WTO ruling

We’ve talked a little here in the past - but not a whole lot - about subsidies and the World Trade Organization case.

Well, today you may have seen or heard reports about the WTO’s final ruling in the U.S. government’s case against European government subsidies to Airbus.

The ruling is confidential at this point, but it will most likely be made public in the next couple of months.

However, the news reports we’re seeing quote officials who say that the U.S. has prevailed on all of the major issues in the final decision, reaffirming the WTO’s interim decision from last year.

We’ve posted Boeing’s comments on the WTO’s landmark decision on Airbus subsidies.

Comments (17)

william carter (everett, washington):

After this "WTO" ruling, I and many others here @ Boeing and outside of Boeing would like to know "When" is the U.S. Government going to realize that it is NOT about a level playing field when it comes to OUR National Security.

But instead, it is about taking care of our Countries CORE industries. Our Shipyards, Airplane makers, Mom & Pop Machine shops, textile mill, Steel mills are needed to achieve a functioning manufacturing base in this Country. I think that it is time for a change in the way our Politicians do business in this Country. We need to take care of our own first...EADS does this and makes US out to be the bad guy.

Andy (Idaho) (Idaho):

Did the A330 benefit from subsidies of this nature?
How would past subsidies for EADS effect competitive bids on military aircraft such as the A330 based tanker offering?

I also remember Airbus saying that the 787 was not a viable model back in 2003 when the A380 was the answer, now they are borrowing like crazy to build its competitor with the A350.

Ross Hirsch (Ft.Worth, Texas):

It doesn’t appear to me that the WTO ruling will have any affect on the business at hand. The ruling according to business week fell short of saying development loans to Airbus constitute a pattern of aid detrimental to Boeing and the US worker. Germany and France are providing development aid to Airbus now for the A350. It seems whatever the WTO ruling says, nothing will change. The main point I see is what will we, (Boeing) do about the A350. Airbus claims 530 orders already for it. My understanding this is the same size and range as the 777. Will we give up this market?

Anonymous (Seattle, Washington USA):

If EADS submits a bid on the USAF Tanker contract how can it be considered a level playing field? Does the Dept. of Defense consider Eupopean government subsidies in the bidding process?
I don't understand the complaints from EADS about US protectionism when they say the tanker RFP favors Boeing's smaller entry. They use "protectionism" on every product they build. Maybe they are finally realizing what it is like to be on the receiving end of their own policy.

I agree with Mr. Carter's comments about protecting America's CORE industries, especially when it comes to our defense. In addition to protecting these industries we need the PROFITS to stay in the US. These monies go towards future research and development which sustains our ability to compete globally and helps keep and create jobs for our children.

Joe Paden Mesa AZ:

It seems like common sense might be making a comeback. Government handouts for Airbus with minimal or no payback provisions are hardly the same as Boeing getting a tax break or winning a competitive military contract. The right side won this one.

Barun Majumdar (Seattle, WA, USA):

WTO ruling is very timely. It'd help Boeing. I also understand that Boeing management has to walk a very fine line to help sustain and grow our business both nationally and internationally.

In this era of global economy spearheaded by fierce competition, our essential key to success is innovation.

"We are embarked as pioneers upon a new science and industry in which our problems are so new and unusual that it behooves no one to dismiss any novel idea with the statement that 'it can't be done!'"
- William E. Boeing, founder, The Boeing Company

Tom (Germany):

William,

there are three ways to handle things like that:

1. do it on your own - completely and you are the boss

2. do it with partners, while your try to be the boss

3. do it with partners, always trying to find a common way.

There is nothing wrong, that the US decided to build the F22 more or less on its's own.
The F35 will be made with critical parts made by partners and it will become the operational backbone of the US airforces...
Different to the F22 or F35 projects the tanker project welcomed an US/Europe partner team.
(Why is the tanker project so often postponed or delayed? And the reasons...). It was an US decision to invite EADS... Boeing, Dem., or Rep. knew enough about EADS before the company was invited to offer a proposal!!! Now WTO......


Back to commercial aircrafts - the 787:

The ultimate load test(wing 150% test load) is in prepartion since February 8. This test should/could be perfomed on March 28 2010!


Gene Kochevar (Huntington Beach, CA):

Randy -- presuming that indications about the favorable (to Boeing) WTO rulings are true, what is their impact? Is Airbus fined? How would this help Boeing aside from perhaps some negative publicity for Airbus?

John Madison (Seattle, WA):

I'm glad to see the WTO finally come out with a ruling that targets these direct government subsidies. Unfortunately, it doesn't change anything in regards to all of the existing airplane programs already developed and in production. What it can do is put what's left of the development of the A350 and any other new programs, on a market based playing field.

What I don't know is, will the WTO ruling be enforceable, and what happens if EADS and the European governments choose to ignore the ruling and continue with subsidies?

This appears to be a step in the right direction, but the results are yet to be determined.

Vahid Einifar (Everett, Washington, 98028):

We all should be mindful of adverse effects of nationalist idealogies that are accentuated by local politicians and Boeing advocates. They accomplish nothing but assist in appearance of improprietory and protectionism.
First class organizations compete on the sound decisions by the leadership and dedication of their employees. So let us plan to win, not beg for hand-outs.

Ron D. Smith (Customer Engineering) (Everett, WA):

After many years of accusations and mistrust, it's great to finally get a clear and unbiased ruling from the WTO. Not to take anything away from Airbus' technical abilities, there's no doubt their current success in the marketplace is directly attributable to the continuous flow of subsidies they have received over the years. Boeing did it the right way, fair and square as a private company, and has every right to feel good about the success achieved. On the other hand, Airbus' satisfaction is diluted at best, knowing well their illegal governmental support was crucial to their success.

We can only hope Airbus and their supporting governments will take notice and take a higher ethical road in the future. But we won't be holding our breath.

Joel W. Funfar (Seattle, Wa.):

This ruling is long overdue. I will note that the article does not mention the Unions involvement in this issue. SPEEA for one was internally looking at this for years and ways that were open in the past under the Byrd ammendment, To file a Counter Vailing Duties (CVD) case against Airbus for example. That route is no longer available since congress change the rules on who could file.

I hope the company could admit that the company and the the unions raised this issue to elected leaders and got the US government to file the WTO case.

To answer some questions here. Now with a WTO ruling the US government can take action in a number of ways against AIRBUS/EADS and governments involved.

Norman (Long Beach, California, United States):

It is a hot potato of an issue Airbus is partially subsidized by European Governments but so is the F-22 and the F-35 by the US Government but so is every combat and most other military aircraft by the government of the countries they come from.

I am not overly concerned about the government subsidization of Airbus as long as it is a safe aircraft for the public to fly in but I think Airbus should make an attempt perhaps with an A320 successor to begin a privately funded development of an aircraft, I like to see what will become of it and how it would be financially developed.

Wyman Henckel (Seattle, WA ):

Consider also the effect the subsidies had in the demise of commercial airplane manufacturers Lockeed and McDonnell Douglas.

Gary Hill (Saint Louis, MO):

I'm certainly no authority in this matter, but it seems as though the US government, in its determination to get the cheapest product possible, would welcome other-government subsidies on an Airbus tanker for the US. That way, they (we) effectively get other-government buy-in for our next US tanker. I hear some talk about whether "past" subsidies should be a consideration in the current tanker competition, but what about the potential for subsidies on the very tanker being competed? Is anyone restricting that? If subsidies are restricted in this competition, then the US government effectively gets less competition. I'll be watching.

Raymond S. Lam (Seattle, Washington, U.S.A.):

There is nothing as level playing field as long as it is for our war fighters. It should only be our field. Beside, don't keep our military blindfolded when solicit RFP for the tankers. We now have 7A7 based configuration, Air Force can have their pick.

Rossano Lamagna (Kalispell Montana):

I had been VERY worried about Boeing. I know that the A380 has REALLY bit the heals of the Iconic 747. I have thought that the 747 would be gone. I know that Airbus is a VERY vicious strong competator and would like to put Boeing out of business. What is unfair is that Airbus can sell planes cheaper than Boeing and airline buy them. Airbus doesn't make as good of a plane as what Boeing makes, but they sure are an agressive competitor. I hope that the WTO can weaken Airbus and that Airbus can play by the rules. I want to see more Boeings being sold, especially the 747-8I's 737's to continue and for triple seven's to continue without the threat of the A350 to bite the heals of the 777.

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