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Behind Trumps threat in the Airbus-billion dispute

Some involved in the trade of the world, refer to it as the "mother of all trade wars," as the mother of all trade wars: Since 2004, the world trade organization (WTO) deals with the question of whether the US and the EU have subsidized their aircraft manufacturers, Boeing and Airbus are each unlawful. The government of US President, Trump now increases the pressure and threatens the EU because of the Airbus subsidies, with the new duties. Washington has calculated the annual loss due to Airbus subsidies to eleven billion dollars, and threatens various EU documents with the charges from aircraft over cheese to brushes. This is the new escalation in the trade conflict? And what is at stake in the dispute?

where is the conflict?
Up to 2004 was an agreement, the state aid for large should the civil rules of the aircraft. It provided that aid can be granted for up to one-third of the development costs. The United States announced the agreement on pressure of the then-Boeing boss Harry Stonecipher, and brought the case before the WTO. The EU responded a few months later with a counter method in which billions of aid from the United States for Boeing. The WTO has come to the conclusion that both sides have failed in different ways against the rules.

How the manufacturers respond? What is the reaction of the EU?
The European Commission has described the measures announced by the U.S. government as a "greatly exaggerated" and announced counter-measures to prepare. Airbus described it as "completely unjustified". Boeing was expected to be behind the US government. President Trump to put on Wednesday. The EU had taken advantage of the United States in the trade for years, he tweeted. "It will stop soon!" His words suggest that the case could also get a stronger political Dimension.

the subsidies received by Airbus and Boeing Are comparable?
Both companies have benefited in different ways from state aid. Boeing has taken, especially tax rebates in the state of Washington, here are the most of its final Assembly lines are located. Airbus complained, especially billions in U.S. aid to the long-haul aircraft, the 777 and 787. Until the end of March the WTO had come to the conclusion that the assistance of the Federal government are not to bring their rules into line. Boeing and the United States, in turn, hold the repayable loan provided by the Airbus countries UK, Germany, France and Spain, is inadmissible.

what's next now?
In the summer, is to decide the so-called WTO-Panel, whether and to what extent Airbus unlawfully subsidized, later, a similar decision for the Boeing case is expected to follow. Trumps trade representative Robert Lighthizer announced that the Airbus decision to be seen before the U.S. government continues to put punitive tariffs in force. Economists calculate for the WTO, how much damage in the lawsuit the country is caused by the subsidies. The judge will then decide whether and to what extent the US is allowed to raise its tariffs to compensate the damage, explains Christian Häberli, a free-trade expert at the World Trade Institute in Bern, has long worked as a judge at the WTO.

Trump could put punitive tariffs in the WTO is over, in power, as he has done for steel - and aluminium imports from Europe. He should wait for the WTO, it would be a departure from his previous line. So far, he is trying to undermine the WTO by seeking bilateral Deals with other States.

Why such a method to make anything so complicated?
trade disputes before the WTO are resolved in arbitration. No other multilateral organization has such a sophisticated apparatus to disputes between members to be resolved. A separate panel is created for the "Dispute Settlement Body". He first searches for a bilateral solution. This fails, an independent Panel is used. Against whose decision either party may appeal, which the appellate court comes into play. The decision falls at the end of the Dispute Settlement Body.

complied with the rules, should be completed, a process at the latest after one and a half years. The reality looks different. According to a study by Bar-Ilan University in Israel, the procedure lasted for last 34 months, with an average of. One of the reasons the notorious Congestion of the instance; especially since the United States block the appointment of judge post in the court of appeal currently.

What role case plays in the ongoing dispute between Trump and the EU?
so Far, not great, but he could become a sort of game of ball in the trade dispute. Trump loves Deals. Conceivable expert Häberli, according to the Trade, that the EU and the US agree that subsidies for Airbus and Boeing to maintain and at the same time the steel dispute and the tariff increases for the EU threatened-vehicles drop – and then with the preparations for a bilateral free trade agreement with the inclusion of the agriculture going. "In the case of such Mega-packets between two great powers, the risk for dirty Deals in violation of the WTO rules and to the detriment of third countries is growing," says Häberli. "The rules is a danger to multilateralism and for our prosperity, securing world trade."

The air transport industry has changed. Only Airbus and Boeing get subsidies?
no. 15 years ago, about the Chinese aviation industry has played no role, that is changing. The C919 is a plane the Size of an Airbus A320. The state-funded machine is likely to have on the world market for the time being, although little chance, but the industry uses it as an important learning experience for future projects, which could be Boeing and Airbus are dangerous. Also, the Russian aircraft industry is attempting a Renaissance of using the ambitious MC-21 programme, which is funded entirely by the state.

Attempts in the U.S. to raise government for the first Time punitive tariffs on aircraft?
no. Two years ago, the US tried to impose high import duties on aircraft of the Bombardier C-Series, with the note, the program have received billions in government aid in Canada. An American court stated, the charges for unlawful.

However, Airbus has decided, after the Acquisition of the C-Series program, to build a second final Assembly line in the United States for the now-A220-mentioned plane, in order to circumvent Trade disputes in the future. Also a part of the machinery of the A320-series is built in the U.S. state of Alabama, however, only four per month.

What is the role of the American market for Airbus plays at all?
A significant. American airlines have ordered since the creation of Airbus 2548 planes, the European manufacturer, in 1574, of which have been delivered. Overall, the order backlog of Airbus is 7357 machines.

there Are approaches to a solution to the dispute between Airbus and Boeing settle?
The American side has so far blocked Attempts to close a new agreement on the state support in the aircraft industry. This would have to worldwide apply and also the new competitors include, says the outgoing Airbus chief Tom Enders. (Editorial Tamedia)

Created: 09.04.2019, 21:37 PM

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