Posted on 08/14/2004 12:01:52 PM PDT by nypokerface
SEATTLE (AFP) - US President George W. Bush warned that the United States may bring WTO action in September against Airbus Industrie, citing "unfair" government subsidies to the European aircraft maker.
"I've instructed US Trade Representative Bob Zoellick to inform European officials in his September meeting that we think these subsidies are unfair and that he should pursue all options to end these subsidies -- including bringing a WTO case, if need be," Bush said.
The president's election-year threat to go to the World Trade Organization came after he met behind closed doors here with workers at Boeing, Airbus' archrival, during a campaign swing.
"Airbus was founded about 30 years ago and has received, in those 30 years, large government subsidies from European nations, and continues to receive them," said Bush.
"I think it's unfair to this American company that these European governments continue to subsidize Airbus," said Bush. "I believe if our country is treated fairly, we can compete with anybody, anytime, anywhere."
Under a 1992 US-European Union agreement, European support for new aircraft programs -- provided in royalty-based loans -- was limited to 33 percent of the total cost, repayable with interest within 17 years.
On the other hand, indirect US support through NASA or military programs was limited to three percent of turnover for the US large commercial aircraft industry.
Boeing has charged that the arrangement allows Airbus to get state money virtually on demand.
"We believe in free trade. We want that free trade to be fair, as well. And getting rid of the subsidies of Airbus will make the trade fair, will make the playing field level" said Bush.
Zoellick has recently stepped up pressure for an overhaul of the 1992 deal, telling reporters at a news conference July 8 that the agreement was outdated.
Airbus is jointly owned by the European Aeronautic Defense and Space Co., which holds 80 percent, and Britain's BAE Systems, which holds the remaining 20 percent.
When a system of grants and government subsidies exists, you get Amtrack. They become bohemeths which are never going to be capable to exist long term within a competetive environment. Give it time.
A larger economy of scale has nothing to do with a subsidy. What are you talking about?
Dog, pls tell me how boeing getting paid for goods and services requested by the DoD is a subsidy. What a laugh. I amlost wish they would get them has they will nver sell more than 250 of the suckers. At least the Concorde was nice to look at.
Military Non-recurring engineering costs are big business. Boeing gets to cover most of it's with military contracts and then use spinoffs for commercial aircraft.
American aircraft manufacturers engineer down from military resources in commercial manufacturing. EU aircraft firms engineer up for the smaller pie military work, out of their commercial resources.
For an example, do you think that EU space agencies can compete with the space shuttle? Nope!!!!!! The EU could never mission profile a space shuttle like America's. Do you think that without a military component to the developmental side of the space shuttle it would ever have been pulled off? Nope.........
I used to do work at the NADC(naval air development center) Ninety percent of the engineers there are not government employees. They are there supporting Boeing projects, Grumman, McDD, Aliant Tech, EGG Rotron, Inland Motors, etc....All doing development work paid for by the DOD, yet produce intellectual results and design work which is later benefiting their commercial side of the business. Yes that's commerce, but it's entirely captive commerce at the direction of the DOD.
Fact is that we've had many similar situations. The Bradley APC is one that comes to mind. That project employed thousands for decades.
Love it. About 8 years too late, but its nice to see the US poke the EU in the eye. Two can play this game.
While I accept the definition you proffer as a better description, I still maintain that it is in no way a subsidy: Goods and services are contracted for, given, received and paid for. The fact that the profit may be reinvested in another line of business is neither here nor there for they are profits derived for commercial activity and as such there disposal is purely up to management and the stockho;lders of the firm reaping the profit. In any event it cannot be maintained that such arrangements are somehow equivalent to a direct subsidy such as the ones offered by EU member states to Airbus.
Even if one were to squint and imagine that the EU member states "contributions" to Airbus were somehow "investments" it still would stink of government subsidizing business for 1) the coercive measures of directly taking the tax monies of citizens and investing it, not on their behalf but on the behalf of the state, reeks wholly of theft, which indeed it is, 2) the citizen in no way get a "return" on this "investment" in any real sense of the world, nor in any real sense does "the state" as it just goes into the coffers of the instituions that actually print money, and 3) the relationship between state, "real" investors, management and company is at best one that could be described as "cartelism" and at worst could be call "fascism" (which is indeed what it actually is.)
But even if we turn a blind eye to all that, Airbus itself gets direct military contract from the EU (ie the new air tankers, that new military transport, coastal partol pplanes) and EADS get huge amounts of work from european defense and aerospace industry. There is also a great deal of tech transfer (and even personnel) between EADS and AIRBUS, and even a great fdeal of "secret" tech transfer between France's national research institutions to EADS. In fact, EADS has recieved large sums from NASA for various projects and is in the current group for the missile defense initiative. I do not know if you are aware of it but the EU has lead commercial space launches for several of the last few years. What make you position particularly odd is that much of the technological transfer came from the "generous" (some would say "treasonous") goings on over the International Space Station and other projects (just witness the Cassini probe) undertaken mostly during the Clinto years, tech transfer directly by the American taxpayer.
So one, it is a absurd thing to claim that because EADS and Airbus does less government business than Boeing that there is in fact some sort of "unfair" subsidies being tossed Boeing's way by the DOD - If EADS and Airbus do not like this they should go drum up more government business in the EU, not call the suceess of Boeing with our government "unfair." Two, it is an odd thing to say in the first place because it is quite true that EADS receives the same sort of "indirect subsidies" from the American tapayer!
It even gets stranger. The current Galileo GPS system, a system really meant to compete directly in a military sense is now to use research directly developed by Boeing in it in exchange for the "promise" that the EU (read France) will stick to certain frequency guidelines and usage policies. France did this so coercively and with such bellicosity that it really amount to a very protracted act of war against us. They have even brought the Chinese in on the deal.
So here we see an "indirect subsidy" to EADS not just from the US government but from EADS' competitors. There is little such reciprocal relationships between public moonies in the EU and Boeing. On top of it all France is direclty affecting our national security with our monies
The EU argument is fallacious, hypocritical, bootless and without merit on the face of it and just to pose it shows how morally depraved and intellectually bankrupt the French truly are.
But there are two final points:
The American taxpayer actually gets something out of the contracts with Boeing; they get national security. In a very real sense that the citizens of the EU do not recieve any collective return on their "investment" in Airbus. It is all about EU elites - again, mostly the French, try to somehow "humiliate" America.
The American citizen as every right to expect that their defense dollar go to American companies for reasons of but security and economics.
In essesense, to hit apon industries directly connected to defense is to willfuly obscure the issue (on france's part, not your's)
We could pick other industries where this pops up with the french (energy, agri-business, ship building) and there the matter would be even more obvious and the response from the French would be just the same lame, bald lies.
So I would say that my point still stands.
Another HUGE problem is that European government provide pensions. Boeing has about $40B sitting in a trust from which to provide future pensions; I do not believe Airbus has to set aside a penny for this.
It's a subjective point as to whether the DoD Boeing contracts amount to a subsidy. But I would point out that it's not like Boeing is a sole-source, DoD procurement rules still apply.
However, with the massive consolidation in the defense industry, and the teaming for big projects among the majors, one could possibly construe it as a quasi-subsidy. For example, whats the real difference between at 70-30 Lockheed/Boeing team, and a 30-70 Boeing/Lockheed team? (I'm not sure if foreign suppliers can bid on big-ticket contracts).
At least on the shipbuilding side, there is an informal system of corporate welfare going on. For example Newport News is the only yard that builds carriers.
In cases like that, theres a strong incentive to keep the contractor liquid since theres no other place for DoD to go, and there are flag-level reputations on the line to keep the project on schedule.
(By the way, threads like these are what makes FR great)
My plan is much simpler. Wait until the French all go to the seashore (now, August) and destroy the Airbus plants with (U.S. made) cruise missiles. France will instantly surrender and we are good to go.
Airbuses are great planes...when the tail fins stay on.
I remember the good old days when Qantas was the world's only all-747 airline.
Now they're flying increasing numbers of Airbuses, and that just makes me nervous.
Boeing was offering the 777-200ER/200LR, 777-300/300ER, and the new 747-400ER. Airbus was offering the A380-800 and A330-200/300. Airbus won the deal by selling the A380's for roughly 50% of list price and throwing in the A330's for free. (Of course they claim the A330's weren't "free" but for the price Qantas ended up paying, either the A330's were free or the A380's will cost next to nothing.)
Thanks for the explanation.
The story we got here, though, was that Qantas was the "first" airline in the world to sign up for the as-then-yet-undesignated Airbus "Superbehemoth" (my name for it), the A-3XX, now of course the Airbus 380.
I'm confused. But I try to stick to one basic rule: "If it ain't Boeing, I ain't going."
Actually the first to sign up for that tub was Emirates followed by Air France, ILFC, Singapore, and then Qantas.
This case is screwed now that GW has jumped on board to subsidize American industry to the tune of trillions of dollars. If you can’t beat them join them, Jorge.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.