WTO clears US for $10bn in tariffs in Airbus subsidy case

Sept. 14, 2019, © Leeham News: The World Trade organization Friday concluded that the US may impose up to $10bn in tariffs against the European Union as a final result of the 15-year trade dispute over Airbus subsidies.

Politico first reported the WTO decision, which has not been made public.

Airbus issued a terse statement.

“The WTO decision is neither public nor authorized for release. We do not comment on rumors on a report that is not public,” a spokesman said in an email. “Aviation is a global industry, and no aircraft comes from one single country or zone. Nobody will win — it’s a lose-lose for the whole industry if we move to tariffs.”

Boeing declined comment.

Targets for tariffs

The US previously listed up to $25bn in potential tariffs, targeting not only Airbus components but a litany of unrelated products and industries.

Airbus assembles the A320 family in Mobile (AL). The US previously said fuselages and wings, among other components, imported could be taxed.

The A220 is also being assembled in Mobile. Wings come from Northern Ireland, which as part of the UK today, remains part of the European Union. If the UK withdraws from the EU under Brexit, it is unclear if the wings will still be potentially subject to tariffs.

Alabama is a solid Republican state, where President Trump’s approval ratings are the highest in the nation. It’s likely Alabama politicians will lobby Trump to avoid levying tariffs on the locally—produced airplanes.

EU case against Boeing pending

The EU’s case against Boeing and the amounts of tariffs that may be levied against continued, illegal subsidies to Boeing is running about six months behind the US-Airbus case. The EU already has listed billions of dollars in tariffs it could impose on Boeing and unrelated goods and industries should the US impose its tariffs now that the WTO has cleared the way to do so.

While there should be no linkage, the grounding of the Boeing 737 MAX and the vow by the EU’s safety agency, EASA, to perform its own testing before clearing the MAX for a return to service could become a pawn in the tariff wars, some worry.

 

58 Comments on “WTO clears US for $10bn in tariffs in Airbus subsidy case

  1. It is not over, until WTO also gives its conclusion on the ongoing BOEING subsidies, which will make Airbus’ $10B presumed “Tariff” look like Petty Cash.
    POLITICO quoted “Trump poised to hit EU with billions in tariffs after victory in Airbus case”. However, he Ignores that there is a parallel case against Boeing which should be defined in the coming months, but the US approach is “Hit First, Talk Later”. This seems like another move by the Administration to subsidize Boeing with this $10B, in their recovery of all their current and future financial catastrophes. Additionally, these are childish confrontations which, at the end, will dearly affect BOEING Worldwide, with this continues Tariff scenarios being presented by this Administration, Targeting everyone on the Globe, irrespective of commodity.

    • “It is not over, until WTO also gives its conclusion on the ongoing BOEING subsidies, which will make Airbus’ $10B presumed “Tariff” look like Petty Cash.”

      I’d wait for the real verdict being available.
      “Wins” especially on the US were invariably and largely overstated.

      Lions roar from the card board box and a fluffy kitten jumps out seconds later. :-()

  2. This all started back in 2004 …I dont think we have seen the end of it

    “October 2004 – Washington files a case challenging European loans to help Airbus develop aircraft and terminates a 1992 civil aircraft agreement covering government support for the two top aircraft manufacturers.” -Reuters 2011

    So previous to 2005 there was an agreement about government support for civil aviation, which of course Boeing made use of all the NASA development on carbon fibre fuselage ( of 777 size!) basic research. Boeing must have decided that the US couldnt win only on technology and customer requirements .

    • Will the Europeans ever get over the fact that they too benefit from Military and civilian research.

      Of the fact that NASA data is available to anyone?

      No, it does not fit in with the conformation bias.

      • Unfortunately, this saga has been a lot like politics in recent years where the obvious malfeasance of one party is obscured by counter-charges by the other party so lazy media report: “both sides are bad” allowing people to pick and choose their own facts.

        Both sides are guilty but Airbus is more guilty many times over.

      • And ESA Data isn´t public? And i don´t see what NASA has to do with a multi billion subsidized facilities for Boeing assembling civilians Airliners….. ?

  3. Tariffs story is totally unrelated to subsidies that Boeing and Aibus may have received from governments.

    Tarrifs are, AKAIK, imposed by the US fancifull federal administration

    • Hello Admiral Prune,

      Regarding:”Tariffs story is totally unrelated to subsidies that Boeing and Aibus may have received from governments.

      Tarifs are, AKAIK, imposed by the US fancifull federal administration”

      Apparently you did not bother to read even the first paragraph of the Politico story that Mr. Hamilton provided a link to? Below are the first two paragraphs of the story, note in particular “The United States has won the right to hit the EU with billions of euros in punitive tariffs by winning a dispute over subsidies” in the first paragraph.

      “The United States has won the right to hit the EU with billions of euros in punitive tariffs by winning a dispute over subsidies to aerospace giant Airbus, four EU officials told POLITICO.

      A World Trade Organization dispute settlement panel on Friday sent the confidential ruling to the European Commission and the United States Trade Representative, the officials said.”

      https://www.politico.com/story/2019/09/14/wto-tariffs-airbus-subsidies-1496170

      • I just realized the Politico story that I posted a link to above, titled: “WTO allows U.S. to hit EU with tariffs over Airbus subsidies”; is similar to, but not he same as the Politico story that Mr. Hamilton posted a link to, which was titled: “Trump poised to hit EU with billions in tariffs after victory in Airbus case”.

        The story that I posted a link to is a US/International Politico story (politico.com), while the story that Mr. Hamilton posted a link to is an EU Politico story (politico.eu). Both stories credit the same author (Jakob Hanke) and both were posted on 9-14-19.

  4. Yes, the WTO will set out tarriffs for Boeing.

    Let’s hope neither side pulls the trigger and actually impose them.

    I’m sure the lawers are enjoying life.

      • Hello Transworld,

        Regarding: “Boeing will pull the trigger.”

        Boeing does not get to decide whether or not to pull the trigger. Only the President of the US can order the trigger pulled. See the excerpt below from the 9-4-19 Reuters story at the link after the excerpt.

        “But informal talks have failed to produce any substantial progress, and EU diplomats say they are bracing for Washington to impose the full range of tariffs allowed by the WTO once the body’s arbitrator rules.

        The process is we get the number and then the President, with the advice of the US trade representative, decides what the appropriate level of … tariffs (is) … if any, Sondland said. That is completely up to the President.””

        https://www.reuters.com/article/us-usa-trade-eu-wto/u-s-hopes-to-see-decision-from-wto-on-aircraft-subsidy-issues-soon-idUSKCN1VP1OG

        • Regarding: “then the President, with the advice of the US trade representative, decides what the appropriate level of … tariffs (is) …”

          My prediction is 100% of the “full range of tariffs allowed by the WTO once the body’s arbitrator rules”, imposed at the first possible moment, and first announced on Twitter.

        • The Boeing board is stacked with political figures. for instance: Nicky Haley and Caroline Kennedy. They aren’t their because of their knowledge of aeronautics, manufacturing systems, financial control and project management.

          • Haley, before she became Governor of South Carolina and regardless of her numerous political connections (and Indian heritage) has a degree in accounting from Clemson and has been a CFO and business owner.
            To imply her knowledge of “manufacturing systems, financial control and project management” isn’t valued is unwarranted.
            Of course she is their for her powerful connections but she is no one trick pony. Most boards would be happy to have her.

          • “There would be thousands of better people.” That’s the frustration watching some individual in key positions. You know there are so many capable, effective ones available.

    • Guess this will exclude the ARJ21, C919, C929, MC21, etc. to be ever operated by US airlines in future, but its a two sided sword.

    • A few decades ago the EU rejected hundreds of thousands of tons of soy fed chicken (ostensibly on health grinds) this lead to a 30% Tarif on European made commercial vehicles. As a result Americans can buy and have huge pickup trucks but lack the relatively efficient in space and fuel European trucks and vans as a choice. I suspect that the only way forward for Europe if it is to invest in military programs to build and stabilise the industry.

      I suspect the battering and Bruising ofba EU/US tradevwar will be emergent nations like China.

      I was in Russia about 2 years ago, about the only sanctions that was hurting the average Russian was the European cheeses. The cheese had gotten boring.

  5. I seem to remember that there was some treaty or other
    to not tax transport class aircraft ( ??and aircraft parts in general??) between US and EU.
    ( again afair in conjunction of establishing the subsidies status quo at the time. ) was this ever revoked from the US side?

  6. I wonder if , should the USA apply these tariffs quickly, EASA might become more insistent on hardware changes to the 737max before accepting it back in service. If they did I think other airworthiness authorities – China & Canada in particular – might well follow suit. Not for the first time, there’s a lot of potential for Trump to shoot Boeing in the foot!

      • Roger:

        I think Boeing has shown its fully capable of using a Mini Mac 10 (tiny sub machine gun) to not just shoot themselves in the foot but to mill a foot off entirely.

        Actually once they fall down they can do the other foot as well.

    • Why would an aviation regulatory body retaliate against a private company just because the government of that private company found a private (public?) company in their own country of wrong doing? Are you saying that EASA is beholden to Airbus and will take offense at this?

      Geee, where could this end up. Probably a good thing that Airbus doesn’t sell any airplanes in the U.S. or the FAA may retaliate against the retaliation.

    • Nor EASA nor FAA nor any regulator shall retaliate in such political matter as subsidies. It would be a disaster for primary funcion of any regulator – safety, and secondary one – progress.

      In this case both US & EU shall wait for the end of the case EU vs. US subsidies, which follows in few months, and then put to the end this. Nor US who started, nor EU who responded will make by imposing tariffs theirs aerospace industry to be better, only more lazy.

    • Several other national regulators are now insisting on testing and reviewing the MAX independently such as the Indian one. Even if EASA approve or are pressured into approval it wont make a big difference due to these other regulators. The other factor is that the ‘cat is out of the bag’ and it can’t be put back in. Even if approved by EASA various concerns about MAX safety will enter public space and any compromises will be known by the public. The public is absolutely mad an many folks want to see Boeing executives in jail. (not impossible given Grand Jury’s, DoJ and FBI involvement).

      The only thing to do is to make EASA happy and have EASA approve ahead of FAA.

      Id say there really isn’t any political motive to gain advantage. Airbus know that they will one day have a crash and they will need the FAA.

  7. So what happens to the Quebec produced A220s? From what I understand, aircraft AND aircraft parts going into Mobile from Spain, France, UK and Germany are under the 100% tariff. So I assume the US built ones will be taxed heavily; but what of the ones currently made in Canada?

    • Thats A320 models.
      The A220, only wings are made in EU country ( for now) but part of fuselage is made in China

  8. Well just when Boeing needed the cash form the MAX debacle.

    It will help retire 787 debt.

    Whats not to like?

    • Hello Transworld,

      Regarding: “Well just when Boeing needed the cash from the MAX debacle.”

      Tariffs, if any end up actually being imposed, would be collected by the US Government, not Boeing. Only governments can file WTO complaints. The parties in the WTO complaint are the US and the EU, not Boeing and Airbus.

      • ” Only governments can file WTO complaints”

        nope- go back to Gatt 92 for the basics. Any small group ( usually more than one but the minimum number is not well defined )can file with the Dept of commerce what is Called ( CVD ) or Countervailing Duties petition

        https://help.cbp.gov/app/answers/detail/a_id/216/~/anti-dumping-%28ad%29-and-countervailing-duties-%28cvd%29

        Petitions may be filed by:

        a U.S. manufacturer
        a trade/business association of manufacturers in the U.S.
        a recognized labor union or group of workers who represent the industry.

        Countervailing duty (CVD) cases are established when a foreign government provides assistance and subsidies, such as tax breaks, to manufacturers that export goods to the U.S., enabling the manufacturers to sell the goods cheaper than domestic manufacturers. CVD cases are country specific and the duties are calculated to duplicate the value of the subsidy..

        The ‘ subsidy’ game is where the GATT92-WTO games get involved. For example the WTO term (LCA) large commercial aircraft is amorphus – such that allmost anything larger than a Piper J4 cub would probably qualify. And what is defined as a subsidy gets even more complex. For example Govt can give’ low cost loans ‘ for initial research and development and initial manufacturing ( paraphrased) with payback terms based on certain ‘ targets’ such as Delivery of xxx airplanes by yy years and zz interest rate (bare minimum )- But IF after FF years and the ‘ targets’ are not met – then the ‘ loan’ gets forgiven. Needless to say – the system gets gamed ….
        So where does the ‘loan’ become a ‘ subsidy ‘- ??

        Answer -How good are YOUR govt lawyers and Politicians and lobbyists

        • Hello Bubba,

          Regarding: “Only governments can file WTO complaints”

          nope- go back to Gatt 92 for the basics. Any small group ( usually more than one but the minimum number is not well defined )can file with the Dept of commerce what is Called ( CVD ) or Countervailing Duties petition.”

          The WTO, according to its website, does not agree with you. See excerpt and link below.

          “Resolving trade disputes is one of the core activities of the WTO. A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made in the WTO. ”

          https://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm

          You are confusing the WTO with the US Department of Commerce. They are two completely different organizations. The WTO is an international organization that regulates trade between the 100 plus nations that have signed the 1994 Marrakesh agreement, which for WTO purposes, replaced the GATT agreements of 1948 and their later revisions. WTO officials are drawn from a wide variety of the WTO member nations, they are not US government employees. The US Department of Commerce is a Department of the US Federal Government whose director is appointed by the US President and confirmed by the US Senate, and whose employees are all US Government Employees. It enforces US trade laws, which the US as a WTO member, has agreed will not violate the Marakkesh agreements. Not all WTO members have the same trade laws, although all have agreed that whatever laws they do have will not violate the Marrakesh agreements.

          Boeing’s anti-dumping and CVD complaints against Bombardier were filed with the US Department of Commerce, and the case was between Boeing and Bombardier. Had Boeing won, Canada could have filed a complaint with the WTO if they felt the US decision in favor of Boeing had violated the Marrakesh agreements. The Boeing-Airbus cases were all filed by the US Government against the EU, or the EU against the US, without there having been any preceding cases decided by the US Department of Commerce or its EU counterpart. US Commerce can only consider cases involving imports into the US, WTO cases can consider imports into any country. Thus a case filed with the WTO by the US government could result in WTO sanctioned penalties being imposed for unfair imports into the US, China, Saudia Arabia, and South America that hurt US companies, whereas a case filed with US Commerce could only result in penalties being imposed, by US Commerce, for unfair imports into the US.

          See below for links to , and some relevant excerpts from, the Wikipedia articles on the WTO and US Commerce.

          “The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world.”

          https://en.wikipedia.org/wiki/World_Trade_Organization

          “In the United States, the Department of Commerce is an executive department of the federal government concerned with promoting economic growth. Among its tasks are gathering economic and demographic data for business and government decision-making, and helping to set industrial standards. This organization’s main purpose is to create jobs, promote economic growth, encourage sustainable development and block harmful trade practices of other nations.”

          https://en.wikipedia.org/wiki/United_States_Department_of_Commerce

        • The excerpt below is from the first page of Boeing’s April 2017 dumping and subsidy complaint against Canada/Bombardier filed with the US Department of Commerce, which is an agency of the US Government and can impose penalties only for imports into the US which do not comply with US subsidy and anti-dumping laws. Note the complaint is about violations of US laws (USC is “US Code”), not violations of the WTO agreements, which have no force in US courts, although the US, as a WTO member, has pledged not to have laws that violate WTO agreements.

          “On behalf of The Boeing Company (“Boeing” or “Petitioner”), we respectfully submit to the U.S. Department of Commerce (the” Department”) and the U.S. International Trade Commission (the “Commission”) petitions for the imposition of antidumping and countervailing duties on U.S. imports of 100- to 150-seat large civil aircraft (“LCAs”) from Canada (the “Petitions”) pursuant to Sections 701 and 731 of the Tariff Act of 1930, 19 U.S.C. §§ 1671 and 1673. Boeing is a U.S. producer of 100- to 150-seat LCAs, and thus, is an interested party within the meaning of 19 U.S.C. § 1677(9)(C).”

          https://leehamnews-5389.kxcdn.com/wp-content/uploads/2017/04/BBD-Complaint-042717.pdf

          The next excerpt is from the summary of the US DS316 complaint against the EU on the WTO’s website. Note that the case is being filed by the US against the EU, that the violations alleged are violations of WTO treaties and not US laws, and that the complaint involves “the global markets for single-aisle LCA, twin‑aisle LCA, and very large aircraft” whereas the jurisdiction of US Commerce would be limited to the US market for such aircraft. Marrakesh incorporated GATT 1994 with modifications.

          “On 6 October 2004, the United States requested consultations with the Governments of Germany, France, the United Kingdom, and Spain (the “member States”), and with the European Communities (“EC”) concerning measures affecting trade in large civil aircraft.

          According to the request for consultations from the United States, measures by the EC and the member States provide subsidies that are inconsistent with their obligations under the SCM Agreement and GATT 1994. The measures include: the provision of financing for design and development to Airbus companies (“launch aid”); the provision of grants and government-provided goods and services to develop, expand, and upgrade Airbus manufacturing sites for the development and production of the Airbus A380; the provision of loans on preferential terms; the assumption and forgiveness of debt resulting from launch and other large civil aircraft production and development financing; the provision of equity infusions and grants; the provision of research and development loans and grants in support of large civil aircraft development, directly for the benefit of Airbus, and any other measures involving a financial contribution to the Airbus companies. The subsidies in question include those relating to the entire family of Airbus products (A300 through the A380)

          The United States further notes that certain launch aid provided for the A340 and A380 appear to be illegal export subsidies in contravention of certain provisions of Article 3 of the SCM Agreement.

          The United States is further concerned that the measures appear to be causing adverse effects to US in a manner contrary to the provisions of Articles 5 and 6 of the SCM Agreement.

          The United States is also concerned that the measures appear to be inconsistent with Article XVI:1 of GATT 1994.

          Finally, the United States is concerned that the measures have caused and continue to cause nullification or impairment of benefits to the United States under GATT 1994 within the meaning of Article XXIII:1.

          On 31 May 2005, the United States requested the establishment of a panel. At its meeting on 13 June 2005, the DSB deferred the establishment of a panel.”

          “The Appellate Body upheld the Panel’s finding that the United States had brought its adverse effects claims with respect to appropriately defined product markets for LCA, namely, the global markets for single-aisle LCA, twin‑aisle LCA, and very large aircraft.”

          https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e.htm

  9. The following is an excerpt from the 9-22-16 Seattle Times story at the link after the excerpt.

    “Scott Hamilton, Bainbridge Island-based aviation expert with Leeham.net, said he would be “shocked if tariffs are imposed on any Airbus or Boeing products and it would be stupid to impose tariffs against unrelated industries.”

    https://www.seattletimes.com/business/boeing-aerospace/wto-slams-eu-for-failing-to-remedy-harm-to-boeing-from-illegal-airbus-subsidies/

    Based on excerpt below from the 9-4-19 Reuters story at the link after the excerpt, my advice would be to prepare to be shocked.

    “But informal talks have failed to produce any substantial progress, and EU diplomats say they are bracing for Washington to impose the full range of tariffs allowed by the WTO once the body’s arbitrator rules.

    The process is we get the number and then the President, with the advice of the US trade representative, decides what the appropriate level of … tariffs (is) … if any, Sondland said. That is completely up to the President.”

    https://www.reuters.com/article/us-usa-trade-eu-wto/u-s-hopes-to-see-decision-from-wto-on-aircraft-subsidy-issues-soon-idUSKCN1VP1OG

  10. Thanks for your reply.

    Based on the USTR list https://ustr.gov/sites/default/files/enforcement/301Investigations/Preliminary_Product_List.pdf
    It does not specify “A320”, but any aircraft or components for aircraft over 15000kg (which would include the CSeries). However, I’m guessing/hoping, even though it’s wings are Belfast made, the A220 would not count as a “European Product”, and therefore not subject to tariffs?

    In short, what I’m asking is, say this 100% tariff gets implemented come October, will Delta still be able to take delivery of their A220s? (I’m scheduled to fly on one and would be so disappointed if it got swapped for a 737)

    • Hello zeng,

      Thank you for posting the very useful link to the preliminary list of tariffs that was posted for public comment by the Office of the US Trade Representative in the US Federal Register. The more the discussion here is based on primary sources such as this, or things officially published by the WTO or EU (not to be confused with things unnamed sources say), the more the discussion here will reflect what is likely to really happen, rather than what people with no legal or trade negotiation experience imagine might happen, or the way they imagine or speculate things work, as opposed to the way they actually work.

    • wow, so they are proposing to kill several thousand jobs in Alabama by taxing the shit out of A320 parts causing Airbus to shut down Alabama’s A320 FAL (not a220 wings, being predominantly composite would be exempt as the list specifically calls out predominantly aluminum wings)

      way to MAGA…..

      • Regarding: ”

        The Annex Section 1 list also includes the following.

        “Other parts, nesoi, for use in new civil aircraft, not for use by the Department of Defense or the U.S. Coast
        Guard, of an unladen weight exceeding 15,000 kg provided for in statistical reporting numbers 8802.40.0040,
        8802.40.0060 and 8802.40.0070.”

        Note that according to the last sentence before each of the Annex Section 1 and 2 lists, “nesoi” (this is actually common legal terminology) is defined as follows.

        ” In the product descriptions,
        the abbreviation ‘‘nesoi’’ means ‘‘not
        elsewhere specified or included’’. ”

        Based on the above, it seems pretty clear to me that carbon fiber wings could be included, if the US President chose to do so.

        • @AP_Robert
          Yeah I saw that and wondered if the composite wings are included. So would this apply to only Mobile, Alabama made A220s, or would the currently Canadian made A220-100s destined for Delta be affected too?

          And how expensive generally is an aircraft wing (like 5% of the total cost? or more like 40%), would a 100% tariff on the halt new deliveries?

          @bilbo
          Yeah, so unfortunate. If this administration’s goal is to destroy as many American jobs as possible then this is exactly what they should be doing.

          • Hello zeng,

            Regarding: “would this apply to only Mobile, Alabama made A220s, or would the currently Canadian made A220-100s destined for Delta be affected too?”

            In my highly, highly, non-expert opinion this is a grey area that would be subject to legal dispute.

            In the May 1999 Headquarters Ruling Letter at the link at the end of this post, US Customs determined the US was the country of origin of Hawker 800XP business jets assembled in the US from parts made in the US, UK and Singapore; however, the country of origin for spare parts that were not part of a kit for assembling an aircraft in the US was ruled to be the country where they were manufactured. The law and analysis section of this letter cites examples where the country of origin of an aircraft assembled in Egypt from USSR built kits was ruled to be the USSR, and another where the country of origin of an aircraft assembled in the USSR from Romanian built kits, but then modified in USSR, was ruled to be the USSR.

            Below are some excerpts.

            “The aircraft manufacturer imports an aircraft fuselage from the United Kingdom which is used in making an airplane called the Hawker 800XP. The Hawker 800XP is a high end, double engine, private passenger plane that is generally used for business purposes. The Hawker fuselage is constructed in the U.K. by British Aerospace and includes vertical stabilizers; the wings, including ailerons; flaps; air brakes; the passenger door; and rear tank. Hamble Aerostructures in the U.K. produces other parts for the aircraft such as horizontal stabilizers, overfin, ventral fairing, tail cone, dorsal fairing and the rudder. For shipping purposes, the fuselage is imported disassembled. As imported, the fuselage is without an interior, the engines or avionics, and it is unpainted. The engines and the avionics are made in the U.S. The landing gear is imported from Singapore.”

            “HOLDING:

            The imported fuselage is substantially transformed in the U.S. when it is reassembled and combined with the engines, avionics and the landing gear to make the Hawker 800XP aircraft. The country of origin of the Hawker 800XP aircraft is the U.S. The spare parts must be separately marked to indicate their country of origin regardless of whether they are sold by a facility which is related or unrelated to the manufacturer.

            A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.”

            “Headquarters Ruling Letter (HRL) 951072, dated May 22, 1992, involved the reassembly of a U.S.S.R.-origin airplane in Egypt. There was no substantial change in name, character or use of the airplane. The airplane that was reassembled in Egypt was exactly the same airplane that was built and then disassembled in the U.S.S.R. Consequently, we determined that the airplane was not substantially transformed in Egypt. In contrast, in HRL 546092, dated September 16, 1992, a Yak 52 aircraft built in Romania was disassembled in Russia and certain vital components of the aircraft were replaced in order to render the aircraft suitable for performing aerobatic acts. In particular, the aircraft was completely disassembled in order to replace the aircraft’s spar with a new heavier spar. A spar is one of the main longitudinal supports of the wings of an aircraft. In addition, a new engine and propeller were fitted as part of the modification of the aircraft. The newly designed aircraft was capable of use with up to nine positive and seven negative gravitational forces. We noted that the purpose of the disassembly and reassembly of the Yak 52 aircraft in Russia was not to restore the aircraft to be used in the manner for which it was originally built. Rather, the work performed on the Yak 52 aircraft transformed it from a trainer plane into a plane capable of aerobatic flight. In addition, the reassembly was very substantial involving, most notably, a completely new spar, engine, and propeller. Accordingly, we found that the processing in Russia resulted in a substantial transformation of the Yak 52 aircraft.”

            https://www.customsmobile.com/rulings/docview?doc_id=HQ+561322

          • Those wings are expensive. I’d estimate 25%… But as pulled up from the story from 2016, I’d tend to think a lot of the noise is rhetoric.,…

          • Below are excerpts from, and links to, another US Customs aircraft related country of origin ruling, in which US Customs ruled that Cessna 162 Skycatchers, assembled in the US from kits made in China, were “Made in China”. I strongly suspect that this ruling did not help with sales of this now out of production aircraft to typical purchasers of US general aviation aircraft.

            “According to your letter the aircraft in question, a model 162 Skycatcher, will be initially constructed at the Shenyang Aircraft facility in China. Shenyang will manufacture the aircraft structure and incorporate an engine, propeller and avionics of US origin. The aircraft will then be disassembled into major components such as the wings, fuselage and tail section for shipment to the US. The aircraft will then be reassembled in the US. You state that options such as co-pilot displays and a recovery parachute may also be added in the US. The aircraft will then be tested and delivered to the ultimate consumer.”

            “In this case, the assembly process does not result in a substantial transformation. The assembled aircraft does not have a distinctive name, character or use different from the unassembled aircraft, and therefore is a good of Chinese origin for marking purposes. The product itself must be marked with the words “Made in China” in a legible, indelible, permanent and conspicuous manner in accordance with Section 134.46 of the Customs Regulations (19 C.F.R. 134.46).”

            https://www.customsmobile.com/rulings/docview?doc_id=NY%20N035242&highlight=Cessna%20Skycatcher

        • so you are saying each wing (stripped of flaps, hydraulic rams, etc) is in excess of 15000 kg? on an aircraft with an OEW of 35,ooo kg?? so a pair of wings is 90% of OEW?

          • Hello bilbo,

            Regarding:”so you are saying each wing (stripped of flaps, hydraulic rams, etc) is in excess of 15000 kg?”

            By my reading and understanding of the English language, the 15,000 kg test in the following, clearly applies to the unladen weight of the assembled aircraft, not to the unladen weigh of individual parts. It would make no sense at all to be talking about ‘unladen weight’ of sub-assemblies.

            “Other parts, nesoi, for use in new civil aircraft, not for use by the Department of Defense or the U.S. Coast Guard, of an unladen weight exceeding 15,000 kg provided for in statistical reporting numbers 8802.40.0040, 8802.40.0060 and 8802.40.0070.”

          • AP, any good lawyer could blow that phrasing out of the water.

            I mean, look what they did to “a well regulated militia”….

            (for those not-muricans out there, the word salad that makes up the 2nd Amendment to the US Constitution: “A Well Regulated Militia, Being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” has been interpreted by the US Supreme Court such that the first two phrases are semantically null and the second 2 phrases constitute an individual right to unregulated gun ownership. Contemporaneous documents written by the authors of the Constitution make clear that their intent was state regulated militias were intended to be a counterbalance against the power of the central federal government, not that individuals should own howitzers)

          • @Billbo and others: we get your point on what lawyers can do but and this comment will stand, but I will not let this get into a debate about the Second Amendment. So a note to others: don’t go there. The comments will be deleted as soon as I see them.

            Hamilton

  11. I wonder if Willie Walsh is still thinking his 200-plane order for IAG is such a good idea now….. It might be just as well it’s not a firm order yet.

  12. If Boeing is going to need a Bailout maybe the Europeans let the US government have it and the US cancels the Tarifs and call it even. In July the crisis which began on 11 March Boeing allowed 5.6 billion to compensate customers. Another billion or so for loss of revenue in the second quarter. Sounds to me that they will have non recoverable losses of about 10 billion by the time its flying again early next year.

    • In following months we will have WTO decision in a case EU vs US subsidies, and as many predicts Boeing (US) will pay, so will be a draw some kind anyway.

      I’m not convinced Boeing should be let to be bailout. It’s a disfunctional company in trade market. Maybe should be divided in space, military, and civil to be easier to supervise and assess if they are obeying rules.

  13. I do believe that Boeing should be subject to a bailout if it needed one.

    It’s a strategic company. But Boeing management can’t take advantage of that.

    So to address Europe. Management did take advantage of the fact that their company was a strategic company. There are many examples

    So we come to Rolls-Rolyce. John Rose, the previous CEO of Rolls-Royce was fired. Strategic company or not strategic company, John Rose was fired. He was replaced by Warren East, an engineer who protects engineers. Warren East fired 4,000 managers but not a single engineer. Indeed Rolls-Royce continues to recruit engineers.

    Boeing is a strategic company. Should it’s managers be allowed to use that for their benefit.

    I think fire them.

    Everybody will be told it will cause unspeakable distruption. It will, but only to the salaries of managers who are the cause of the disruption.

    Boeing: Do a Rolls-Royce. Fire the managers.

  14. In early 2002- there was a meeting re WTO issues
    Here are some extracts from that meeting. A question was asked of Rudy if this meeting was ‘ on the record ‘ He answered yes. But for a variety of reasons ( not pertinent here ) major efforts were made to hide it, modify the minutes, etc.

    Its past time to set at least part of the record straight.

    Rudy de Leon started with his resume, which included the important fact that he had only
    been with the Boeing Company for the past six months. He continued with the fact that
    he was here today to discuss three issues: 1) Air Force 767 tanker program; 2) FSC tax,
    and 3) the plusses and minuses of a trade filing at this point in time.
    Mr. deLeon has a team of 12 looking at the Airbus issue, which was commissioned by
    Phil Condit.

    Tankers – the KC135’s are approximately 40 years old. The Air Force
    wanted leases to make it easier to get a new fleet of tankers, due to budget constraints
    over the next several years. Leasing the tankers allows the money to come from
    another pocket where money is available. The Air Force wanted 767s because Boeing
    built almost all the tankers the Air Force ever had.
    They were also getting lots of support from Congress, and on 12/21/01 Congress passed the defense budget bill containing provisions to lease up to 100 converted 767 tankers.
    However, The Washington Post ran an Airbus story the day before Christmas saying Airbus could build the tankers and for 40% less money. Boeing needs to prevail on this issue for the
    good of Congress, the public, and the Air Force with a contract.
    Airbus has retained DC law firms to help them make this a competitive bidding process. Airbus is making this a subsidy issue by saying this is nothing more than a handout to Boeing. The Air
    Force has to decide tankers configuration before the design phase may begin.
    **** asked when do we make the 1st airplane and the answer was we would start right
    away once we had a contract in hand. The present schedule is for a 2004 rollout and
    2005 delivery of the first airplane. 25% of the KC135’s are in the depot at any one
    time so the Air Force is flying wings off these aging planes. . . .
    FSC – impacts us all because it is a tax deal. European industries can get
    VAT tax back on goods they sell outside the EU. This provision for VAT was grand-
    fathered into WTO agreements in the 1980’s. However, FSC taxes were not
    grandfathered into the WTO agreements for some reason. Our government needs to fix
    the FSC tax problem in the WTO agreements if possible. **** ….. Answer: A trade case opens up a third front to attack Boeing. Airbus would say Boeing wants a trade case because we can’t compete in the market place.

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