Posted on 05/31/2005 5:52:29 AM PDT by Brilliant
BRUSSELS – European Union trade chief Peter Mandelson said Tuesday that the EU will file a countercomplaint at the World Trade Organization claiming Boeing Co. receives illegal aid -- launching new trade war with Washington...
The U.S. Trade Representative office said it will ask the global trade enforcer to appoint a panel to decide the fate of billions of dollars of government aid doled out on each side of the Atlantic to the two aircraft makers...
The dispute is coming to a head now because it is widely believed Airbus will be awarded more than a billion dollars in European launch aid for a new aircraft, the A350 -- a midrange plane that will compete against the Boeing 787 -- as early as mid-June...
For Airbus, operating without direct subsidies would be a step into the unknown, because for its entire 35-year history, it has used government financing to cover at least some costs of developing new aircraft. Until the 1992 agreement, subsidies were unlimited and varied widely by country. The French and Spanish Airbus operations were state-owned and received significant state support, while the private British and German operations received less.
After 1992, government loans were limited to 33% of the one-time costs of developing a new jetliner. Each new Airbus plane model has used launch aid, while the development of some recent models derived from existing planes didn't use the aid.
For its 555-seat A380 superjumbo, which is now being tested for certification, Airbus received almost $4 billion in launch aid as part of its $10.7 billion up-front costs. For the proposed A350, Airbus late last year applied to the governments of France, Germany, Britain and Spain for roughly $1 billion in aid.
(Excerpt) Read more at online.wsj.com ...
What subsidies does Boeing receive?
If the EU wins, I hope that the voices to end this sucker are finally heard and actiom is taken. Foisting this on the AMerican people was perpahs the worst momnet of the GOP in the 1990's.
We not only need to get out of the UN: We need to get out of the IMF, the World Bank and the WTO.
NONE.
The Euro's claim however, that the fact that Boeing receives miltary contracts, that this is somehow a subsidy.
The "parents" of Airbus - EADS and BAE - also get military contracts (even some US contracts in BAE's case,) and Airbus gets similar local subsidies. The Euro's have cleeverly masked a lot of this just so they can try this sort of rhetoric.
If it works, then it is time to scrap the WTO, for nothing could be a more blatant manipulation of it than the EU's approach to Airbus.
EADS and BAE get plenty of cointracts too, so even if we accept their definition of subsidies, it still does not wash.
The EU wants it both ways, as per usual.
It receives what are called "subsidies." When you're a military contractor, it's hard to tell what's a subsidy, and what's a military contract.
Tax incentives at state level to encourage an industry to settle there is not a subsidy (and is VERY common practice in Europe as well!!!)
Airbus receives DIRECT subsidies from the EU and the various governments in the form of loans which, if the project fails, DO NOT NEED TO BE PAID BACK!
In an "sane" world, there can be no other conclusion than that Airbus is being subsidised to the detriment of Boeing.
We do not however, live in a "sane" world.
From a european point of view:
Bring it on then. Tax breaks granted to Boeing in 2003
alone are worth 3.2bn dollars, thats money given for free.
The launch aid for the Airbus totals 1.7bn dollars, to be
repaid with interest. Airbus projects do not fail, the company has been extremely successful for decades. The loans are compliant with wto rules.
Maybe you would like to recall:
export tax breaks to american companies: black eye
byrd amendment: broken nose
steel tarriffs: front teeth missing
And now Boeing, having top executives sent to jail for
criminal conduct on a regular basis is whining. Please,
drag it to the WTO, so we can add another one to the facelift for corporate america.
Have a nice day
Hey, why not add another to the list. The Airbus jumbo will never be allowed to land in the USA. Believe it! It will happen.
Is that you Chirac? Still smarting over the vote, eh?
really none ?
This is one of the reasons I said that the EU "wants to have it both ways." They want to be a "United States of Europe" when they want to, and a "trading zone" in cases where that suites them.
The problem is that the WTO is full of leftists that 1) have a very Statist view of capitalism, and 2) a reflexively Anti-American.
The WTO just periodically those the USA a bone to keep up appearances, but it is an Internationalist Socialist Organization from the getgo.
Newt should be ashamed of himself for championing this organization. We never should have joined it. What is ironic is that we where told at the time that we would control it.
Just like diplomacy should be run by the Excutive, so should international economic relations. The fate of America cannot be in citizens of other countries hands. It is the central flaw of organizations like the WTO: they are political organizatrion but pretend to be otherwise, and they are not accountable to any electorate in any practical way.
Eventually we shall have to pull out the sooner the better.
Boeing's stock is up about 20 points from May '04 to May '05.
When you start talking about "tax incentives" you are really opening a door to the figurers. BA might pay lower taxes in the first instance than Airbus, or vice versa. So is that a "subsidy?" And if one pays higher taxes, and the government gives it a break so that they are the same, is that a "subsidy?"
It's really impossible to make these determinations with any degree of logic or accuracy. The only real solution is to let the market make the call, and tell both the EU and the Congress that the normal WTO restrictions and procedures won't be applied.
The reality is that the WTO has not worked anyway. The theory behind the WTO was to reduce the number of trade disputes, but in fact, it has increased the number of trade disputes. Anytime you tell someone they have a legal right, there is going to be a dispute. Under the old system, you were on your honor, and the only thing that constrained you was the fact that tarrifs and quotas were bad policy.
So, a state in the united states, which has it's own tax code independant of the federal tax code, decides to give a company an incentive to build a factory (thus increase jobs and tax revenue for the state) in the state, and this is equivalent to national government(s) (and the EU itself) "loaning" a company money to create a product it could not otherwise afford to create / sell - and most importantly, does not need to be paid back if the product flops??
It is also equivalent to "coercing" other foreign governments to purchuse the airbus (see India, Thailand etc...)?
How about the municipal, state, federal and other "tax breaks" that Airbus receives?
Oh, and don't forget the defense contracts as well.
One final point for balance.
Ask yourself, if Airbus has only had comercial sucesses,
why are they unable to secure the needed capital by borrowing from a bank? Furthermore, what is the purpose of the "subsidies" that Airbus receives, to promote "growth and job creation" or to help compete with Boeing?
That's why I suggest that we simply say that GATT and the WTO don't apply to BA and Airbus. Let the EU subsidize them. BA will continue to dominate this industry even with the EU subsidies, just as they have in the past.
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.