every large manufacturing company nowadays has to have some type of monetary loan etc to launch a large project. Airbus does it and so does Boeing. Th
42 AirbusDriver : I don't know what the big deal is there is an agreement in place. -Nobody stop us from doing the same. -We can't expect everybody in the world to do i
43 PlaneSmart : Greaser The statement the US military market is closed to EADS is wow wrong. Really really wrong. I mean so wrong if you'd watch Baywatch you'd see ma
44 M27 : Another example, I jumseated recently on AA, on a new 737-800 and was very surprise to see that the all overhead panel, Center panel, Levers, Lights a
45 AirbusDriver : I was just pointing out that some parts of the cockpit of the 737NG could have use newer technologies that Boeing has available. I think Boeing need t
46 Scbriml : I understand what you are saying. But the EU is taking jobs and money from the United States and Europe expects the United States simply accept it as
47 Sabenapilot : Ironically, it might even take more US workers to build a single A350, than it might take to assemble a B7E7, so if US jobs are your major concern, yo
48 Whitehatter : The WTO will have a field day with this. The US complaining side will have to show just how they are disadvantaged by the deal. Which means opening up
49 Jamesjoyce : Ladies, Gents, pleeezzz. Please realise that the US are a single country and the EU is a union of 25 with a kind of centralised government but still 2
50 Sas330got : As Has been pointed out by both sides in this discussion, Europe and the US are very different markets. We do busniess like we do here and you do it i
51 Post contains links Dynkrisolo : As for Government sourced capital, again convenient facts are being left out. Such as how Governments borrow. They don't send people round the banks
52 N79969 : "So as long as it doesn't affect the US, we in Europe can do as we like, but as soon as it starts to irritate your government, we should all stand to
53 Planemaker : "It has been financing an attack on U.S. private industry for 30+ years now and shows no signs of stopping." The EU did not force McDD to offshore all
54 Sllevin : We did not expect the EU to blatantly violate the spirit of the agreement and then hide behind the binding terms like a used-car salemen that knowingl
55 Post contains images Glideslope : The only reason Airbus is being so public with these loans is the upcoming WTO War. I actually see this as a step in the right direction by Airbus. T
56 PVG : Aither, I was just pointing out the obvious fact that Europe (especially France & Germany) directly subsidize and bail their industries all the time w
57 PlaneSmart : As an older guy, i have old memories. Eximbank advanced enormous sums to buyers of US-built aircraft in the 60's and 70's, at rates unavailable thru b
58 TransPac : Whats the big deal here? The whole subsidy issue is really just something of an elaborate mind game between two economic superpowers. Considering this
59 Atmx2000 : It's not just Boeing. Look at GM and FORD: The Japanese companies just keep running circles around them no matter what they do. Why are they always be
60 Post contains images Bill142 : Gee this EU Vs US crap seems to be about as frequent as the Why are there no PTV's on Lufthansa and the Airbus Vs Boeing threads. You have to remember
61 Widebody : This subsidy issue has been beaten to death by voices who have not even taken the time to go and read the original agreement. Fact: Airbus loans are a
62 Atmx2000 : Its just like borrowing money from a bank, except in this instance the central banks of Germany, France, UK and Spain are the ones funding the money.
63 Sabenapilot : N79969, How funny it is to see you look fanatically for new yet equally weak excuses as to why the US first singed into the 1992 bilateral but then la
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Does Anyone Know What Aircraft I Will Get posted Sun Jan 18 2004 23:54:53 by A340600
Who Does NW 320´s Will Get To Nrt? posted Sat Jan 5 2002 08:56:53 by TOMASKEMPNER
Who Will Get More Orders This Year: Boeing/Airbus posted Mon May 1 2000 19:45:27 by LeoDF
Airbus 380 To Get Approval Next Tueday posted Wed Dec 6 2006 17:37:18 by LHStarAlliance
Why Does Sandford Get More Int. Flights Than Mco posted Tue Oct 17 2006 23:22:13 by Fll2993
Easyjet Does Not Get Istanbul (SAW) Flights Cleared... posted Sat Jun 17 2006 14:12:45 by Beaucaire
Tassili Al Will Get 4 DHC-8 Q400s posted Sun Jun 11 2006 06:40:40 by FCKC
How Do Airbus And Boeing Get Financed? posted Thu Apr 27 2006 09:39:35 by RootsAir
When Does Flybe Get Its 195s? posted Sun Apr 23 2006 12:23:06 by HS748
Why Does SXM Get So Much Heavy Traffic? posted Sun Apr 23 2006 00:14:58 by Jamesbuk