41 Comments on “Pontifications: The WTO Airbus/Boeing standstill and pursuing China”

1. OK, so what’s the US/EU plan of action against China?
   – Sanctions? They don’t work — just look at Russia, Iran and North Korea.
   – Trade wars? They don’t work either: China was not affected to any great extent by Trump policies.
   – WTO complaints? They’ll take years/decades to play out.
   – Onshoring? Probably the “best” path, but how long will the process take, and to what extent can it be completed? Labor in “the west” is expensive, so “following market forces” naturally causes a deviation to lower-wage countries. As such, onshoring is thus “contrary to market principles”…though it’s good for domestic economies, if you can maintain a market to sell to.

   Summarizing: the genie is clearly out of the bottle, but can he ever be forced back in again?

   • @Bryce

     You are right – what could US and EU do, even if ever by a miracle they managed to align trade economic and political policies – which they can not and will not align, for their interests are different and neither has any interest ad idem beyond the bare minimum in making/displaying some notion of common cause

     USEU cannot even agree on Russia, where commonality is more obvious if only in terms of some parcel of shared history which one or two oldsters still engaged in upper levels of administration remember –even so witness Merkel’s yes no maybe contortions

     « However, it’s about time the US and EU teamed to pursue China’s anti-free market policies. »

     Why should EUUS team up – both markets..er sorry both free markets, administrations and economies, benefit massively from China industry and so called anti free market policies

     Besides China and RECEP is now the significant market to export to/import from, any significant USEU action will only push both domestic corporations and third party countries further away from sanction happy ‘free markets’ in favour of er…non sanction yet open but somehow ‘unfree’ China/RECEP

     – as such action has done in the past : who wants to trade with an unreliable US non free market, which specialises in hefting trade restrictions around the world on a whim in an attempt to coerce and dominate

     And what about Biden’s Bills – apparently promising massive State intervention and subsidies for the US economy ? Would this have to be outlawed ?

     On shoring is not going to happen – it’s an empty slogan to mask yet another massive WS theft of whatever it is they have not already stolen – and in any case, as you point out, a failed attempt to go against free market principles

     • @ Gerrard

       Very valid points.
       And, as @Uwe pointed out a while ago in another article, onshoring production also means onshoring the associated CO2 production (and other environmental footprint) — which causes complications vis-à-vis the Paris Climate Agreement and other green movements.

       As stated in other articles, various European countries have been trading with China for 3000 years, and the EU recently got a cold shower from 4 years of Trump politics: consequently, where China is concerned, when the US beckons the EU is not necessarily going to follow.

       It will be interesting to see what Australia does: it’s closer to China, heavily dependent on it for trade, and currently embroiled in a nasty standoff with it. The Chinese are currently continuing to import Australian iron ore, but they’d probably stop that in a heartbeat if they had another source. Where that’s concerned, the US/EU should take note.

       Take note: China still has “the west” in a very tight spot where rare earth metals are concerned:
       https://investingnews.com/daily/resource-investing/critical-metals-investing/rare-earth-investing/rare-earth-metal-production/#:~:text=The%20half-year%20quota%20for%20rare%20earth%20mining%20in,world%E2%80%99s%20top%20importer%20of%20rare%20earths%20in%202018.

       • @Bryce

         Off shoring took place to offload dirty industry onto China et al, and gain clean green kudos : a particular case in point was rare earths – blind idiocy to throw that away

         To re shore industry to any scale will not be possible, for this and all other reasons as previously discussed : EPA and so on bureaucracy has so massively bought in to squeaky clean that anything not expressly a high level political and WS priority (viz Intel and TSMC fabs in Arizona) will be banned

         Plus the culture and the skills and the workers offshored into World of Mac or Warehouse dumboland, or, in fact what this is, Servitude

         Europe has been trading as you point out forever with the East – into the 18th C China was still the largest economy, second up India : followed an interlude of couple of hundred years only and…we’re now back to the good old days, c.f. Mackinder Theory

         The Oz have long played the US lapdog, but recently with drooling frenzy– for iron ore they are safe from any significant competition for a few years, the time it’ll take China to build up the alternatives in Africa and South America – at which time they’ll impose their terms and conditions, and take significant control

         Meanwhile, probably, the Asians in general will continue to buy up real estate there, including of course agricultural – Aus is a very large very empty island with a tiny population off shore an overpopulated dominant continent starting to flex, shades of 1617

   • > But making the transformation done by Japan, S. Korea and Taiwan to a legal democratic country Still the West can make China a gigantic Cuba or N.Korea and move production home or to Vietnam, Burma, Indonesia, Cambodja <

     Interesting, but unsure what that sentence might mean in practice. Who do you see in the driver's seat at the moment? I myself don't see the West in a position to "make"
     China do anything at all; least of all become
     another Cuba (for any entity's benefit).

     Maybe the west can do that w/ CF, "AI", and Robots, though, so I shouldn't be dismissive.

     😉

   • In recent hot days, Americans living in the Pacific NW would probably go over the border to get cheap Chinese made air conditioners if they can’t find them in local hardware stores because of trade wars.

2. Do the Chinese, CAAC require 3 source AOA back-up logic for the MAX? I remember they were the first to ground the MAX after the second crash & FAA the last. Or is all this much bigger?

   • “Do the Chinese, CAAC require 3 source AOA back-up logic for the MAX?”

     I certainly hope that is the case: after all, that is the current “international standard”.
     I also hope that the CAAC is requiring a full audit of the MAX’s software, since such an audit has (seemingly) never been performed by the FAA/EASA.

     • Keesje:

       In actual addressing the question, as far as I know, China has no released any details on their review.

       So what we have its just a blank. My take is if they put out any details then that opens it to discussion which has not happened.

       So either we speculate or we see if something comes out that is addressable.

       To put it in perspective, India also has not approved the MAX back into flight and unknown where that is or why as well.

       We do known the highest standard is EASA with the synthetic system added to the -10 and I believe if that is approved, that also includes a plan to back fit the rest of the MAX fleets.

       I have pondered Boeing may not try to certify the -10 and avoid that though that might not work with EASA.

       The -10 is two years out, Boeing could work on approval and start putting it on the current mfg MAX jets

       • The severe covid situation in India has likely meant little progress on the officials approving anything , or the airlines needing those Max’s.
         But go ahead , you know you want to speak for ‘what India wants’, but with a small number in country no one is in a rush to do so.

         • Duke:

           Other than I suspect Covd is an aspect of India, I am not going to speak for India or comment further unless some information shows up.

           I have none and if someone has it, its not been published where I have seen it.

           New Zealand just allowed Fiji to operate their MAX jets into the country.

           Clearly India and China are big deals in the Aviation world.

         • Countries like Singapore, India, Indonesia and Malaysia haven’t lifted the ban of B737 MAX. Do they all have a trade war with the U.S.??

3. “China ignores international protocols, flaunts WTO rules despite being a member state and simply steals intellectual property, ”

   Now where is the difference to the US, please!
   IP for the US turned a big thing after they had borrowed enough
   from elsewhere. i.e. a thief that dislikes stealing 🙂

   WTO and other global coop rulings are either mostly ignored or
   “deformed” to suit long before they are turned lose.

   These global “you did, we did” runoffs are rife with bigotry afaics.

   • @Uwe

     As usual the fine language is merely to conceal the power game

     My rules….or your rules….

     All industrial economies start in theft and end in theft

4. Blaming the Trump administration comes across as taking political sides and overstates him as a factor given that there are genuine reasons for trade tensions with China that ‘aviation analysts’ and financial analysts with an appeasement outlook miss. China’s behaviour in the South China Sea towards other nations, it’s shameful (that is the right word many people agree with) human rights and its joint venture system of appropriating technology without letting full access of western companies to grow into China and its state owned enterprises have long been a concern. Some Democrats have long been concerned by it as well. It’s just that it became a media talking point for the last election because 40 years ago Senator Joe Biden pushed through most favoured nation trading status for China.

   My impression, from imagining that I was a patriotic Chinese is that the issue is more that China simply does not need the B737-MAX anyway given COVID, an upset that China’s Certifier CCA is not allowed in the EASA/FAA certification club by barriers and thusly that the C919 is not being certified, which must be galling given what a safety mess the initial MAX certification turned out to be. In addition it gives the C919 a little bit of a leg up. I’d like to see an honest analysis of the aircraft. It may not be a little less economical than the MAX but it is I believe also a lot more spacious.

   • Let’s not stray into geo-political issues not directly related to WTO/trade issues. China South China Sea, human rights are not directly on point.

     Hamilton

     • Scott:

       With all due respect (and I will comply) you cannot isolate out part of the issues between countries and then discuss the rest in a vacuum. Or you have to refer to looking over your shoulder at the elephant in the room.

       Its a dicey balance (impossible probably) trying to keep the posts on a tech subject in this case. Much like trying to divest Boeing, FAA and US politics that got the FAA to where it is.

       The US and EU worked out the WTO deal because of a more common basis of understanding. Boeing leveled the filed when they started to work huge tax breaks from Washington State. A few billion in breaks when 100s of billions get moved around is not a show stopper and both sides can (now) see its in their best overall interests.

       If you have a chasm of other takes and those in turn become part of the specific MAX certification’s issue, untangling that may be well be impossible.

       Without naming them I would say that there are 3 huge issues in play that are off topic that have direct affect on the certification issue.

       And does Airbus refuse to sell aircraft to China if China does not follow EASA in certification of the MAX?

       • U.S. sells weapons to the Saudis and U.A.E. and provided support including mid-air refueling to Saudi Air Force in their war in Yemen (until recently) which helped created a humanitarian crisis.

         How about Australia’s historical abuse of its aboriginals??

         -> Aussie shame: what parts of being Australian we shouldn’t be proud of

         https://www.abc.net.au/triplej/programs/hack/aussie-shame-what-parts-of-being-australian/6964942

         The treatment of Aboriginal people is our great collective continuing shame

         https://www.smh.com.au/opinion/the-treatment-of-aboriginal-people-is-our-great-collective-continuing-shame-20161028-gsd8iq.html

         -> Australia Day: A Day of Celebration or Mourning?

         https://www.nytimes.com/2021/01/26/world/australia/invasion-day.html

         Of course you won’t see anything wrong if you are not one of those being oppressed.

5. Of (great) relevance and interest to the current discussion:
   “WTO chief makes a point: do not target China”

   “But at the EU’s trade policy day this week, where EU officials repeated long-standing grievances against China’s industrial policies and the state-owned companies, the new head of the WTO offered a very powerful and pragmatic repudiation of the group’s approach to gang up on China.

   “I’ll just be very open,” said Ngozi Okonjo-Iweala, who made history in March when she became the first woman and first African to head the WTO, as she warned against targeting China. “When China feels it’s being targeted and it’s only about China, then you get a lot of resistance.”

   In the speech, Okonjo-Iweala went further to warn countries not to “use the WTO or trade as kind of a weapon to solve” political issues. She did not name names, but that is a reference to the plan pushed by the US, the EU and Japan to try to “weaponize the WTO” and international trading rules to serve their ill-willed, selfish political interests in containing China’s economic rise.

   Moreover, today’s China is no longer the same country that was easily invaded by the so-called Eight-Nation Alliance over a century ago. It is now the world’s second-largest economy, the world’s largest trading nation, and the biggest contributor to global economic growth. China will not be intimidated and pushed around by a few so-called advanced countries.

   To put the WTO chief’s warning into more blunt terms, China will not sit idle and allow the US and its allies to use the WTO as a weapon against itself. Any such attempt should and will be met with forceful resistance.

   And that resistance won’t just come from China. The US and its allies might being targeting China directly, but whatever reform plans they push forward at the WTO will also hit other developing countries, which have similar economic policies and development plans as China. In fact, while the US and its allies may have put China on the spotlight, their true intention is to pull the WTO and global trading rules further into their favor and away from the developing economies.”

   https://www.globaltimes.cn/page/202104/1222390.shtml

   • @Bryce

     Great link, perfect timing

6. Off topic but very important.
   Tim Clark asked if the 777X has new embbeded software. He got the answer today.
   FlightGlobal reports a new CCS system which GE is producing and an 777-9 pitch up event in December 2020.

   • @ Leon
     This amazing issue received some attention in the comments section of Bjorn’s article below.
     It seems that BA isn’t taking certification responsibilities very seriously, and has no problem dragging its feet.

7. From the above post

   “But COMAC can’t possibly fulfill the need for China’s domestic aviation needs. Airbus and Boeing must be part of the solution.”

   AB is already present in China and ‘part of the solution’; so, to a more limited extent is BA, and is thus also and already ‘part of the solution’

   AB has a distinct advantage over BA – in that is not a US company by definition associated with (the infamous warcarts) and burdened with heavy handed hostile US policies towards China, which run the range from sanctions to war rage brinkmanship, conspiring with various neighbours, and beyond

   BA as other US corps, as the US economy and workforce and people, is taken hostage by these policies, whose only role is to play make believe to shore up a lack of domestic policies productive of useful projects employment or national purpose

   If Boeing has a smaller perhaps vanishing share of the China market than Airbus, it only has itself to blame (Max 787 777 -what did I miss- failures) but it may also blame the US Administration

   Yet not COMAC nor the China Administration

   • I see AB going to take over 80% market in large passenger aircraft in China.

     Boeing won’t raise 737 MAX production rate in the next few years and orders from the fastest growing market in the world dries up. Kiss goodbye to its next new jet.

     • Maybe Boeing can then get a subsidy from Airbus as they allow them to raise their prices in China!

       The rest gets into speculative aspects we are not allowed to delve into.,

8. At first glance US/EU coordination *itself* goes against the very notion of “free markets”; not that we have those anyway, except for lip service.

   As a commenter above said, those entities’ Elites benefit massively from China, which is why most all of the US’s productive capacity and much of EU’s was moved there.

   And now they cry over their own spilt milk.

   • Bill7:

     You sound like me lo this many years. Trade is one thing, giving it away by the 11,000 Unit container ship (aka Ever Given) is something else.

     But the real impact is on the country as a whole as far as economy and or prosperity. In the end its the rest of us that are really affected. CEO will get their bucks no matter how badly they perform.

     • I wonder how much of this China trade war is another red herring like Japanese cars in the 80s and 90s.

       Reagan imposed import quotas on Japanese cars, administrations in the 90s believed they can force open the Japanese market: Toyota worked with GM and sent Chevy Cavalier to its dealers. AFAIK, GM eventually was forced to take back the cars and dumped them in other markets because few Japanese were interested in those gas guzzlers (relatively speaking) and working against the market hadn’t bring many jobs back. Statistics show fewer and fewer auto assembly workers.

9. How the U.S. paralyse the WTO?

   https://www.bloomberg.com/opinion/articles/2019-12-12/wto-paralysis-means-law-of-jungle-unless-eu-can-create-solution

   https://www.jurist.org/commentary/2020/04/rathore-bajpai-wto-appellate-body-crisis/

   https://www.thehindubusinessline.com/opinion/columns/why-the-us-has-chosen-to-paralyse-wto/article30288794.ece

   -> “By blocking the functioning of the Appellate Body, the US has neutralised any possible challenge to its unilateral trade policies

   In the western world, wearing a black tie for funeral is a normal practice. But, for a Chinese trade envoy to openly declare that he is wearing the black tie at an important meeting in Centre William Rappard (that houses the World Trade Organization) on the banks of Geneva Lake , is unusual. The Chinese envoy said he “foresaw the result” that is coming at the WTO, thanks to their bête noire — the US. The envoy was referring to the result centring on a decision taken by the US to block the selection process for filling vacancies at the highest adjudicating body of the WTO. With this, Uncle Sam chose to take the oxygen out of the highest adjudicating arm for global trade body, which was regarded as the “crown jewel” of the WTO system.

   The Appellate Body has served the WTO members well for the past 25 years. Its binding rulings since 1995 were never easy. They dealt with complex trade issues and tensions arising from mennu ki faida (what benefits me most) trade policies/measures for maximising dollar-and-cent gains in the international trade.”

   • That is one view on the WTO.

     Another is like ISO9000, its just a European plot to make life difficult for Americans! (that is said with a degree of irony as having been involved in ISO9000 and 14,000 (not sure what happen to the previous 8999) it was truly a joke.

     My view is WTO is a patty cake joke that anyone can ignore and get away with it.

     What are they going to do? Take our lolli pops away?

10. I don’t know that China can really be spoken of politically monolithically (maybe they can), but my impression so far
    is that they’ll do what they see in in their *long-term strategic*
    interest. That, in the short and medium term, will substantially involve AB for sure; BA I’m less sure about.

    • Were super free in the west theese days

11. “But COMAC can’t possibly fulfill the need for China’s domestic aviation needs. Airbus and Boeing must be part of the solution.

    If the US and EU can now focus on how China ignores international protocols, flaunts WTO rules despite being a member state and simply steals intellectual property, Airbus and Boeing—and other EU and US businesses—will benefit”

    What if China decides to go it alone or buy MC-21? Keep shifting to rail. How much leverage is there really if China just says no?

    So far as far as how it goes, China threw an EU deal under the bus that was to their benefit.

    Frankly that is why its virtually impossible to discuss the problem as it is bound up in topics/areas that are off the table for discussion (and no I don’t know how you open it up and keep it civil or clean though I think it can be managed if it is kept to polite disagreement and non is just cut – that of course takes your valuable time sadly).

    • In my opinion The West attempts to still claim the high ground (“Rules-based Int’l Order™” and such), whilst having themselves hollowed out the ground they’re trying to stand on..
      The AB/BA coordination (some might say “collusion” or “ganging up”) does not bode especially well for congenial relations.

      Agree with TW that it’s very hard to separate the political and economic now, and it’s not likely to get easier.

      • Clearly the Western world has been involved in horrible ugly history , be it European colonialism or the US and its history and actions.

        I think its true that we continue to work towards something better though we fall short as well.

        Do two wrongs make a right?

12. The US will be patient with China with 737 reauthorization maybe until 2023. After that no engines and components will be supplied to any C919 and Airbus delivery to China. The blackmail by China will be stop at some point.

    • …at which point the rare earth metal tap — and many other taps — will be turned off.
      Who will fare worst?

      • Daveo:

        While it may go there, Russia has shifted Western content out of the MC-21 and will have a variant option that goes without it (including engines)

        China might well have Russia supply the engines if they are willing to take the short term hit and the 919 has not ramped up at all yet.

        Not a clue where China is going or even if they gave it any thought and just wound up where they are at and no one planned it or it will just disappear as an issue tomorrow.

    • Russia has an engine for the MC-21 and China is working on the following

      https://en.wikipedia.org/wiki/ACAE_CJ-1000A

      Both of course would take years to build cowling and interface to a C919 but it could be done (assumes Russia would sell to China, might not)

      But China will build an engine and while not up to US or UK capability for SFC and maint (reliability ?) it will work.

      How much you give up to get that? Big questions.

      • > But China will build an engine and while not up to US or UK capability for SFC and maint (reliability ?) it will work. <

        I see "it will work" (or not) looming large in all our futures.

13. Time to put down your rose-tinted glasses

    Dominic Gates:

    Boeing touts its T-7 jet fighter program as its future

    “Discovery of a previously undisclosed aerodynamic issue…raised fresh questions about Boeing’s assertions of the benefits of using a revolutionary design process for the T-7”

    via Aviation Week

    https://mobile.twitter.com/dominicgates/status/1409534990992347138