The Airbus and Boeing subsidy battle is not over yet

Seventeen years later, millions of dollars in statutory costs and a lot of bad blood broke out between Boeing and Airbus. The trade dispute is over Finally. At least that’s how the EU and the US foretold an agreement on Tuesday to suspend tariffs on subsidies to the world’s two largest aircraft manufacturers.

However, the truth is that behind the minister’s inside-out and victory declaration on the transition from proceedings to cooperation, no conclusions have yet been reached to permanently end the conflict.

Both sides have decided to set aside Tit-for-Tat tariffs, leave the root cause of the discrepancy unresolved so far, and give them five years to come up with a mutually acceptable framework to support the aerospace industry. only.

There is no doubt that Lancor is still on fire. Boeing’s comment that the EU is now promised to work on so-called launch assistance for new aircraft speaks for itself. The agreement announced to the world on Tuesday does not promise the EU to do so. It simply states that “both sides will continue to discuss working on good support measures.”

For the United States, this means terminating the European system of providing loans for the launch of new aircraft, which will be repaid when a jet plane wins a certain level of export orders. As long as the lending is at market prices, the system has been determined by the World Trade Organization to be legal, but not always. However, it protects Airbus from the cost of failure. And for Europe, the problem is the support given to Boeing through state tax incentives and defense-funded research that benefits the commercial aircraft sector.

People near both sides say it’s unlikely that Boeing will agree to meet US President Joe Biden’s EU summit by Friday, given that Boeing continued to insist on Airbus refund support decades ago. Said.

But over the weekend, negotiators seem to have opted for a new approach. They chose to look for ways to improve dialogue between the two sides, hoping for a future agreement. This includes regular contact between the EU and US Trade Ministers in the Joint Working Group, and transparency of R & D funding.

The hard work is about to begin. Finding a framework that suits both is not easy. However, each recognizes that the decades of commercial duopoly time enjoyed by aerospace champions is lacking.

Later this year, the Chinese C919 Single Isle, which is comparable to the Boeing 737 and Airbus A320, will enter the commercial service. Its range and fuel efficiency are not competitive with the latest Boeing and Airbus, but Chinese state airlines are lined up to guarantee the success of the aircraft in multiple orders.

Over the years, its development has gone smoothly from about $ 49 billion to $ 72 billion with state-related support. Government-owned manufacturer ComacAccording to the Think Tank Center of the Center for Strategic and International Studies, based in Washington. The customer base of the first variant of the C919 may be limited, but future iterations can be much more competitive on a global scale, especially if backed by soft loans to customers. ..

The EU and the United States have finally realized that without agreement on what constitutes an equal competition, China can hardly complain about its support for its own aerospace champion. This deal is more about self-preservation than ending a trade dispute.

But to be truly effective, working groups need to bring in other aerospace countries such as the United Kingdom, Brazil and Canada. If everyone agrees on what constitutes acceptable state support, it may place more weight on China’s demand for transparency.

Overall, the measures agreed this week could pave the way for a more equitable competitive environment. But they have also filled the notion that civilian aerospace has ever been a true commercial concern, more than ever.

In their statement on Tuesday, both sides have not questioned the legitimacy of government support for their aerospace companies. Instead, it focuses on what kind of support we can provide and what terms we define. “It’s about a really acceptable level of grants,” said a Geneva-based trade lawyer.

Sash Tusa, an aerospace analyst at Agency Partners, said: .. .. It’s a government and state business. “

Many of us have known this for years. It’s a shame that it took 17 years, millions of dollars, and a lot of heat to dispel the illusion.

The Airbus and Boeing subsidy battle is not over yet

Source link The Airbus and Boeing subsidy battle is not over yet

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