1979 Civil Aircraft Industry treaty signed between the US, Western European Countries, Canada and Japan
Agreement prohibits levying of import duties and quotas on civilairliners and on their parts and components
Agreement designed to reduce the influence of governments on airline’s purchasing decisions
Yet disbursement of subsidies to aircraft makers very flexibleBan on duties, quotas and technical trade barriers can be deemed a success but reducing the government influence has not worked
1992 EU-US agreement on Trade in Large Civil Aircraft – banneddirect production and sales subsidies but allows subsidies to new projects in the aircraft industry = 33% of the subsidies
This subsidy is a launch aid which has to be repaid with interest and theinterest rate has to cover the government’s loan costs = reduces financial risk by the airliner – this aid is what Airbus receives as an assistance
Agreement also enables indirect payments by the stateto the company at a maximum of 3% of the sales volume of the domestic industry for large civil aircraft – these subsidies don’t have to be repaid
Agreement was issued in 1992 to help the twoairline companies but was meant to be decreased and finally cancelled but instead became common practice on both parts – agreement on both parts
October 2004, US put an end to the 1992 agreement andstarted procedures against Europe and Airbus.
US and Boeing arguments:
US argued that Airbus wasn’t facing anymore difficulties in the market and the subsidies it was receiving were prohibitedby the WTO Agreement on Subsidies and Countervailing Measures of 1994
Through subsidies, Airbus developed new planes
Capture by Airbus of Boeing’s long standing customers withaid of billions of dollars in government loans at below market rates => violation of global trade rules
Evidence of lost plane sales and lowered prices made after 2001 where aviation...