Trade In Large Civil Aircraft Research Articles

Making Sense of the Arbitrator's Ruling in DS 316, EC and Certain Member States – Measures Affecting Trade in Large Civil Aircraft (Article 22.6-EC): A Jigsaw Puzzle with (at Least) a Couple Missing Pieces

Abstract‘The US won a $7.5 Billion award from the World Trade Organization against the European Union, who has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory’, tweeted President Trump on 3 October 2019. The United States (US) won not only the highest amount of retaliation ever adjudicated in the history of the WTO but also an ongoing right to retaliate on an annual basis until such time as the EU had complied by either removing the subsidies it granted Airbus or somehow neutralizing their adverse effects on Boeing. In light of the facts of the case, this ruling has two major shortcomings. First, in sharp contrast with the statutory language and practice until now, the Arbitrator effectively introduced a permanent liability rule into the WTO system through the backdoor. Second, given the way the decision and the associated award has been written, it is simply impossible for the EU to comply because (a) the contested subsidies are no longer in existence and (b) no guidance has been provided on how the EU might go about removing their adverse effects on Boeing if it sought to achieve compliance. Thus, in all likelihood, the EU is saddled with a ruling that obligates it to cough up an annual sum of $7.5 billion USD for an indefinite time period.

Article 21.5 DSU Appellate Body Report United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint): Spillovers from Defense R&D Add to the Tug-of-War between Panels and the WTO Appellate Body

AbstractThe March 2019 release of the Appellate Body's compliance report in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) marks yet another chapter in the ongoing Boeing–Airbus dispute. While raising numerous new and old subsidy issues, this paper focuses on one specific aspect, the evaluation of the financial contributions and benefits associated with the Department of Defense (DOD) R&D procurement contracts. The paper describes the differing views taken by the panels compared to the Appellate Body. It highlights two issues that led to an extremely lengthy proceeding: (1) the black or white nature of the decision regarding the characterization of contracts which have features of both purchases of services and joint ventures; and (2) the difficulty in demonstrating a financial contribution flowing from payments for R&D for military systems to Boeing's civil aircraft production. It concludes that this case represents a failure of the WTO dispute settlement system and underscores flaws in the ASCM in that after fifteen years of litigation, no determination was made as to whether or not the DOD R&D contracts examined here constituted impermissible subsidies.

‘Flying High in a Plane’ Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft

AbstractThis article reviews the Appellate Body decision in the implementation phase of the EC–Aircraft dispute. Focusing on some of the key findings, we assess whether they are legally and economically correct. We conclude that (a) though still unclear, the test for establishing de facto contingency on import substitution subsidies is probably too demanding; (b) though legitimate, the interpretation of the remedy of removal of the adverse effects for actionable subsidies is the weakest and most deferential possible; (c) the hesitation in confirming that quantitative methods are the key tool to define the relevant market is unwelcome; and (d) the Appellate Body correctly recognize the importance for Panels to consider, in the context of the serious prejudice analysis, whether the like product of the complainant has been subsidized. Most importantly, the analysis of this case, set within the broader jurisprudence and practice, has led us to conclude that WTO subsidy disciplines are not particularly strong. The review of the main economic theories justifying subsidy control (strategic trade policy, terms of trade, private information, commitment theory) has shown that no single theory is able to fully account for subsidies and the need to control them. The key question is the definition of what we want to achieve by controlling subsidies, which is the main message sent to the policy-makers and negotiators that are currently considering law reform.

Making Sense of the Arbitrator’s Ruling in DS 316 EC and Certain Member States- Measures Affecting Trade in Large Civil Aircraft (Article 22.6-EC) A Jigsaw Puzzle with (at Least) a Couple Missing Pieces

Making Sense of the Arbitrator’s Ruling in DS 316 EC and Certain Member States- Measures Affecting Trade in Large Civil Aircraft (Article 22.6-EC) A Jigsaw Puzzle with (at Least) a Couple Missing Pieces

Article 21.5 DSU Appellate Body Report United States—Measures Affecting Trade in Large Civil Aircraft (Second Complaint): Spillovers from Defense R&D Add to the Tug-of-War Between Panels and the WTO Appellate Body

Article 21.5 DSU Appellate Body Report United States—Measures Affecting Trade in Large Civil Aircraft (Second Complaint): Spillovers from Defense R&D Add to the Tug-of-War Between Panels and the WTO Appellate Body

'Flying High in a Plane' Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft (WT/DS316/AB/RW)

This article reviews the Appellate Body decision in the implementation phase of the EC – Aircraft dispute. Focusing on some of the key findings, we assess whether they are legally and economically correct. We conclude that a) though still unclear, the test for establishing de facto contingency on import substitution subsidies is probably too demanding; that b) though legitimate, the interpretation of the remedy of removal of the adverse effects for actionable subsidies is the weakest and most deferential possible; that c) the hesitation in confirming that quantitative methods are the key tool to define the relevant market is unwelcome; and that d) the Appellate Body correctly recognise the importance for Panels to consider, in the context of the serious prejudice analysis, whether the like product of the complainant has been subsidised. Most importantly, the analysis of this case, set within the broader jurisprudence and practice, has led us to conclude that WTO subsidy disciplines are not particularly strong. The review of the main economic theories justifying subsidy control (strategic trade policy, terms of trade, private information, commitment theory) has shown that no single theory is able to fully account for subsidies and the need to control them. The key question is the definition of what we want to achieve by controlling subsidies, which is the main message sent to the policy-makers and negotiators that are currently considering law reform.

European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft (EC and Certain Member States–Large Civil Aircraft) (DS316)

This dispute relates to the compliance proceedings in which the panel and the Appellate Body found that that European Union (EU) and certain of the member States acted inconsistently with their obligations under the Agreement on Subsidies and Countervailing Measures (SCM Agreement). The types of measures at issue in the original panel proceedings include the Launch Aid/Member State Financing (LA/MSF) for, inter alia, the A300, A310, and A380; French and German government ‘equity infusions’ provided in connection with the corporate restructuring of Aérospatiale and Deutsche Airbus; certain infrastructure and related measures provided by the German and Spanish authorities; and research and technological development funding provided by the European Communities and certain member States. The EU replaced the terminated the A300 and A310 programmes with new LA/MSF programmes, including the A350XWB LA/MSF subsidies.

United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint): some comments

AbstractThis paper provides limited comments on portions of the Appellate Body (AB) judgment. With respect to the existence of a subsidy under contracts with NASA and DOD, we find the discussion of whether Boeing has received a financial contribution to be a distraction from the core issue – whether the mix of monetary compensation, access to government personnel and facilities, and IP rights ‘overcompensated’ Boeing for the services it rendered (or whether the government paid more for those services than they were worth to the government). The panel's analysis of this core issue, which focused on whether Boeing was the principal beneficiary of the contracts, is flawed, but the alternative approach of the AB is equally flawed. The analogy between an R&D joint venture and equity infusion is dubious, and the existence of a benefit simply does not turn on how one dimension of the contract (the allocation of the resulting intellectual property rights (IP)) is specified. We also argue that even a contract that confers a ‘benefit’ (or economic rent) on Boeing could still be an efficient arrangement for the allocation of cost and prospective revenues between the two partners. With respect to adverse effects, we argue that the panel and AB failed to develop an adequate counterfactual with respect to product developments; that is, it is not implausible that if Boeing had not received a subsidy and would accordingly have developed the 787 later, Airbus would also have delayed the development of the A350. To determine the existence of adverse effects, the panel and AB should have considered the profit (or sales) of Airbus relative to what would have happened in this counterfactual world. Finally, we observe that the analysis of lost sales and ‘price suppression’ fails to consider the specific features of competition in the aircraft industry. Unlike what happens in the market with posted prices, when contracts are individually negotiated, whether the outcome of competition is affected by a subsidy depends on the relative cost position of the bidders. When Boeing is the lowest cost bidder, the only effect of the subsidy is to increase its rent, with no effect on sales or prices for Airbus.

Case Note Part Two: Appellate Body Report in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (US – Boeing) – Part II – Serious Pr

Case Note Part Two: Appellate Body Report in <i>United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (US – Boeing)</i> – Part II – Serious Pr

‘Automatic’ Discovery Procedures in the WTO – The Treatment of Annex V to the SCM Agreement by Appellate Body Report in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (US – Boeing)

‘Automatic’ Discovery Procedures in the WTO – The Treatment of Annex V to the SCM Agreement by Appellate Body Report in <i>United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)</i> (DS353) (US – Boeing)

Case Note Part One: Appellate Body Report in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (US – Boeing)

View Case Note Part One: Appellate Body Report in <i>United States &#150; Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (US &#150; Boeing)</i> by Jan Bohanes,Rueda Garcia - Global Trade and Customs Journal

WTO dispute settlement proceedings: European support for airbus in the spotlight

The bilateral WTO Agreement on Trade in Large Civil Aircraft (TLCA) of 1992 regulated the permitted levels of support for the European and American aviation industries. In October 2004, the US unilaterally withdrew from the TLCA, right as Boeing was about to lose its market leader status. Together with the termination of the TLCA, the US requested the initiation of WTO dispute settlement proceedings against the EU as well as against the governments of Germany, France, the UK and Spain regarding alleged direct and indirect subsidisation of Airbus. In response, the EC requested, on that same day, the initiation of dispute settlement proceedings regarding certain US federal, state and local subsidies granted to the American aircraft producer Boeing, which the EC regarded as incompatible with WTO rules. What European subsidies exist for Airbus, and how extensive are they?

China's Growing Market for Large Civil Aircraft

China will likely become the largest market in the world for new large civil aircraft (LCA), with global LCA manufacturers expecting to sell 100 LCA per year in the Chinese market for the next twenty years, or one every three to four days, at a total value ranging up to $350 billion. The challenge for western LCA producers in meeting this demand comes less from each other than from the regulation of China's market by its government, the lack of adequate air transport infrastructure to serve its population, and China's nascent attempt at building its own LCA. Should China continue to aggressively address governmental and infrastructure restraints, it will benefit through increased trade and tourism, both of which will spur LCA sales to satisfy air transport demand. This paper describes China's growing market for LCA and the challenges for LCA producers in realizing China's potential market. It further discusses China's trade in LCA and parts, U.S. exports and imports with China, key infrastructure and regulatory challenges in China, and China's ambitions of building a domestic LCA by 2020.