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WTO Says Boeing Got Illegal $5bn Subsidies  
User currently offlinechrisrad From Australia, joined Dec 2000, 1069 posts, RR: 8
Posted (2 years 6 months 1 week 6 days 1 hour ago) and read 10646 times:

Haven't seen this posted yet on the forum

"The World Trade Organization has ruled that US planemaker Boeing received $US5.3 billion ($A5.04 billion) in illegal government subsidies over a quarter of a century, far less than what arch-rival Airbus received according to an earlier finding"

http://au.finance.yahoo.com/news/wto...21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3


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121 replies: All unread, showing first 25:
 
User currently offlinetugger From United States of America, joined Apr 2006, 5608 posts, RR: 8
Reply 1, posted (2 years 6 months 1 week 6 days 1 hour ago) and read 10575 times:

The sad but funny thing is the trumpeting in the article by each sides supporters is nearly identical to the "talking at cross purposes" that we see here on A.net on this topic (and will see in this thread). Each side only puts forth and supports what reinforces it's "favorite".

I guess the one good thing is that now that this is established, who got what and how much, the two sides can hopefully now establish an equalized and agreed to method going forward on how to support their aerospace industries. Of course it will take many years to do so.

I am also betting these decisions will be used to target any other nations/regions support of their commercial aerospace sectors.

Tugg



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User currently offlinemercure1 From French Polynesia, joined Jul 2008, 1495 posts, RR: 2
Reply 2, posted (2 years 6 months 1 week 6 days 1 hour ago) and read 10531 times:

Not that it will put things to rest, however the point is that Boeing has benefited and been subsidized by the US government, and on its own commercial merits would would have incurred far higher financial cost in doing business.

So at the day, hopefully Boeing atleast can step back from playing its "I'm innocent" card, as its has been shown to have benefited from illegal aid (albeit not to as large amount as EADS).


User currently offlinekanban From United States of America, joined Jan 2008, 3560 posts, RR: 26
Reply 3, posted (2 years 6 months 1 week 6 days ago) and read 10516 times:
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Well one thing I agree with is the tax breaks Washington State has given Boeing every time they introduce a new model are inappropriate..Now sales tax exclusion costs us all. The state is broke now and although this won't balance the books, it will help. On the other side I disagree that doing paid research for NASA is a subsidy.. NASA pays and gets product for the payment. Export subsidies are tricky... but it seems only those around commercial a/c are illegal... next someone will claim that US foreign aid that is used to buy US products is illegal.. but European foreign aid used to buy European products isn't.

User currently offlinefrmrCapCadet From United States of America, joined May 2008, 1718 posts, RR: 1
Reply 4, posted (2 years 6 months 1 week 6 days ago) and read 10504 times:

Fuller stories make it abundently clear that Airbus illegal subsidies were 3-4 times larger. That has been clear for the last year or so. Why not reporte with a little accuracy?


Buffet: the airline business...has eaten up capital...like..no other (business)
User currently offlinePM From Germany, joined Feb 2005, 6920 posts, RR: 63
Reply 5, posted (2 years 6 months 1 week 6 days ago) and read 10487 times:

ATWonline's report today starts pretty unambiguously.

http://atwonline.com/international-a...s-ruling-airbus-boeing-both-claim-

"The World Trade Organization (WTO) on Monday upheld a ruling that Boeing received “at least” $5.3 billion of unfair subsidies between 1989 and 2006 and agreed with Airbus that the effect of the financial support is larger than their face value in light of their “particularly pervasive” nature."

Quoting mercure1 (Reply 2):
hopefully Boeing atleast can step back from playing its "I'm innocent" card

   Neither side is innocent but I think only one claims to be...  


User currently offlinePPVRA From Brazil, joined Nov 2004, 8964 posts, RR: 39
Reply 6, posted (2 years 6 months 1 week 6 days ago) and read 10452 times:

It's bizarre that tax breaks are somehow subsidies, but sweetheart loans are not. And both A & B benefit in at least one way from sweetheart loans through export programs. Both US and EU airlines have complained about these export loans that benefit foreign airlines like Emirates, Qatar, Singapore, etc.

Maybe there is some sort of arrangement that makes these tax breaks subsidy-like, but unless you look closer, who knows.



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineikramerica From United States of America, joined May 2005, 21532 posts, RR: 59
Reply 7, posted (2 years 6 months 1 week 6 days ago) and read 10437 times:

Why not argue that universal healthcare is a subsidy too? Or that corporate tax rates that aren't the same in one country v another result in a subsidy? Ultimately there is no such thing as a level playing field in international trade. Why the charade from the WTO that it's even possible?


Of all the things to worry about... the Wookie has no pants.
User currently offlineStitch From United States of America, joined Jul 2005, 31003 posts, RR: 86
Reply 8, posted (2 years 6 months 1 week 5 days 23 hours ago) and read 10255 times:
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Quoting ikramerica (Reply 7):
Ultimately there is no such thing as a level playing field in international trade.

  

The disagreement between both governments and OEMs has been ridiculous from the start, IMO, and in the end, only the lawyers (public and private) benefit as they rack up those billable hours.

The EU decries the subsidies Boeing gets from Washington State to land the 787 FAL, but they keep their mouths firmly shut on the subsidies Alabama gave Airbus to land an A330 FAL in Mobile, to say nothing of the subsidies they gave Mercedes for their factory in Tuscaloosa (to name just two of many).

And the US bitches about subsidies given to Airbus, even though a significant amount of kit that goes into an Airbus plane comes from US factories that create US jobs and pay US taxes. And I am sure with little work folks can bring up areas where the US position on commercial aviation is hypocritically ignored in other fields.


User currently offlineRubberJungle From , joined Dec 1969, posts, RR:
Reply 9, posted (2 years 6 months 1 week 5 days 16 hours ago) and read 9902 times:

EADS chief financial officer Hans-Peter Ring said in Paris last week that the government loans were proving more expensive than market-sourced finance, at least at the moment.

User currently offlinen1786b From United States of America, joined Sep 2005, 560 posts, RR: 17
Reply 10, posted (2 years 6 months 1 week 5 days 16 hours ago) and read 9847 times:

Quoting RubberJungle (Reply 9):
EADS chief financial officer Hans-Peter Ring said in Paris last week that the government loans were proving more expensive than market-sourced finance, at least at the moment.

A nice impartial perspective - if that were the case, why does he have his hands out for the A350XWB?

On a side note, I also think it is interesting on how tax policy can be judged "illegal" by the WTO. Now wouldn't it be nice to see if the WTO have a look at how they exonerate VAT from export sales? Not to mention the legal and fiscal framework of the public-private Aerospace clusters.

And how do the NASA grants differ from all the EU framework programs and the ONERA and DLR grants? Enquiring minds want to know... What a mess...

[Edited 2012-03-13 02:19:57]

User currently offlinerheinwaldner From Switzerland, joined Jan 2008, 2226 posts, RR: 5
Reply 11, posted (2 years 6 months 1 week 5 days 16 hours ago) and read 9841 times:

Quoting frmrCapCadet (Reply 4):
Fuller stories make it abundently clear that Airbus illegal subsidies were 3-4 times larger.

This is not true. The benefit for Airbus was not the full amount of paid RLI's. Only the difference between the interest rate they got (government borrowing rate plus 0.25%) and the interest rate on the free market was charged as subsidy. And this is far less than the 15bn's as claimed wrongly by the US side.
Please correct me if I am wrong.


User currently offlineSuperCaravelle From Netherlands, joined Jan 2012, 237 posts, RR: 0
Reply 12, posted (2 years 6 months 1 week 5 days 15 hours ago) and read 9692 times:

Boeing and Airbus will not push each other out of the market and they both know it. The government subsidies won't change that for either one.
My main gripe is that with each subsidy, either for A or B, it becomes more difficult for new entrants to enter the market successfully. Something that is, in my opinion, highly needed and at the same time almost impossible.


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7538 posts, RR: 17
Reply 13, posted (2 years 6 months 1 week 5 days 14 hours ago) and read 9636 times:

Quoting frmrCapCadet (Reply 4):
Why not reporte with a little accuracy?
Quoting PM (Reply 5):
ATWonline's report today starts pretty unambiguously

The BBC (a member of the European media) reports it as it is:

'[The WTO] said [Boeing], which is the arch-rival of Europe's Airbus, was given $5bn (£3.2bn, 3.8bn euros) in illegal government subsidies.

'That is much less than the $18bn an earlier ruling found Airbus had received from the EU.'

It goes on to report:

' US Trade Representative Ron Kirk, called the ruling "a tremendous victory for American manufacturers and workers".'

Complete report at:

http://www.bbc.co.uk/news/business-17345903


User currently offlineDaysleeper From UK - England, joined Dec 2009, 841 posts, RR: 1
Reply 14, posted (2 years 6 months 1 week 5 days 13 hours ago) and read 9527 times:

Quoting frmrCapCadet (Reply 4):
Fuller stories make it abundently clear that Airbus illegal subsidies were 3-4 times larger. That has been clear for the last year or so. Why not reporte with a little accuracy?

That’s just plain wrong, although Airbus has received more cash it was in the form of loans that have to be repaid with interest and royalty payments. Therefore only the difference between market interest rates and those charged by the government should be considered a subsidy.

As for who is the real winner in this case; it has to be the lawyers really. Boeing has been left with a fair bit of egg on its face given how it instigated the case in the first place only to have its own illegal subsidy’s found out. And Airbus has been found to be receiving preferential interest rates… So they both lose really.


User currently offlinescbriml From United Kingdom, joined Jul 2003, 12568 posts, RR: 46
Reply 15, posted (2 years 6 months 1 week 5 days 13 hours ago) and read 9429 times:
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Quoting frmrCapCadet (Reply 4):
Fuller stories make it abundently clear that Airbus illegal subsidies were 3-4 times larger.

So now we're playing "You're more guilty then me?" Both are guilty of infringing WTO rules. You're either guilty or innocent, you cannot be more guilty or less guilty.

Quoting n1786b (Reply 10):
why does he have his hands out for the A350XWB?

What government funding has Airbus applied for in respect of the A350?

Quoting rheinwaldner (Reply 11):
And this is far less than the 15bn's as claimed wrongly by the US side.
Please correct me if I am wrong.

I believe you're correct. Of course that makes Boeing's $5b+ of illegal subsidies far more significant than they would have us believe.

Quoting VV701 (Reply 13):
' US Trade Representative Ron Kirk, called the ruling "a tremendous victory for American manufacturers and workers".'

And they're all at it!   

At the end of the day, this will go down as a huge waste of time, money and energy for all involved, except the lawyer$.
http://www.businessweek.com/news/201...egal-boeing-aid-raises-harm-amount

Quote:
“It’s all been a waste of time prompted by Harry Stonecipher’s ill-advised decision to pursue the issue back in 2004,”



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User currently offlineaeroblogger From India, joined Dec 2011, 1363 posts, RR: 0
Reply 16, posted (2 years 6 months 1 week 5 days 13 hours ago) and read 9330 times:

Some of the comments at Airbus were off-putting to say the least. Calling the 787 Dreamliner the "7aid7 Subsidyliner"? really?


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User currently onlineRevelation From United States of America, joined Feb 2005, 12564 posts, RR: 25
Reply 17, posted (2 years 6 months 1 week 5 days 12 hours ago) and read 8953 times:

Quoting scbriml (Reply 15):
So now we're playing "You're more guilty then me?" Both are guilty of infringing WTO rules. You're either guilty or innocent, you cannot be more guilty or less guilty.

Interesting, given that this board had numerous scorecards of numbers of violations claimed and number of claims upheld for each side as events unfurled.



Inspiration, move me brightly!
User currently offlineastuteman From United Kingdom, joined Jan 2005, 10038 posts, RR: 96
Reply 18, posted (2 years 6 months 1 week 5 days 12 hours ago) and read 8937 times:
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Quoting frmrCapCadet (Reply 4):
Fuller stories make it abundently clear that Airbus illegal subsidies were 3-4 times larger. That has been clear for the last year or so. Why not reporte with a little accuracy?

Indeed. Why not report with a little accuracy?

From the article in the OP..

Quote:
The World Trade Organization has ruled that US planemaker Boeing received $US5.3 billion ($A5.04 billion) in ILLEGAL government subsidies over a quarter of a century

my bolding

Quote:
In May last year, a WTO panel ruled on a US complaint that European governments provided to Airbus, based in Toulouse, France, with $US18 billion in subsidies, THOUGH NOT ALL WERE FOUND TO BE ILLEGAL UNDER INTERNATIONAL RULES

My bolding again.

So.
Do you have a figure for the LEGAL subsidies Boeing have received, so that we can add it to the $US5.3Bn that has been ruled ILLEGAL by the WTO, and compare THAT to the $US18Bn said to have been received by Airbus, for the sake of "accuracy"?   

I will suggest that attempting to rule on whether one side benefitted more than the other in this debate is about as "unsafe" a judgement as it is possible to make?

We, collectively, should have learned by now IMO

Still. I believe the bonus paid by the lawyers union to Harry Stonecipher for raising the issue in the first place was well earned  

Rgds


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7538 posts, RR: 17
Reply 19, posted (2 years 6 months 1 week 5 days 12 hours ago) and read 8920 times:

Quoting scbriml (Reply 15):
So now we're playing "You're more guilty then me?" Both are guilty of infringing WTO rules. You're either guilty or innocent, you cannot be more guilty or less guilty.

Perhaps you could therefore explain why courts vary the punishment of those found guilty of specific crimes depending on the measurable or perceived severity of their crime? Do you think that they mistakenly believe that some are more guilty than others?

As a taxpayer providing my and my family's share of any UK or EU illegal subsidy my bank account certainly notices the difference between a smaller or larger illegal subsidy.

Quoting scbriml (Reply 15):
And they're all at it!

Of course. From the same link:

'EU Trade Commissioner Karel De Guch called Monday's ruling vindication of the "EU's long-held claims that Boeing has received massive US government handouts in the past and continues to do so today".'

Everyone's a winner even though both have been found guilty. And -, whether we are American or European, its our money.

As a European tax payer I have made a contribution to what the WTO has identified as an $18 billion subsidy. This is equivalent to almost £23 for every man, woman and child resident in the EU. This is money I would far rather have seen spent on education or health care than subsidising the world's airlines, the end beneficiaries of the subsidy. In the UK alone - assuming the per capita contribution from poorer EU members matches the UK's, which it does not - the total subsiidy amounts to over £1.4 billion.


User currently offlineastuteman From United Kingdom, joined Jan 2005, 10038 posts, RR: 96
Reply 20, posted (2 years 6 months 1 week 5 days 10 hours ago) and read 8536 times:
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Quoting VV701 (Reply 19):
As a European tax payer I have made a contribution to what the WTO has identified as an $18 billion subsidy. This is equivalent to almost £23 for every man, woman and child resident in the EU. This is money I would far rather have seen spent on education or health care than subsidising the world's airlines, the end beneficiaries of the subsidy. In the UK alone - assuming the per capita contribution from poorer EU members matches the UK's, which it does not - the total subsiidy amounts to over £1.4 billion.

I'd be a bit careful with this argument......

The $18Bn in "subsidies" includes Repayable Launch Investment, which as the name suggests, gest repaid.

The WTO ruling in respect of this (as far as I can tell) was that
a) it was a legal mechanism
b) in some cases it had been applied in an "illegal" manner - i.e. on interest rate terms or repayment terms, that strayed outside the "agreed" legal framework.

Airbus have been asked to put these loans back onto a legal footing

I suspect that overall, European taxpayers tax burdens have benefitted far more from the economic wealth created by Airbus, than the tax drag caused by the RLI has hurt them.

Hard to prove either way....

Rgds


User currently offlineEPA001 From Netherlands, joined Sep 2006, 4739 posts, RR: 39
Reply 21, posted (2 years 6 months 1 week 5 days 10 hours ago) and read 8526 times:
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Quoting n1786b (Reply 10):
Quoting RubberJungle (Reply 9):
EADS chief financial officer Hans-Peter Ring said in Paris last week that the government loans were proving more expensive than market-sourced finance, at least at the moment.

A nice impartial perspective - if that were the case, why does he have his hands out for the A350XWB?


Hans-Peter Ring has stated that RLI (Repayable Loan Initiative money) is still attractive to Airbus due to better risk spreading conditions. That is why they still take the more expensive RLI loans.

See also: http://www.flightglobal.com/blogs/fl...irbus-launch-aid-no-great-bar.html

Quoting Daysleeper (Reply 14):
Therefore only the difference between market interest rates and those charged by the government should be considered a subsidy.


   Which is the big difference in the two cases imho.

Quoting astuteman (Reply 18):
I will suggest that attempting to rule on whether one side benefited more than the other in this debate is about as "unsafe" a judgement as it is possible to make?


   The WTO-cases are called the best pension scheme for lawyers in the 21st century on both sides of the pond.

Quoting VV701 (Reply 19):
As a European tax payer I have made a contribution to what the WTO has identified as an $18 billion subsidy.


The financial advantage which was ruled illegal by thw WTO was $ 18 Billion. It was the difference in interest rates on the $ 18 Billion to be paid which was declared illegal. That surmounts to an amount which is almost completely negligible compared to the $ 18 Billion amount. Airbus have stated that they have taken the actions necessary to comply with the WTO ruling to their advantage. They must have even out the financial imbalance which was not a real big amount of money.

It is going to be interesting to see if Boeing will pay back $ 5.3 Billion in cash.  . And also the interest rate advantage they enjoyed (for loans they never had to take because of the subsidy) should be paid back as well imho.  .

[Edited 2012-03-13 08:29:05]

User currently offlinePPVRA From Brazil, joined Nov 2004, 8964 posts, RR: 39
Reply 22, posted (2 years 6 months 1 week 5 days 9 hours ago) and read 8496 times:

Quoting astuteman (Reply 23):
The $18Bn in "subsidies" includes Repayable Launch Investment, which as the name suggests, gest repaid.

As mentioned above, sweetheart loans are still subsidies. And we should not diminish this to mere "interest rates" - had Airbus not been able to find alternative investments, some of their programs would never even have gotten off the ground. Not a slight impact in the least. Not that I believe they couldn't have found it, IMO it was likely a business decision to go with the lower interest loans, which probably has other benefits you and I would not give them in case they got into trouble.

Quoting astuteman (Reply 23):
I suspect that overall, European taxpayers tax burdens have benefitted far more from the economic wealth created by Airbus, than the tax drag caused by the RLI has hurt them.

Hard to prove either way....

Since a lot of this money is probably related to the A380, I'd say this is - thus far - still very much in the negative. Going forward, however, hopefully this will change.



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlinefpetrutiu From United States of America, joined Aug 2007, 884 posts, RR: 0
Reply 23, posted (2 years 6 months 1 week 5 days 8 hours ago) and read 8188 times:

http://money.cnn.com/2012/03/12/mark...s-wto/index.htm?cnn=yes&hpt=hp_bn1

According to the WTO, Boeing got $6b compared to $18b for Airbus. WTO futher agreed that Boeing was not at a level playing field and that Airbus had the overall advantage.


User currently offlinepar13del From Bahamas, joined Dec 2005, 7229 posts, RR: 8
Reply 24, posted (2 years 6 months 1 week 5 days 8 hours ago) and read 8110 times:

Quoting astuteman (Reply 18):
Indeed. Why not report with a little accuracy?

From the article in the OP..

Quote:
The World Trade Organization has ruled that US planemaker Boeing received $US5.3 billion ($A5.04 billion) in ILLEGAL government subsidies over a quarter of a century
Quoting astuteman (Reply 18):
my bolding

Quote:
In May last year, a WTO panel ruled on a US complaint that European governments provided to Airbus, based in Toulouse, France, with $US18 billion in subsidies, THOUGH NOT ALL WERE FOUND TO BE ILLEGAL UNDER INTERNATIONAL RULES

My question would be how is the WTO able to definitively state a figure that Boeing received as being illegal but when it comes to the Airbus ruling they state a figure then add the caveat that not all were found to be illegal, it could be $5.00 or $1,000.00, guess I have to go read the entire document.

As some have said illegal is illegal, and if you can state that some is legal and some illegal one should be able to identiy the figure with more accuracy than saying though not all.
It essentially provides more fodder for litigants professional and amateur on and off this site who want to claim that the WTO ruling is definitive and case closed.


25 Daysleeper : It’s really not that difficult to understand, Airbus received preferential interest rates on loans that were ruled illegal therefore they are only
26 usxguy : I want to know how is this "illegal" ?? Where is the Constitution for Earth? What makes the WTO the "end-all" law? Both Airbus and Boeing receive 'nat
27 Post contains images par13del : The "if" is my issue, the quoted text allows the use of if on one side Definately no if here. Which makes one wonder if those who made the ruling are
28 Post contains links and images EPA001 : Since a post of my got deleted for housekeeping purposes only, I will repost this interesting part which states that Airbus have complied with the WTO
29 Post contains images TheCol : It's amazing how much money is wasted over this kangaroo court. Cue the cargo bay...
30 Stitch : Now that both sides have their "win" and proved how "bad" the other side was, hopefully they'll work on a new agreement and then STFU.
31 zeke : This is actually the second time the WTO has ruled against the US/Boing practices. The fist one was basically money laundering as they were not payin
32 Post contains images aircellist : I like your optimism... But, if the talk on this thread is any indicative... We aren't there yet
33 cmf : I will not comment on the two cases as it seems there are more versions to each sentence than people reading them. Just how much the rulings have chan
34 scbriml : Guilt and punishment are two different beasts. You're either guilty or innocent - it's a binary state, like pregnancy. Even if Airbus received nothin
35 Post contains images astuteman : Shouldn't we? It is clearly eveident that some portion at least is exactly that. Maybe not all, but some. Dismissing "mere interest rates" as irrelev
36 Stitch : Could explain why a number of European defense contractors have become so active in bidding for US military contracts the past couple of decades.[Edi
37 ikramerica : And of course the problem with his assertion is that if the military subsidies were keeping the commercial side afloat, then Boeing would drop the co
38 Stitch : And while much smaller than the US defense industry, Europe's is not exactly tiny. British, French and Spanish governments at the State/Region, Count
39 scbriml : I didn't think WTO rules applied to military programs anyway?
40 Post contains images Stitch : Might be why they focused mainly on the tax breaks given to Boeing for the 787 and discounted the military stuff Airbus was using as part of their $1
41 par13del : One of the reasons why such logical responses were welcomed in the tanker threads. Off topic for a bit but the so called dividend from the end of the
42 Post contains links neutronstar73 : And that's a KEY point. If Airbus uses NASA technology (funded by Americans and used at no expense to them) then they too have recieved an "illegal"
43 Post contains images EPA001 : The aviaton week article is an incorrect interpretation of the facts. Airbus have complied with the WTO ruling as I earlier posted and they did not pa
44 astuteman : It's not about being able to "keep the commercial side afloat". It's about being able to leverage advantage from the revenue stream It doesn't. That'
45 wingman : Well, to equate this entire debacle to aircraft orders is interesting. After all these years and all the bitterness and legal fees it all just amounts
46 scbriml : It's not insignificant, but... Or, spread those aircraft over the 40 years that Airbus has existed and you're talking about less than six planes per
47 ikramerica : Is it 737s though? Or is it A330s, A350s and A380s? What if the A380 couldnt be launched? How many 747s did that cost Boeing? Would there be 745 and 7
48 EPA001 : Both parties have left out long time-frames and several segments of the market in their complaints. So that one verdict can be countered with another
49 Grid : Canada and Brazil have had it out at the WTO. Russia just recently joined the WTO so maybe complaints will be forthcoming. Not sure about Japan. I ha
50 Stitch : I am confident that Airbus did not need RLI to launch the A380, nor did Boeing need tax subsidies to launch the 787. I also believe the 747 was a dead
51 par13del : Why, when you also state the following. Regardless of the WTO ruling the US side still does not agree with the RLI concept, and the US government doe
52 EPA001 : RLI in principal is no subsidy. The WTO has been very clear on that subject. Subsidies are gifts, RLI is paid back including interest. And that makes
53 Post contains images astuteman : I don't need you to tell me that. If you follow the thread, my comment was in response to an assertion that these "subsidies" had cost EU taxpayers $
54 Grid : It wasn't really to hold forth an English class ... but to join the intellectual debate. But it looks we at least agree the repayable launch aid is a
55 Post contains images scbriml : I believe that's a bridge too far, but I'll let the Astute one deal with it. Despite the a.net myth that RLI can simply be forgotten if the program "
56 Post contains images EPA001 : That is exactly how I meant it. . And that is exactly one of the quite small parts that Airbus had to correct according to the WTO verdict in the US-
57 Grid : The Panel determined that, and the Appellate Body upheld, it is a subsidy.
58 Post contains links and images EPA001 : No, it is not a subsidy. It was upheld that RLI as such is not a subsidy. Read the report from the WTO and the various press releases on the issue. .
59 AirframeAS : I hope there will be no agreement. Let the games finally begin. The bilateral agreement was stupid to begin with, ill written and very flawed. It was
60 scbriml : It gave both OEMs exactly the same rights. That one chose not to exercise those rights is not the fault of the other or the agreement. If it was anyw
61 AirframeAS : How is it the same rights if Airbus was allowed to subsidies and Boeing was not allowed to any? How is that fair? I think the U.S. did, however Boein
62 EPA001 : Once again, a loan is not a subsidy. Subsidies is money given away for free. RLI is a loan which must be paid back with interest. Tax breaks like Boei
63 Post contains images AirframeAS : Depends on the definition and on who you talk to. Airbus doesn't get tax breaks, right?
64 par13del : I guess its the same reason why the US originally agreed to Bermuda I, II and now Open Skies, everything is not static. Well good luck if that is the
65 PM : Not possible. No such thing. I rather hope that neither company "wins". I want both Boeing and Airbus around for a long time.
66 Post contains images Stitch : The funny thing is, a tax break isn't free money. It's just more money an entity gets to keep. Of course they do. They just were not part of the comp
67 XT6Wagon : They should file a counter complaint, as Airbus received huge grants to "develop composite aircraft technologies". This is worse than the NASA work a
68 Post contains images AirframeAS : Really?! Then what are U.S. airlines doing right now??
69 Post contains links flood : It certainly was, as the original complaint encompased far more than the RLI being discussed here. "the provision of grants and government-provided g
70 PM : I don't know as I generally try to avoid them. But as I understand it, they are drifting in and out of Chapter 11. Free market? Survival of the fitte
71 scbriml : Under the agreement, both Airbus and Boeing were allowed to seek RLI up to, I think, one third the cost of developing a new plane. That Boeing chose
72 par13del : In my opinion a major flaw in the US side of the agreement, the US government knew that no one would give Boeing RLI yet they signed an agreement all
73 Post contains images EPA001 : No it is not. A loan is a loan and must be repaid. That is the whole principle of a loan. Any bank or dictionary can explain that to you. Some condit
74 ebbuk : Don't know what Boeing thought they'd get by pursuing Airbus. Word from the wise, "Don't accuse me of having stinky poo when yours smells just as foul
75 Grid : More like Boeing knew both company's poo was stinky, but Airbus's poo was three times as stinkier. I guess we can both be right - it is a subsidy, ju
76 Post contains images par13del : That's one way of looking at it, the whole contention of both RLI and tax breaks is the start up of the business. Most tax breaks are aimed at the in
77 Post contains images EPA001 : No, I have to be firm here. It is a loan, and it is under WTO rules a not prohibited loan. You can also call it a government investment, a government
78 InsideMan : and you know this how?
79 Post contains images flipdewaf : I'll try again, apparently my last comment was inflamatory. 1. RLI, REPAYABLE Launch Initiative, so not a subsidy Airbus' ~$18bn was the total amount
80 Post contains images Stitch : The US decided that rather than RLI, they would be allowed to provide "indirect support" (benefits provided for aeronautical applications of NASA or
81 neutronstar73 : Nice try. I'll leave this here: Subsidy (definition) 1. Monetary assistance granted by a government to a person or group in support of an enterprise
82 astuteman : Except that it IS "free" money to your next development project before it is in a position to earn anything...... Much more expensive without RLI? It
83 aircellist : So. Let's say the banks loan money, receive the reimbursment of capital and interest in 17 years. That is not a subsidy. Governments loan money, recei
84 flood : Not to mention those slightly favorable interest rates may easily be offset long-term by the ensuing royalty payments.
85 Stitch : Maybe we have different ideas of the word "free". If we're talking unencumbered - as in free to be used for other purposes than payment of taxes - th
86 Post contains links scbriml : The WTO clearly does not agree with you. http://www.diplonews.com/feeds/free/12_March_2012_229.php So, RLI is not a subsidy. Some RLI that attracted
87 par13del : So the diference in interest rate from say 15% to say 10% on the loan is what? The WTO mentioned the lower than market rate interest rates given on R
88 pygmalion : RLI is a subsidy not only because of the interest rate but also because of the payment terms. Commercial loans that allow you to defer payments for 17
89 Post contains images Stitch : RLI does not defer payments because for each delivery Airbus is required to send a payment to the governments that extended RLI. So Airbus does not g
90 AirframeAS : Ok, let me ask you this: What is the difference between a loan that has to be repaid vs. a loan that does not have to be repaid if the product does n
91 pygmalion : There are no payments until delivery. For the A350 that is how long now?
92 Post contains images par13del : Which simply means that the payment is more tied to the loan, wonder when banks will tie my mortgage payments to my salary and bonus which have not b
93 Post contains images Stitch : The latter might very well be ruled illegal by the WTO. HOWEVER, as has been pointed out more times than I can count just by myself, to say nothing o
94 scbriml : Some, not all, has been found thus, yes. I think you're wrong here. And here. RLI has to be repaid within 17 years. You're less than correct here as
95 AirframeAS : Thanks for that. Is it also an A.net myth that Airbus has that "Buy two, get one free" thing-a-roo?
96 flood : I believe Airbus has received RLI for the A350 but at interest rates in compliance with WTO rulings. The A350 wasn't included in Boeing's complaint t
97 Post contains links cmf : Sorry for bringing in facts to the discussion but since this is a WTO case it is the WTO definition of subsidy that matters. Doesn't matter if you agr
98 Post contains images EPA001 : How about 20 or 30 year bonds? Risk spreading is the biggest driver for (in this case) Airbus to still make use of the RLI. Even though financing wit
99 Stitch : My memory is a bit hazy, but I believe RLI interest rates were the same as the EU-equivalent of the Federal Discount Rate - the interest rate the fed
100 Post contains links EPA001 : I remember this line from wikipedia, so I will post it here: "These loans are held at a minimum interest rate equal to the cost of government borrowi
101 aircellist : I believe you are somehow seeing my point. That definition of subsidy is so rigged that any money coming from the government would be a subsidy, no m
102 Post contains links cmf : The terms were (a) 25 per cent of that programme's total development cost as estimated at the time of commitment (or of actual development costs, whi
103 aircellist : cmf: many thanks! The WTO wording makes much sense.
104 zeke : One needs to be careful with the dates on various agreements. That definition of a subsidy came into effect after the 1992 EC-US Agreement on Trade i
105 cmf : Mostly agree. There are and has been different definitions about what is subsidy. In the 1992 agreement they don't use subsidy but rather support but
106 aircellist : Is there a valuation of the US content of said A330, GE an Honeywell, somewhere? And, just for fun, what would be the valuation of the relative US, E
107 AirframeAS : Just out of curiosity, when was this 1992 agreement due to expire??
108 Post contains images Hamlet69 : Stitch, I'm am seriously trying to stay out of this debate, because as has also been pointed out numerous times - there are no winners here, except th
109 aircellist : Hamlet69, Wow! Thanks! Is this the part of the judgment that Airbus has agreed to comply with? I mean, to guarantee full reimbursment, notwithstanding
110 EPA001 : I am not sure about that. But Airbus have paid about 40% more money back to the EU governments then it in total has received on RLI commitments, and
111 Post contains images flipdewaf : No, Nor are they available from the EU governments Fred
112 Daysleeper : I don’t think that’s actually the case, my interpretation is that RLI is effectively an un-secured loan, or a loan secured on the success of the
113 par13del : As there is no agreement in place now, whose definition do you think is going to be important going forward, neither the US nor EU is going to adapt
114 rheinwaldner : No worries, they will not shy back more than Airbus or Boeing. This interpretation seems not to be valid. Please back it up with quotes. For fair ans
115 Daysleeper : I’m not sure how relevant all this is, as regardless of the fine print it’s very clear that the monies Airbus received were loans that they were
116 Post contains links EPA001 : It was more than $ 5 Billion. From: http://www.airbus.com/presscentre/pr...ing-loss-for-boeing-in-wto-appeal/
117 cmf : The agreements are not about what is a subsidy or not. They are based on what are illegal subsidies. I expect WTO to keep that subsidy definition and
118 Post contains images diverdave : I would be fascinated if somebody could come up with a link showing the royalties in terms of percentages or euros. I have looked. Yes, but the RLI p
119 Stitch : Thank you for that. Still, I don't think we're going to see a situation where an Airbus program doesn't meet the minimum. Maybe the A340-500/A340-600
120 Post contains images Hamlet69 : aircellist, I honestly don't know. So far, I have not found any public information on the steps that the EU and Airbus have taken to comply with the W
121 neutronstar73 : Now that was the most informative post I've seen. Certainly has changed my views on the subject, although the line "both sides benefitted" has certai
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