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WTO-verdict: EU Interest Rates Against Rules  
User currently offlineEPA001 From Netherlands, joined Sep 2006, 4980 posts, RR: 40
Posted (4 years 5 months 4 weeks 1 day 7 hours ago) and read 8885 times:
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According to the Dutch website www.nu.nl the French press agency AFP has published that the WTO will condemn the too low intrest rates that the EU charged for loans to Airbus. But the support by itself is ruled legal.

The article, which is in Dutch only, can be found here: http://www.nu.nl/economie/2281384/wto-veroordeelt-eu-steun-airbus.html

It states that the loans were awarded against "too easy" conditions. (a free translation of what is written in the news item).

It seems that what Airbus claimed a couple of months ago could be true, we have to await the WTO press statement to be sure about that. But the intrest rates being too low was already stated by Airbus as an initial response. Now we have to await the confirmation.

If confirmed the major objective of the US-protest at the WTO, to declare the support illegal, has not been reached. if so, that does not come as a surprise I must say. But again, we will have to wait for the official press statement and the release of the full report to be able to draw any real conclusion.

Since the news is "fresh" I have posted it here.



[Edited 2010-06-29 14:54:15]

137 replies: All unread, showing first 25:
 
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 1, posted (4 years 5 months 4 weeks 1 day 7 hours ago) and read 8869 times:

Didn't airbus declare "victory" a few months back? At least that was the subject of a voluminous thread here.


"When all is said and done, more will be said than done".
User currently offlineslz396 From , joined Dec 1969, posts, RR:
Reply 2, posted (4 years 5 months 4 weeks 1 day 6 hours ago) and read 8816 times:

Indeed, as far as I have understood it, the news is not fresh at all as the verdict was already widely commented some time ago and basically came down to what you say: the WTO threw out most of the US' claims, including the ideologic clash over the principle of launch aid.

Only a few smaller claims were upheld by the WTO (e.g. too low interest rates or even outright cash handouts and tax cuts) and ironically those are at the very center of the EU's counter claim which the WTO is set to rule on this summer, so many spectators assume the WTO's verdict in that case will be very damning for Boeing and the 787 program, known to be heavily subsidized through straight out cash handouts, rather than mechanisms of RLI.

Here's Airbus reaction to the WTO ruling, dating back some months already:

http://www.airbus.com/en/presscentre...5BbackPid%5D=1765&cHash=e527450959

Looks like summer has started and some journalists have a hard time finding new stories....

[Edited 2010-06-29 15:16:18]

User currently offlinezeke From Hong Kong, joined Dec 2006, 9236 posts, RR: 76
Reply 3, posted (4 years 5 months 4 weeks 1 day 6 hours ago) and read 8767 times:

Quoting Lumberton (Reply 1):
Didn't airbus declare "victory" a few months back? At least that was the subject of a voluminous thread here.

The full text of the US/Boeing complaint is available on the WTO website.

The various Boeing press releases following the WTO initial ruling is silent on the vast majority of their initial complaints.

Many, including myself have drawn our own conclusions based upon this alone. In my view, if the Boeing PR machine could have made an inch of ground using a splinter of material, they would have.

In my view, the US Government and Boeing have failed to convert the majority of their claims in front of the WTO.

The biggest claim that was not upheld, i.e. declared legal was the repayable launch investment vehicle which have been used on every Boeing product since the 757/767.

Also keep in mind it took Boeing six (6) years to comply with the last WTO ruling that found Boeing was using illegal subsidies, I doubt the US/Boeing will grace the EU/EADS with the same standard. They will want the to follow a timetable which they could not follow themselves.



We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlinescbriml From United Kingdom, joined Jul 2003, 12897 posts, RR: 46
Reply 4, posted (4 years 5 months 4 weeks 1 day 6 hours ago) and read 8688 times:
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The full report will be available on the WTO website from 14:00GMT tomorrow.

AFP is reporting:

Quote:
In its landmark 1,000-page report to be published in Geneva, the World Trade Organisation rules that the mechanism of repayable advances, crucial to the development of European planes, is legal and compatible with its rules, the source said.

They also report EU interest rates charged to Airbus were too low:

Quote:
However the world trade guardians are set to condemn the European Union for the low level of interest rates at which it has offered such funding, under a mechanism over 20 years old, as they were below market rates, a key element of the US complaint.
http://www.google.com/hostednews/afp...ALeqM5iGFkJdRQ2LwC4EqNml_3uQ7I0nYA



Time flies like an arrow, but fruit flies like a banana! #44cHAMpion
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 5, posted (4 years 5 months 4 weeks 1 day 6 hours ago) and read 8667 times:

Quoting zeke (Reply 3):
The various Boeing press releases following the WTO initial ruling is silent on the vast majority of their initial complaints.
Many, including myself have drawn our own conclusions based upon this alone.

We will be able to guage the accuracy of those "conclusions" tomorrow then.

The US does not need to win every point in this case, just like Boeing need not have won every point in its protest with the GAO over the flawed tanker award two years ago. One was enough.

How it will all play out, whether it will eventually end in a negotiated settlement, or a full blown trade war, no one can say at this point. Myself, I'm betting on a negotiated settlement down the line, but these are very uncertain times.

[Edited 2010-06-29 16:34:07]


"When all is said and done, more will be said than done".
User currently offlineEPA001 From Netherlands, joined Sep 2006, 4980 posts, RR: 40
Reply 6, posted (4 years 5 months 4 weeks 1 day 5 hours ago) and read 8591 times:
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Quoting scbriml (Reply 4):
Quote:
In its landmark 1,000-page report to be published in Geneva, the World Trade Organisation rules that the mechanism of repayable advances, crucial to the development of European planes, is legal and compatible with its rules, the source said.

It is incredible that the report contains a 1,000 pages. Maybe 2 to 4 pages would have been enough in my view.  


User currently offlineBoeingVista From Australia, joined Jan 2009, 1585 posts, RR: 3
Reply 7, posted (4 years 5 months 4 weeks 1 day 4 hours ago) and read 8560 times:

Quoting Lumberton (Reply 5):

We will be able to guage the accuracy of those "conclusions" tomorrow then.

The US does not need to win every point in this case, just like Boeing need not have won every point in its protest with the GAO over the flawed tanker award two years ago. One was enough.

How it will all play out, whether it will eventually end in a negotiated settlement, or a full blown trade war, no one can say at this point. Myself, I'm betting on a negotiated settlement down the line, but these are very uncertain times.

Going to be a big day then as the interim report on the EU complaint agains Boeing should also be issued by July 1st



BV
User currently offlinescbriml From United Kingdom, joined Jul 2003, 12897 posts, RR: 46
Reply 8, posted (4 years 5 months 4 weeks 1 day 2 hours ago) and read 8473 times:
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Quoting BoeingVista (Reply 7):
Going to be a big day then as the interim report on the EU complaint agains Boeing should also be issued by July 1st

I believe that one is due on 16th July.



Time flies like an arrow, but fruit flies like a banana! #44cHAMpion
User currently offlineBoeingVista From Australia, joined Jan 2009, 1585 posts, RR: 3
Reply 9, posted (4 years 5 months 4 weeks 1 day 2 hours ago) and read 8439 times:

Quoting scbriml (Reply 8):
I believe that one is due on 16th July.

Ok, the WTO website still says end of June 2010



BV
User currently offlinezeke From Hong Kong, joined Dec 2006, 9236 posts, RR: 76
Reply 10, posted (4 years 5 months 4 weeks 1 day ago) and read 8364 times:

Quoting Lumberton (Reply 5):

The US does not need to win every point in this case, just like Boeing need not have won every point in its protest with the GAO over the flawed tanker award two years ago. One was enough.

Not at all, this is nothing like the GAO. The GAO did not overturn the whole of the USAF decision, they asked for the USAF to reopen discussions to obtain more information. It was the DoD that canned the last KC-X competition, and that was expressly made against the GAO written recommendations.

For a long time now it has been suggested that the A330 received illegal subsidies for the development of the airframe, this has been the crux of much of the anti-KC-30 rhetoric in the USA. As far as I am aware, the RLI that was used for the A330 was deemed legal by the WTO, what was deemed illegal in relation to the A330 was the financing arrangements of some sales, and some of the sales are financed very similar to the way Boeing gets the US Government to underwrite many sales through the US Government owned EXIM bank.

Keep in mind that the US Government/Boeing was found guilty of similar illegal export subsidies in around 2000 by the WTO, it took them about 6 years to comply. I will be interesting to see the timeframe that the US Government/Boeing deems acceptable this time now that the shoe in on the other foot.



We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlinebillreid From Netherlands, joined Jun 2006, 1045 posts, RR: 0
Reply 11, posted (4 years 5 months 4 weeks 19 hours ago) and read 8211 times:

Regardless this makes the Tanker bid by Ab very difficult to award. For congress to support the AB bid against the US Boeing bid after the manufacturer received dollars/euros below market rate becomes very politically charged. Is it AB's plan to use what amounts to free money to build a plant in the USA to compete with Boeing? Charged at the lowest point of questioning.

The thousand page report makes sense. A "good morning" statement from a lawyer usually takes 5 - 7 pages because they charge by the page.

I find that saying the launch aid was legal but was issued at illegal rates seams to be an oxymoron.
The whole point here is some lawyers are getting very very very rich writing these encyclopedias that are self contradicting, but by doing this it requires another 147,000,000 pages and $123,456,789 in additional legal fees to be billed.



Some people don't get it. Business is about making MONEY!
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 12, posted (4 years 5 months 4 weeks 19 hours ago) and read 8207 times:

Quoting zeke (Reply 10):
As far as I am aware, the RLI that was used for the A330 was deemed legal by the WTO, what was deemed illegal in relation to the A330 was the financing arrangements of some sales, and some of the sales are financed very similar to the way Boeing gets the US Government to underwrite many sales through the US Government owned EXIM bank.

So you have seen the final report?   

Quoting zeke (Reply 10):
Not at all, this is nothing like the GAO.

If someone is shooting at you with an automatic weapon and most of the rounds miss, and "only" two or three hit you, that's a good thing?  

[Edited 2010-06-30 03:09:03]


"When all is said and done, more will be said than done".
User currently offlinejoost From Netherlands, joined Apr 2005, 3188 posts, RR: 4
Reply 13, posted (4 years 5 months 4 weeks 19 hours ago) and read 8187 times:

Quoting EPA001 (Reply 6):
It is incredible that the report contains a 1,000 pages. Maybe 2 to 4 pages would have been enough in my view.

It only demonstrates that discussions about state aid and subsidies to large coorperations (be it airplane manufacturers, airlines, oil and gas companies, car manufacturers, etc, etc) are way more complex than they are often believed to be on forums like A.net.


User currently offlineEPA001 From Netherlands, joined Sep 2006, 4980 posts, RR: 40
Reply 14, posted (4 years 5 months 4 weeks 18 hours ago) and read 8116 times:
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Quoting joost (Reply 13):
It only demonstrates that discussions about state aid and subsidies to large coorperations (be it airplane manufacturers, airlines, oil and gas companies, car manufacturers, etc, etc) are way more complex than they are often believed to be on forums like A.net.


I know they are much more complex that most of us can imagine here, but still the issue was not that difficult to begin with. 2-4 pages is also an exaggeration on my part, but about a 100 pages maximum should do the job.

After all, the EU and Airbus has kept the guidelines of the agreement the US walked away from in place. So they could hardly be found guilty of massive illegal support as the US claimed in their protest. Anyway, the official report will be available soon for all of us. Reading it might kill some free time we might have left.  


User currently offlinezeke From Hong Kong, joined Dec 2006, 9236 posts, RR: 76
Reply 15, posted (4 years 5 months 4 weeks 17 hours ago) and read 8067 times:

Quoting Lumberton (Reply 12):
So you have seen the final report?

I will do soon, your flippant remarks are well noted, I will look forward to quoting relevent paragraphs back at you.

Quoting Lumberton (Reply 12):
If someone is shooting at you with an automatic weapon and most of the rounds miss, and "only" two or three hit you, that's a good thing?

Load of rubbish, the WTO report has nothing to do with the GAO. And the GAO never cancelled the KC-X contract.

Boeing was already found guilty of using subsidies by the WTO ? How many times has people like yourself brought this up ? NIL.

Perfect example of the reversionalism.



We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 16, posted (4 years 5 months 4 weeks 17 hours ago) and read 8014 times:

Quoting zeke (Reply 15):
Load of rubbish, the WTO report has nothing to do with the GAO. And the GAO never cancelled the KC-X contract.

The comparison to the WTO report with the GAO decision a couple of years back is only to put some comments into context. There were those here (in fact I believe you may have been one of them) who argued that Boeing "only won" 8 or out of a hundred plus points. Well those eight were enough to destroy the award. I see some already starting the spin machine to minimize any adverse ruling against EU launch aid.

Load of rubbish? Who cares who canceled it! The GAO report detailed that the award was horribly flawed, leading to the tanker award being "tanked". That is beyond dispute. It doesn't matter who pulled the trigger, be it DOD, Santa Claus, or Elvis. It died.
        

[Edited 2010-06-30 05:15:07]

[Edited 2010-06-30 05:16:51]


"When all is said and done, more will be said than done".
User currently offlineEPA001 From Netherlands, joined Sep 2006, 4980 posts, RR: 40
Reply 17, posted (4 years 5 months 4 weeks 16 hours ago) and read 7966 times:
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Quoting Lumberton (Reply 16):
Well those eight were enough to destroy the award

The award was destroyed by the USAF, not by recommendation of the GAO. So that is a totally different story. But let's stay on track here and await the final report and press release by the WTO.


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3602 posts, RR: 10
Reply 18, posted (4 years 5 months 4 weeks 16 hours ago) and read 7904 times:

Quoting EPA001 (Reply 17):
The award was destroyed by the USAF, not by recommendation of the GAO. So that is a totally different story. But let's stay on track here and await the final report and press release by the WTO.

Just to clear up a bit here, as some seem to be confused (on both sides).

The award was cancelled by the USAF because the USAF was the contracting agency. The USAF had no choice by law but to cancel the award because of the GAO audit. The GAO does not award contracts (except for it's own service needs such as pencil supplies). The GAO is tasked as an impartial referee for USA government to insure fairness and prevent/detect corruption. There was no corruption found, but the GAO found that the bidding process was not "fair" (whatever "fair" is).


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 19, posted (4 years 5 months 4 weeks 14 hours ago) and read 7498 times:

This is going to be a lot of "fun" sorting out; the WTO has released its findings on the U.S. case to the public. The spin machines on both sides are working.
US claims landmark victory in Airbus subsidy case

Some perspective for that gleeful "airbus claims WTO victory" thread a few months back.... 



"When all is said and done, more will be said than done".
User currently offlineOmega1153 From Netherlands, joined Aug 2007, 11 posts, RR: 0
Reply 20, posted (4 years 5 months 4 weeks 13 hours ago) and read 7415 times:

Quoting zeke (Reply 10):
I will be interesting to see the timeframe that the US Government/Boeing deems acceptable this time now that the shoe in on the other foot.

The timeframe for compliance will undoubtedly lead to an arbitration case in itself. It will also be interesting to see what remedy will be awarded. Retaliation issues are always present in EU/US trade disputes. Which again has the potential for a separate legal dispute; the case is likely to go on for a bit longer...

Quoting billreid (Reply 11):
The thousand page report makes sense. A "good morning" statement from a lawyer usually takes 5 - 7 pages because they charge by the page.

Actually, most charge by the hour. Plus, the majority of the report probably consists of a reproduction of applicable legal provisions, factual history, arguments by the parties and third parties, amicus briefs etc. The actual decision / legal analysis will still be substantial (necessarily, due to the complexity of the case), but not a thousand pages long.

Quoting billreid (Reply 11):
I find that saying the launch aid was legal but was issued at illegal rates seams to be an oxymoron.

Not really from a legal point of view; the distinction can have serious consequences both as to the final decision and as to available remedies.

Quoting joost (Reply 13):
It only demonstrates that discussions about state aid and subsidies to large coorperations (be it airplane manufacturers, airlines, oil and gas companies, car manufacturers, etc, etc) are way more complex than they are often believed to be on forums like A.net.

   which demonstrates that even aviation non-specialists, such as lawyers, can greatly enjoy reading the discussions here…   



Fiat Iustitia Ruat Caelum
User currently offlinejustloveplanes From United States of America, joined Jul 2004, 1065 posts, RR: 1
Reply 21, posted (4 years 5 months 4 weeks 13 hours ago) and read 7338 times:

This is a confusing issue as the subsidy issue is many faceted. So I give my quick take in that vein.

The essence of why a subsidy is illegal is it is deemed to be unfairly advantageous to in a free market. This is how the WTO viewed the terms of the government loans, i.e. gave an unfair advantage in the marketplace.

Whether a government can provide loans or not is irrelevant, it's the terms of the load that matter. For example, it the governemt provides commercial terms, it's by defiinition not a subsidy since the receiver can get the same loan from a commercial bank - no harm, no foul, government can loan all the money it wants (banks might have an issue...)

However, advantageous loan terms can have the effect of removing risk - in effect, go ahead and do it, we'll catch you - or subsidizing costs. Of the two, subsidizing costs can be looked at various ways between Boeing and Airbus, that is a complex discussion. Removing risk is a different matter. This is an advantage that I don't believe Boeing benefits from, I don't know about the terms for Airbus, but if there is a fundamental issue at the root of the matter, this is it.


User currently offlinezeke From Hong Kong, joined Dec 2006, 9236 posts, RR: 76
Reply 22, posted (4 years 5 months 4 weeks 13 hours ago) and read 7303 times:

Quoting Lumberton (Reply 16):

This is about the WTO, not GAO.

Quoting EPA001 (Reply 17):
The award was destroyed by the USAF

No, it was cancelled by Gates, at the DoD level.

Quoting DLPMMM (Reply 18):

The award was cancelled by the USAF because the USAF was the contracting agency.

It was cancelled by the DoD.

Quoting DLPMMM (Reply 18):
The USAF had no choice by law but to cancel the award because of the GAO audit.

No, the choice that the USAF wanted, and recommended by the GAO was to repoen discussions. Gates at the DoD cancelled the RFP as a political decision that should be taken by the next president.



We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlinezeke From Hong Kong, joined Dec 2006, 9236 posts, RR: 76
Reply 23, posted (4 years 5 months 4 weeks 13 hours ago) and read 7274 times:

The report is available online for all to see now : http://www.wto.org/english/news_e/news10_e/316r_e.htm

These are the conclusions and recommendations : http://www.wto.org/english/tratop_e/dispu_e/316r_conc_e.pdf

Quote:
VIII. CONCLUSIONS AND RECOMMENDATION
A. CONCLUSIONS
8.1 In light of the findings set out in the foregoing sections of our Report, we conclude that the United States has established the following concerning the existence of subsidies:
(a) concerning the provision of LA/MSF;
(i) that each of the challenged LA/MSF measures constitutes a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement, and
(ii) that the German, Spanish and UK A380 LA/MSF measures are subsidies contingent in fact upon anticipated export performance, and therefore prohibited export subsidies within the meaning of Article 3.1(a) and footnote 4 of the SCM Agreement.
(b) concerning the provision of infrastructure and infrastructure-related grants;
(i) that the provision of the Mühlenberger Loch site constitutes a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement,
(ii) that the provision of the lengthened Bremen Airport Runway constitutes a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement,
(iii) that the provision of the ZAC Aéroconstellation site and associated EIG facilities constitutes a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement, and
(iv) that challenged grants provided by authorities in Germany and Spain for the construction of manufacturing and assembly facilities in Nordenham, Germany, and Sevilla, La Rinconada, Toledo, Puerto de Santa Maria and Puerto Real, Spain, and by the governments of Andalusia and Castilla-La Mancha to Airbus in Puerto Real, Sevilla, and Illescas (Toledo) are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement.
(c) concerning the German government's transfer of its ownership share in Deutsche Airbus to the Daimler Group;
(i) that the 1989 acquisition by KfW of a 20 percent equity interest in Deutsche Airbus is a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement, and
(ii) that the 1992 transfer by KfW of its 20 percent equity interest in Deutsche Airbus to MBB is a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement.
(d) concerning the equity infusions that the French government and Crédit Lyonnais provided to Aérospatiale;
(i) that the 1987, 1988, 1992 and 1994 equity infusions to Aérospatiale are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement, and
(ii) that the 1998 transfer by the French government of its 45.76 percent interest in Dassault Aviation to Aérospatiale is a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement.
(e) concerning the research and technological development funding provided by the European Communities and certain EC member States;
(i) that grants under the Second, Third, Fourth, Fifth and Sixth EC Framework Programmes identified in Annexes I.1, I.2, I.3, I.4 and I.5 are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement,
(ii) that French government grants amounting to a maximum of EUR 391 million between 1986 and 1993 and EUR [***] between 1994 and 2005 are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement,
(iii) that German Federal government grants under the LuFo I, LuFo II and LuFo III programmes amounting to EUR [***] are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement,
(iv) that German sub-Federal government grants amounting to EUR [***] from the Bavarian authorities under the OZB and Bayerisches Luftfahrtforschungsprogramm, EUR 11 million from the Bremen authorities under the AMST programmes, and EUR [***] from the Hamburg authorities under the Luftfahrtforschungsprogramm are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement,
(v) that loans under the Spanish government PROFIT and PTA programmes amounting to, respectively, EUR 62.2 million and EUR [***], are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement, and
(vi) that UK government grants under the CARAD and ARP programmes amounting to GBP [***] are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement.
8.2 Furthermore, in light of the findings set out in the foregoing sections of our Report, we conclude that the United States has established the following with respect to adverse effects:
(a) that the effect of the subsidies is to displace the imports of a like product of the United States into the European market within the meaning of Article 6.3(a) of the SCM Agreement, constituting serious prejudice to the interests of the United States within the meaning of Article 5(c) of the SCM Agreement,
(b) that the effect of the subsidies is to displace the exports of a like product of the United States from the markets of Australia, Brazil, China, Chinese Taipei, Korea, Mexico, and Singapore within the meaning of Article 6.3(b) of the SCM Agreement, constituting serious prejudice to the interests of the United States within the meaning of Article 5(c) of the SCM Agreement,
(c) that the effect of the subsidies is likely displacement of exports of a like product of the United States from the market of India within the meaning of Article 6.3(b) of the SCM Agreement, constituting a threat of serious prejudice to the interests of the United States within the meaning of Article 5(c) of the SCM Agreement, and
(d) that the effect of the subsidies is significant lost sales in the same market within the meaning of Article 6.3(c) of the SCM Agreement, constituting serious prejudice to the interests of the United States within the meaning of Article 5(c) of the SCM Agreement.
8.3 On the other hand, in light of the findings set out in the foregoing sections of our Report, we conclude that the United States has not established the following concerning the existence of subsidies:
(a) concerning the provision of LA/MSF;
(i) the existence, as of July 2005, of a LA/MSF commitment measure for the A350 constituting a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement,
(ii) that the French A380, French A340-500/600, Spanish A340-500/600 and French A330-200 LA/MSF measures are subsidies contingent in fact upon anticipated export performance within the meaning of Article 3.1(a) and footnote 4 of the SCM Agreement,
(iii) that the French A380, German A380, Spanish A380, UK A380, French A340-500/600, Spanish A340-500/600 and French A330-200 LA/MSF measures are subsidies contingent in law upon anticipated export performance within the meaning of Article 3.1(a) and footnote 4 of the SCM Agreement, and
(iv) the existence of an unwritten LA/MSF Programme measure constituting a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement.
(b) concerning the challenged EIB Loans;
(i) that each of the challenged loans and the 2002 credit facility for the A380 constitutes a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement.
(c) concerning the provision of infrastructure and infrastructure-related grants;
(i) that the road improvements by French authorities constitute specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement,
(ii) that the GBP 19.5 million provided to Airbus UK in respect of its operations in Broughton, Wales, is a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement, and
(iii) that the grant provided by the government of Andalusia to Airbus in Puerto Santa Maria is a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement.
(d) that the 1998 settlement by the German government of Deutsche Airbus' government debt constitutes a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement.
(e) concerning the research and technological development funding provided by the European Communities and certain EC member States;
(i) that the German Federal government's commitment to provide Airbus with EUR [***] under the LuFo III programme is a specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement, and
(ii) that the challenged grants under the UK Technology Programme are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement.
8.4 Furthermore, in light of the findings set out in the foregoing sections of our Report, we conclude that the United States has not established the following with respect to adverse effects;
(a) that the effect of the subsidies is significant price undercutting by the subsidized product as compared with the price of a like product of the United States in the same market within the meaning of Article 6.3(c) of the SCM Agreement,
(b) that the effect of the subsidies is significant price suppression within the meaning of Article 6.3(c) of the SCM Agreement,
(c) that the effect of the subsidies is significant price depression within the meaning of Article 6.3(c) of the SCM Agreement, and
(d) that, through the use of the subsidies, the European Communities and certain EC member States cause injury to the United States' domestic industry within the meaning of Article 5(a) of the SCM Agreement.
B. RECOMMENDATIONS
8.5 Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. We conclude that, to the extent that the European Communities, France, Germany, Spain and the United Kingdom have acted inconsistently with the SCM Agreement, they have nullified or impaired benefits accruing to the United States under that Agreement.
8.6 Article 4.7 of the SCM Agreement provides that, having found a measure in dispute to be a prohibited subsidy, a panel "shall recommend that the subsidizing Member withdraw the subsidy without delay" (emphasis added). Furthermore, that provision provides that a panel "shall specify in its recommendation the time-period within which the measure must be withdrawn" (emphasis added). Accordingly, taking into account the nature of the prohibited subsidies we have found in this dispute, we recommend that the subsidizing Member granting each subsidy found to be prohibited withdraw it without delay and specify that this be done within 90 days.
8.7 Article 7.8 of the SCM Agreement provides that "  here a panel report or an Appellate Body report is adopted in which it is determined that any subsidy has resulted in adverse effects to the interests of another Member within the meaning of Article 5, the Member granting or maintaining such subsidy shall take appropriate steps to remove the adverse effects or shall withdraw the subsidy". Accordingly, in light of our conclusions with respect to adverse effects set out in paragraph 8.2 above, we recommend that, upon adoption of this report, or of an Appellate Body report in this dispute determining that any subsidy has resulted in adverse effects to the interests of the United States, the Member granting each subsidy found to have resulted in such adverse effects "take appropriate steps to remove the adverse effects or ... withdraw the subsidy".
8.8 Finally, we note that the special and additional rules applicable under Parts II and III of the SCM Agreement do not require a panel to specify how the implementation of recommendations under Articles 4.7 and 7.8 should be effected by the subsidizing Member(s). In this context, we recall that the second sentence of Article 19.1 of the DSU provides that a panel "may" suggest ways in which a recommendation could be implemented. Assuming that this provision also applies to recommendations under Articles 4.7 and 7.8 of the SCM Agreement, we note the observation of the panel in US – Hot Rolled Steel that the means of implementation is, pursuant to Article 21.3 of the DSU, for the Member concerned, in the first instance. Further, the Appellate Body has made clear that the second sentence of Article 19.1 "does not oblige panels to make ... a suggestion". In this case, it is possible to speculate as to the approaches that might be used to implement our recommendations. However, in the absence of any requirement to do so, and given that the United States has not even requested that we do so, we do not make any suggestions concerning steps that might be taken to implement those recommendations.



We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlineUnited787 From United States of America, joined May 2005, 2780 posts, RR: 2
Reply 24, posted (4 years 5 months 4 weeks 13 hours ago) and read 7158 times:

According to Crain's Chicago Business, Boeing Won!

http://www.chicagobusiness.com/cgi-bin/news.pl?id=38733


25 Post contains images NAV20 : Not overly 'fair,' billreid - they have to 'record and discuss' all the points both sides have made, whether relevant or not. And I hate to think of
26 Tugger : What does "SCM" stand for? Thanks, Tugg
27 airfrnt : Again, Airbus has been spinning this like mad, but the EU definitely got slapped on the biggest point - that the EU launch aid was distorting the mark
28 airfrnt : Yep, this particular blade has been swinging over Airbus's neck for a while, regardless of the WTO ruling. Remember that Airbus didn't just use launc
29 Stitch : Were the A340-200 and A340-300 programs tied into the A330-200 and A330-300 programs in terms of RLI repayments and royalties? I know a separate line
30 Post contains images NAV20 : Thanks Zeke - your post crossed with mine. Looks like fun. It appears that the Panel made a clear decision that many of the subsidies provided to Airb
31 billreid : I was trying to be funny. But you gotta admit this is a lovely cash cow for lawyers, don't you think? This is why this will be a negotiated deal. Bot
32 Aither : This is ridiculous Below market rates loans are unfair ? what a big deal when you compare that to the unfair advantage countries have by not having to
33 NAV20 : As far as I know, Stitch, prior to the A380, 'launch aid' deals didn't have any 'end-date' repayment terms. As far as i can gather, it was just 'assu
34 Post contains links hawkercamm : http://www.airbus.com/en/presscentre...ews[backPid]=1683&cHash=89b4801f4e This would seem to suggest that launch aim for new aircraft is mostly le
35 Jacobin777 : I've always been skeptical on the "250 frames sold to break even"..if it were true, there would have been no reason Boeing wouldn't have entered the
36 keesje : But the loans itself were not illegal. And that was the core of this spat. Hell will freeze before they would admit it but that must be a major, major
37 Post contains images NAV20 : Cheers, billreid - my comment was just meant in fun........ Just 'dunno' - if I was still in business, and working for Boeing, and reading phrases li
38 Post contains images astuteman : Airbus most certainly haven't lost the war ??????? Reads a bit more like "no injury to the United States' domestic industry within the meaning of Art
39 Baroque : So we can confidently expect the WTO to declare the GFC an illegal event and to demand the Fed return interest rates to commercial levels, whatever t
40 Post contains links Lumberton : Reuters attempts to condense the 1000 pages to one. http://www.reuters.com/article/idCNL...:a49:g43:r2:c0.196203:b35330298:z0[Edited 2010-06-30 11:22:
41 Stitch : Looking at the UK Aerospace Industry Report for 2005, on page 27 it notes the following (bolding mine): Now that might be an amendment of the RLI ter
42 Stitch : Speaking only on this topic, they can be "unfair" if they allow a project to go forward that could not be economically justified at market rates. One
43 Post contains images NAV20 : Dead right, Stitch. That was written at least four years after the A380 project went into production, and the A380 was Airbus's only new project in t
44 Post contains images scbriml : Well, pretty much as expected, far from a clear-cut victory for either side, but enough to allow both sides to be able to claim victory! However, it s
45 Post contains images astuteman : Always a pleasure to have a rational discussion with you Stitch Obviously, any form of repayment of additional interest, or for some of the infrastru
46 silentbob : I don't think you can separate the loans from the interest rates, the rate was part of the deal. The WTO found that their actions were a violation of
47 Stitch : I think the only real call was that if the A330-200's RLI had been ruled illegal, the Airbus RFP would have to be adjusted upwards in price on a per
48 Stitch : Personally, I'm not surprised that RLI was found to be a legal financial instrument. As I recall, the 1992 agreement allowed the US government to do t
49 Post contains images EPA001 : Well, this sums it all up quite nicely. If Airbus needs to repay anything, it would be the difference in interest between the commercial loans (which
50 Post contains images EPA001 : That could be the outcome of all this. But RLI is what it is, repayable. The Japanese subsidies, though not a part of this claim, were never repayabl
51 Stitch : To my knowledge, Japan's government did not directly hand over LD3 containers of cash to Boeing. What they did do was invest heavily in Japanese indu
52 airfrnt : Wow. A whole bunch of Airbus cheerleaders say "Airbus is right". A whole bunch of Boeing cheerleaders saying "Airbus is wrong" Which again, as I point
53 aircellist : Long after the tanker contract award, most probably... Indeed...
54 Post contains images Stitch : Well part of the problem is nobody is doing an impartial analysis (to be fair, the thing just came out). US media and politicians, along with Boeing,
55 Lufthansa411 : I am really looking forward to seeing what comes of the claim from Airbus and whether anything substantial is found. It should help to bring some bala
56 Post contains links mham001 : Reading this, it seems it is a slam dunk loss for Airbus. WTO panel slams EU aid for Airbus http://news.yahoo.com/s/nm/20100630/bs_nm/us_trade_airbus
57 XT6Wagon : The problem they will have is the production rate is far below what was planned at the time the loan was made. However we don't know at which frame t
58 DLPMMM : We will see who won or lost when it comes down to who pays what to whom, and even then it might not really be clear. Until that time, this entire thr
59 BoeingVista : The ruling is all over the place the answer to the complaint seems to be yes, no and maybe, I expect the same of the EU claim against Boeing. This dis
60 PVG : Boeing wins because Airbus can no longer get cheap (below market rate) finance. I think that is all they were after.
61 par13del : Which US government under which party is going to provide RLI to Boeing, and will that set a precedent for other industries, the other option in real
62 astuteman : I can't believe there are those who appear to think that this whole WTO charade is ultimately anything other than a zero sum game... Astonishing. Boe
63 NAV20 : I think that's a key point, par13del. RLI made it too easy for Airbus to embark on ill-advised projects that the private market wouldn't support. Fol
64 Baroque : I know of no signs that the 1992 agreement was changed (at least until after the A380 and probably not then either). Which makes it a little odd that
65 NAV20 : Baroque, as far as one can tell, in the case of the A380, they appear to be one and the same thing. According to the Gellman Report the terms were (a
66 Post contains images EPA001 : No, this ruling as I understand it will not force anyone to pay back the loans. The conditions of the loans were illegal, the loans itself not. So th
67 PVG : I my opinion, what Boeing is after is to stop all governments from providing low or no cost aid. When Airbus made their accusations against Boeing fo
68 MingToo : PVG: You make a very good point. If you view Boeing and Airbus as a duopoly and not purely as competitors then it makes a lot of sense. Their aim, hav
69 Baroque : Nav, WADR just because Gellman apparently did not read the 1992 agreement nor the numerous HoC documents does not mean that you are forbidden to read
70 Stitch : If the outcome is Airbus using RLI, even at market rates, to secure capital that Boeing cannot on the commercial credit markets (because the governme
71 MingToo : But by definition the market rate that Airbus pays includes the risk premium of funding a risky project. If Boeing cannot secure the same market rate
72 Post contains images scbriml : Ah, this week's "Airbus is doomed" message. The UK Government only just reconfirmed that its RLI for the A350 would not be cut as part of the Governm
73 keesje : I think it is an illusion to think Airbus, Boeing, Embraer, Bombardier and the rest of the pack do not receive vital government support, for strategi
74 Post contains links zeke : "Agreement on Subsidies and Countervailing Measures " which was incorporated into the 1994 "General Agreement on Tariffs and Trade" (GATT) The SCM te
75 joecanuck : Amen...every single syllable uttered on this issue is nothing more than spin, spin, spin. What's that saying...? Statistics don't lie...statisticians
76 Baroque : Ah a pedant after mine own heart, got to insist on acronyms being grammatical. TsOR, not TORs too. Yep, whiich may have a bearing on: because they mu
77 Post contains images astuteman : Sadly it was also last week's, last year's and the year before's "Airbus is doomed" message too, Scrimbl. And the year before that's. No matter. Each
78 Stitch : That is true, but with RLI providing up to one-third of the amount believed necessary to bring a new or updated commercial aircraft family to market,
79 MingToo : Actually yes, I did think of that after posting. It is mostly a consequence of different estimates of the risk by the market players. For example, th
80 NAV20 : I wasn't thinking in terms of the WTO ruling per se, EPA001 - I don't think that is particularly important. The significance of WTO rulings is mainly
81 PVG : Of course they are all receiving government money. However, they are going to see more competition whether they like it or not and alot of it will in
82 Post contains images Jacobin777 : Its seems you are the one who is adding flamebit...I didn't read that anywhere. Any person who thinks or who insinuates Airbus is doomed is full of i
83 Post contains links Baroque : A few bits that might be considered relevant from (yes I know that he should have called it RLI but he does explain that later on!): PREMISE AND PRACT
84 Post contains links and images NAV20 : Cheers, Jacobin777...... This Reuters press story on the issue is the best I've found so far. It puts the situation (and the standpoints of the two op
85 AAExecPlat : You know...I have no issues with forcing Airbus to seek commercial loans or at least commercial interest rate loans from European governments. I also
86 Stitch : What about the tax breaks AL is offering Airbus to build the KC-30A/A330MRTT/A330-200F there? What about all the tax breaks municipalities in the UK,
87 AAExecPlat : Believe it or not, but that was exactly my point. I am not arguing any of your points. I am aware of those. You just reiterated my point from the Boe
88 Post contains images par13del : And we thought the only lawyers were those outside of a.net Colonies anyone, the difference now is that the industrial nations have all sorts of "leg
89 scbriml : If you really believe my post is flamebait, you have options available to remedy it. It doesn't, which is why I put the phrase in double-quotes (othe
90 Post contains images bikerthai : Don't mess with the moderator Folks are all caught up in the details. Whether the A350 or A320 replacement will get an RLI or loans at "market rate",
91 Aesma : Airbus has to reimburse the aid (hence the name Reimbursable Launch Investment) so I don't see how the risk is removed. It is merely diminished a lit
92 Jacobin777 : I guess I have. Sorry, no "implication"...only that Airbus would have to pay market rates for loans, etc.
93 PVG : What about the issue that maybe Boeing wouldn't need government help if their main competitor wasn't receiving so much of it itself? Was Boeing gettt
94 Post contains images Baroque : Looking at the plot of payments out and in both the 1992 agreement and the WTO complaint appear to be after the horse had (well and truly) bolted. In
95 Post contains images EPA001 : I am not sure if the RLI system works that way. The loans received must be payed back in full with interest. Airbus has always complied with that con
96 Stitch : Since the payments / royalties are on a per-frame basis, it is true that the A380 (and perhaps the A345/A346) cannot draw on the A320/A330/A340 progr
97 Baroque : I have never seen it stated, but common sense would suggest a couple of things. 1. Provided the money is not fake or from sales of drugs, the Governm
98 Post contains links NAV20 : Interesting figures, Baroque, thanks. I think it illustrates both ‘what went right’ and ‘what went wrong,’ though. The Americans were, in my v
99 slz396 : Fascinating to see this topic has now almost reached 100 replies, whereas it discusses nothing but old news really. Other than an opportunity for both
100 tarheelwings : While I agree that the majority of what is being said by both A & B is old news and that this dispute will eventually have to be settled by direc
101 UALWN : Err, the US sold all sorts of stuff to Saddam Hussein's Iraq right until the first Gulf War. Back then, Iraq was the good guy, while Iran was the bad
102 Stitch : I no longer seem to have the file, but when I did research EU support beyond RLI for EADS and Airbus, I found a number of Spannish aid at the Federal
103 UALWN : Well, you said municipal level before. Even at the Spanish government level, if there was any aid (and I trust you when you say there was), I would b
104 slz396 : That is what the WTO will rule on, pretty soon. Mind you, in the case of the US vs the EU which we are discussing here, sponsoring of all-in-all rela
105 Stitch : It has evidently been granted at the Federal, Provincial and Municipal level. I don't remember the specific amounts, but for the commercial side, it
106 UALWN : Just a pedantic correction: this should read national, regional, and municipal level. Spain is not a federal state...unfortunately.
107 Post contains images Stitch : I was up at 03:00 so the brain is still in neutral and I forgot that Spain is a Constitutional Monarchy / Parliamentary Democracy...
108 UALWN : Well, I guess it could still be a federal constitutional monarchy / federal parliamentary democracy, but it ain't.
109 aerokiwi : Why the hell are governments or government entities even funding these things in the first place, on either side, in any direction? Is there actually
110 Post contains images NAV20 : In my view, aerokiwi, there are two areas in which direct government funding is justified. The first is 'defence' - by definition (unless a given com
111 Aesma : I'm not talking about the RLI system. Some here are saying that if Airbus should pay something more than envisioned because of this ruling, they woul
112 NAV20 : With respect, Aesma, EADS lost $US1B. (Euro763M.) last financial year, and are forecasting breakeven at best for THIS financial year. In fact, their
113 UALWN : There are many things in your post that I don't understand. This is one of them. One quarter? When were EADS's shares trading at four times what they
114 Post contains images NAV20 : From long experience I tend to take inflation into account, AALWN. I can clearly recall that EADS shares hit E36.10 just before the Forgeard s**t fin
115 UALWN : I'm sorry, but cumulative inflation in the Euro area between mid 2006 and now is about 10%. So taking into account inflation does not turn a factor t
116 aerokiwi : I work in this space now... largely in Australia. There isn't a market failure, per se, but instead money is channelled to regional areas based large
117 Stitch : I find that those who advocate most vocally for it are not themselves subject to it (as they are in a protected position).
118 Post contains images Baroque : Is not that a series of indisputables? At least you guys (probably except aerokiwi) has not had to go through the serial lying about our brand new ta
119 tugger : So what does a ruling like this mean for something like COMAC in China that appears to have almost unlimited state support and funding? Does it mean t
120 aerokiwi : Probably a fair call. Good question. Same goes for the Russian manufacturers. Wasn't there a recent case between Canada and Brazil? Did that go to WT
121 NAV20 : It doesn't HAVE to be like that, aerokiwi. All over Europe, the problem in the 60s and 70s was that whole industries like coalmining and shipbuilding
122 SSTsomeday : My problem is not with the interest rates so much, but with the actual availability of government loans that the private sector may not likely be wil
123 AAExecPlat : I think you are only partially right. The A380 was launched with a solid business thought, namely that the busiest airports in the world don't have m
124 Stitch : That is the current Fed Discount rate. Boeing secured the bulk of their monies in the mid-2000s. Also, Boeing would not have been able to secure capi
125 Post contains links DLPMMM : I thought this was an interesting article from Reuters: EADS CEO Slams Boeing "Propaganda" http://news.airwise.com/story/view/1278330607.html Fair Use
126 silentbob : Just about every nation in the world is afraid of making the Chinese mad. I don't think anyone would consider pushing the issue at this time.
127 SSTsomeday : You write a fair and dignified post. I hope our discussion hasn't been rehashed too much, because it's nice to consider some important points in a ge
128 MingToo : But those looking at financing the project with private money will be encouraged and willing to lend or lend at a lower rate knowing that the tax inc
129 Post contains images astuteman : Indeed It's called RLI - that IS the mechanism This is absolutely incorrect, by the way. The tax incentives that Boeing (and its suppliers in WA) rec
130 MingToo : Putting aside the Airbus versus Boeing, RLI versus tax break and so forth for a moment. Perhaps the question should be if it is possible to develop co
131 Stitch : The staggered Business & Occupation tax rate reductions passed by the Washington State House of Representatives as House Bill 2294 applies specifi
132 MingToo : And if it uses 21% less ?? No tax break ? That seems a very curious way of phrasing it in any sort of legal document. Better than fifteen percent wou
133 Stitch : The Bill was passed specifically to ensure the (initial) 787 FAL would be in Washington, so it was tailored specifically for the 787 and likely used
134 AAExecPlat : Stitch. I actually wrote a reply yesterday on my blackberry, but that never posted for whatever reason, so apologies for the rather late reply. My po
135 MingToo : You are also assuming that Airbus is borrowing in Euros. They could borrow in dollars just as Boeing does with the same base rate. Given that their c
136 AAExecPlat : I would be shocked if they borrowed from US banks in USD. Does anyone know for sure what banks financed the A380/A350 ventures?
137 MingToo : Why ? Its not at all unusual for companies to borrow in currencies other than their own native one. There is no reason that it has to be a US bank, E
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