Well, we have necessarily done a quick scan of the 1,000+ page document, skipping all the history and back-and-forth and concentrating on the findings and conclusions that begin on PDF page 288 of the document.
Podcast with Scott Hamilton, Richard Aboulafia and Addison Schonland.
As we noted in the previous post, as far as we are concerned there is a pox on Airbus and Boeing, for both have sinned (with Boeing’s sins yet to be detailed in the forthcoming Interim Report due July 16). Both need to go to Confession and then go forth and sin no more.
Having said that, it is clear to any reader that the US won on the fundamentals. Airbus can claim a few significant victories, to be sure. The US failed to get launch out ruled illegal. The US failed to block launch aid for the A350.
But significantly, the WTO found the launch aid provided was illegal on the terms and conditions as being below market rates or not on commercial terms. So future launch aid must be done on a commercial basis.
On this, we are now and have been in the past in full agreement: Airbus should have to go to the commercial markets just like Boeing.
Of course, this raises the question if Airbus has to structure launch aid on commercial terms, why go to the governments at all?
The answer Airbus gives is that the governments want to support their aerospace industries and the jobs they create and this is how they can.
Frankly, we find this to be a weak argument.
Obviously the more socialistic Europe wants jobs programs, but this is no different than the fal-der-all Boeing’s supporters tout in the KC-X tanker program and a host of other military procurements. There are, after all, example after example of military programs the US Defense Department has not and does not want, and tried to kill (Boeing’s V-22 Osprey being one notorious example), but which Congress foisted on the Pentagon in the name of jobs. (Boeing’s C-17 currently is another example; DOD wants to kill it, the USAF says it doesn’t need any more and Boeing and its supporters are doing everything possible to force the airplane to live on.)
So we’ll concede the governments want to maintain a modicum of control over Airbus through providing launch aid. But we personally think the real reason is that even on commercial terms, the governments may well be a more reliable source of funds than the commercial markets.
We don’t like government hand-outs (aka corporate welfare) of any kind, in any shape or in any form. Not for Airbus, not for Boeing. Period.
The WTO panel also rejected the US complaint that Airbus destroyed tens of thousands of US aerospace jobs. Boeing and its supporters have been bleating that Airbus killed McDonnell Douglas and Lockheed commercial airplane business. Not true. This removes a major talking point–or at least it should.
The WTO panel found that the illegal subsidies didn’t suppress pricing but the panel agreed with the US that Boeing lost sales in key countries, including Mexico, Germany and India and several others. Airbus tried to portray to the media that losses were confined to countries such as Sri Lanka, which didn’t matter.
Research and development grants were found by the panel to be illegal–which Airbus, in its media briefing, attempts to turn into a positive because grants from NASA and the US Defense Department are at the root of the EU’s complaint against Boeing’s “illegal” subsidies. If found illegal for Airbus, then these should be found illegal for Boeing and the amount is far greater for Boeing than for Airbus, the company claims. This sounds reasonable and could be a major setback for Boeing when the WTO panel reviewing this case is issued.
The statistical back-and-forth between Boeing and Airbus about how many US complaints were upheld or rejected is, to us, nonsense. This is the basis for which Airbus claims victories–asserting 70% of the US claims were rejected. Boeing, as noted in a previous post attachment, presents a chart that shows most of its claims were upheld.
This is similar to the Northrop Grumman response when the US Government Accountability Office found eight violations by the USAF in the 2008 KC-X contract award while rejecting most other Boeing complaints.
We don’t care. The fact is that launch aid terms and conditions were found to be illegal. $4bn in aid for the A380 was illegal. R&D grants are illegal (watch out, Boeing). And so on.
The US won and the EU lost. It doesn’t matter whether, to use an American football analogy, Airbus was offsides by one inch or by one yard, or whether it was one player or the entire team. Offsides is offsides.
We fully expect a similar outcome in the EU case against Boeing. We fully expect similar spins by the supporters of both sides.
We find the whole spectacle tawdry.