Airbus/Boeing WTO disputes (debate) 
President
The next item is the debate on the oral question to the Commission on the Airbus/Boeing WTO disputes by Helmuth Markov, on behalf of the Committee on International Trade - B6-0155/2008).
Helmuth Markov
author. - (DE) Madam President, Commissioner, ladies and gentlemen, the trade dispute between the European Union and the United States about large aircraft is no ordinary controversy like others that are taken to the WTO for resolution. This dispute has led to by far the largest and most complicated proceedings that have ever been instituted. It involves an enormous conflict of interest.
The United States has criticised the way in which the EU and the Member States involved in the EADS consortium have subsidised the introduction of new large aircraft over the last 20 years. For its part, the EU has accused the United States of granting hidden subsidies to Boeing as part of defence and aerospace projects in which it is involved. We do not yet know which way the WTO Dispute Settlement Body will decide. I assume that the decision will be that both parties have violated applicable WTO rules. Whatever the outcome of the case, it is still possible to make some recommendations.
Firstly, perhaps it is time both Boeing and Airbus relied much more on their own resources instead of being able to fall back on comprehensive state subsidies, then keeping the support and profit for themselves but avoiding risk by means of the company structure. Better functioning and greater transparency in the aviation sector would certainly benefit all aspects of the industry and also customers.
This does not mean that large aircraft manufacturers should no longer receive any financial support at all. I should simply like to emphasise that a balanced, appropriate system is needed that does not favour the interests of large companies but also takes into account important issues such as, for example, the creation of jobs and the protection of the environment, together with the improvement of passenger safety.
Secondly, in this regard it is significant that, in 2007, thousands of Airbus employees lost their jobs as a result of a restructuring that, in my opinion, was not necessary - after years of huge profits for this European consortium. This is not an appropriate way for management to deal with crises, especially as it was not the employees who were at fault but the managers, who had failed dismally.
Third, the existence of the WTO Dispute Settlement Body is a considerable step forward in the international trade regime, because it delivers reliable directions in the event that differences of opinion arise from different interpretations of the Uruguay Round agreements. We shall also be given its decision, but is that enough of a solution?
Fourth, it is regrettable that the 1992 EU-US Agreement on Large Civil Aircraft was not sufficient to achieve a negotiated solution instead of a court ruling.
Fifth, the aviation industry is currently being confronted with new challenges. The economic crisis and the rise in the price of oil are having more drastic effects on the air transport system than we have ever experienced before. A solution must be found quickly, and perhaps it is time to start thinking about cooperation instead of confrontation.
Sixth, as far as matters of public procurement are concerned, my personal opinion is that it would be more appropriate not to include this important sector of the economy fully in the WTO system. In almost all national economies, public procurement is an important catalyst for economic development. Politicians must also have a certain degree of influence in some areas key to shaping the way society develops.
Seventh: it is time the United States and the EU came to an understanding that it must remain possible to take measures for political management of developments in the national economy, including the awarding of public contracts and financial support. In addition, however, there is a need for transparency mechanisms and democratic control to ensure that everyone keeps to the existing rules.
Eighth: the Boeing case shows us that a government should avoid becoming entrenched behind the argument of alleged national defence interests in order to support its own national industry, or rather the interests of a few strong lobby groups with which it is closely associated.
Ninth: this controversy represents more than just a dispute between the EU and the United States. This is yet another case in which those who portray themselves as the champions of free trade give in to protectionist national temptations out of self-interest. We should distance ourselves from both, because that kind of behaviour does not lead to better conditions for our citizens but only to discrimination and unfair competition based on dumping.
Dalia Grybauskaitė
Member of the Commission. - Madam President, I would like to reply and answer the oral question on behalf of Commissioner Mandelson, who was not able to attend today because he is in the process of deep bilateral negotiations on the Doha Round.
The US case against European support for Airbus and the European case against US subsidies to Boeing are currently at the WTO Panel stage and the European legal position has been defended. We are now expecting the interim reports in both cases in the fall or winter. The next steps will be determined by the outcome of the dispute and by the underlying interests which led to it.
On the question of how this affects the ability of the industry to compete, we would like to say that we see no reason why the pending EU and US litigation in the WTO over support to Airbus and Boeing should affect the ability of European industry to compete fairly and in public procurement competitions with the United States.
Government procurement is about providing the best equipment, at the best value for the taxpayers, in the tanker procurement. The US Air Force has determined that the plane offered by Northrop Grumman and the EADS is superior to the Boeing and is the best tanker to meet its needs. The question of support for Airbus is immaterial in this assessment. The WTO litigation and the procurement have nothing to do with each other.
On the United States Government Accountability Office reactions, we would like to say that the US Air Force's selection of the Northrop Grumman KC-45 remains in force. There is a misperception that Northrop Grumman and the EADS North America have somehow lost or that the Boeing award has been reversed. Northrop Grumman and EADS North America remain under contract, albeit under a stop-work order, which places on hold the work under contract.
The US Government Accountability Office reviewed the Air Force's evaluation process, not the capabilities of the aircraft. There is no requirement or direction from the Accountability Office to recompete the previous contract award. The Air Force and Department of Defense have indicated that the KC-45 best meets the USAF's requirements. The Accountability Office has requested the Air Force to respond regarding the steps it will take within 60 days of the 18 June announcement.
In general, the government support for aerospace meets the need that certain developments in the large civil aircraft industry require very high levels of investment. It is the Commission's view that any government support for aerospace on both sides of the Atlantic has to be balanced, in order to ensure that the conditions of competition are not distorted. If this is the case, such support can contribute to innovation, increase safety and improve environmental performance and efficiencies in air transportation. It is in the interests of airlines and consumers, as well as governments, to maintain a high level of healthy competition in the aircraft sector.
On the prospects of the bilateral agreements of 1992, we would like to inform you that, despite several good-faith attempts to solve the dispute amicably over the past years, the differences between the two sides - the US and the EU - have proven too big. The US has denied there are any subsidies to Boeing while at the same time demanding that the EU put an end to European support to Airbus. On this basis it has not been possible to establish a fair and balanced basis for a negotiated settlement yet.
On 18 October 2007 Boeing publicly rejected Airbus's offer to explore an amicable solution. We should also be aware that, with the current pre-electoral atmosphere in the US, it may not be easy at the present time to find a balanced settlement. We therefore do not expect that this dispute can be resolved in the near future, before the WTO has ruled on both the Airbus and Boeing cases.
I would like to take this opportunity to thank the honourable Member of the European Parliament for his interest in and support for this cause, as demonstrated in the oral question and resolution provided to us.
Georgios Papastamkos
Madam President, Euro-Atlantic economic relations are exceptionally important to both sides. Any commercial disputes should be settled by seeking transparent, balanced solutions.
In this case, the desired objective is to secure a fair hearing for both sides, and a balanced approach to state aid for the aircraft industry. This financial aid is particularly important for promoting research, innovation and environmental management, and for improving the safety and efficiency of air transport.
The unilateral withdrawal of the United States from the bilateral agreement of 1992 is cause for concern, since European state aid is fully in accordance with the letter and spirit of that agreement.
The European side is justified in considering the financial resources invested in Airbus to be limited in extent, returnable and without competitive impact, in contrast with the prohibited and actionable non-returnable US subsidies.
As you know, the Union has made substantial efforts to achieve a bona fide settlement of the matter on the basis of negotiation. However, it has not yet met with a response. The European Commission is therefore called upon to maintain a robust negotiating stance for a long-term settlement of the matter, under terms of legitimate, balanced competition.
The US demand for an end to subsidies to Airbus, as a condition for holding negotiations, falls outside an acceptable framework for settling the dispute.
Erika Mann
Madam President, Commissioner, ladies and gentlemen, there is only one reason why we wish to have a debate this evening and that is that the attacks from the American side, by both Boeing and many members of Congress, on the awarding of the contract to Northrop Grumman/EADS are very bitter and even go as far as to target individual Member States. That is the reason why we are holding a debate here and why there will also be a resolution, for which I am very thankful, because we in the committee have been trying for a long time to bring this resolution about.
The frustration is directed against the fact that Northrop Grumman/EADS presented a better offer, to which the US Air Force gave preference over a Boeing model in a public tender. That is the most natural thing in the world. We are dealing here with NATO partners and not with countries who do not work together regularly. We have the Transatlantic Partnership, which is reaffirmed at every summit meeting. In the three stated areas, Europe purchases four times as much from the Americans, and so, to that extent, we already have a very intensive mutual 'partnership'.
There is absolutely no reason for the Americans to be frustrated, and that is what we want to make clear here. We do not need to go into the details again - I am very grateful that the Commissioner and Mr Papastamkos have already done that. It is essentially a political protest that we want to voice today - and which, by the way, repeatedly influences the WTO discussion on the American side, because comments are constantly being made. The US Air Force cannot be permitted to award a contract to, among others, a European consortium, at the same time as a WTO case is being decided. This makes it plain that the two issues are interwoven politically, but the Commissioner is absolutely right when she points out that, in reality, they are not connected.
I should like personally to thank the Commission and the Member States for repeatedly setting great store by getting the facts right. I should also like to thank my fellow Members for the fact that we are finally having this discussion and can present the resolution. I hope this means that the Americans will give us a good hearing.
Mieczysław Edmund Janowski
on behalf of the UEN Group. - (PL) Madam President, for some years now the market for the manufacture of large aircraft has been virtually bipolar. Airbus and Boeing rule the roost. For the last two years, though, we have been witnessing an investigation by the World Trade Organisation into the EU-US dispute over subsidies to these two heavyweight concerns. What is at stake here is a lot of money, and also - perhaps more importantly - ambitions to be leader in the field of state-of-the-art technology.
The United States is accusing Airbus of enjoying the advantage of large subsidies and beneficial credits from EU Member State governments. Meanwhile, from the European side, we also hear serious reservations regarding the vast amount of state aid given to Boeing in the form of tax breaks provided by the states of Illinois, Kansas and Washington, as well as aid from the army and NASA within the framework of public procurement.
We fear a Pyrrhic victory in this dispute. Both companies benefit from state aid of a debatable legitimacy. Let us not forget, however, that they are the world's only manufacturers of large passenger aircraft. They compete with each other, but they must also cooperate if they are to make use of the best solutions in their designs and technologies. All this has to be to the benefit of passengers.
It seems to me that what is needed here is more partnership and amicable negotiations, as there is room for both Airbus and Boeing in the world market. According to my calculations, over 15 years the world will require some 36 000 modern, safe civil aircraft. Perhaps 1 500 of these will be of the large type. It is hard to say for sure who will come out on top, Boeing or Airbus, but let us also bear in mind that Russia is starting to feature in this market, and Russia too practises government subvention.
Jacky Hénin
Madam President, the WTO dispute between Airbus and Boeing is nothing more than a bad joke. The Americans are trying to oppose the superiority of Airbus by any means possible, even resorting to the courts. However, while Airbus has received repayable financing, Boeing is collapsing under the weight of funding from different countries, and particularly under the enormous weight of military research. This is why the Dreamliner is the most subsidised aeroplane in the world.
What is really behind the unfair competition in this case is the weak dollar. Unfortunately, the US is complicit in this matter with the European Central Bank. The real question, therefore, is whether or not Airbus will continue to design and manufacture its aircraft in the euro area. To say yes would mean the European Central Bank being at the beck and call of industry, rather than refinancing investment banks without any guarantee of repayment. To say yes would mean creating a sovereign European public fund, which would replace the private shareholders of EADS, who have shown their inability to develop a relevant industrial strategy, instead preferring to protect their dividends.
Replacing the A320 with an aircraft offering a 20% fuel saving will only be possible with the kind of investment that the shareholders are unwilling to make. Europe needs a strong EADS group that is 100% public-owned if it wants an industrial policy that is able to provide it with its own energy-efficient air transport.
Syed Kamall
Madam President, any fair-minded person who has followed the two cases at the WTO would really come to the conclusion that to use an English phrase 'it is a six of one and half a dozen of the other'. For example, Boeing receives US Federal and State Government support exceeding the 1992 EU-US agreement; Boeing receives subsidies from NASA and the Department of Defense programmes; Boeing benefits from non-competitive military contracts at inflated prices and Boeing benefits from the US foreign sales corporation tax breaks, infringing WTO law. Opposite to that, the US complains that Airbus receives launch aid relating to R&D; it receives grants for development and production sites; it receives loans on preferential terms; it receives debt forgiveness relating to large civil aircraft production and development financing; it receives R&D grants directly benefiting Airbus and it complains that it receives illegal export subsidies.
On a positive side, many EU airlines continue to order Boeing aircraft and the US Department of Defense did award the contract in the first place to the EADS Northrop Grumman tanker. Those are positive signs. While both sides have cause for complaint, I am afraid that what we find in this question is naked anti-Americanism and a petty, little European mentality.
Airbus is cast as the angelic saviour of European skies while Boeing is the evil American company seeking to unfairly dominate global aviation. I sincerely hope that my group, the EPP, does not see fit to support this resolution since it would really show my group at its very worst - anti-American, protectionist and anti-competitive. Maybe we are allowing ourselves to be overly influenced by the French presidency, but please let's not allow the initials EPP to stand for the European Protectionist Party.
Kader Arif
(FR) Madam President, Commissioner, ladies and gentlemen, the resolution that we are going to vote on makes a number of recommendations to the Commission, reminding it that, on behalf of the EU, it defends the interests of the Member States and of the European large civil aircraft industry.
In view of the fact that the US Congress has already supported Boeing on numerous occasions, and bearing in mind that the infringement of the tanker agreement undermines the position of the European aircraft manufacturer, the unflagging support of the European Union as a whole - the Member States, the Commission and Parliament - is more crucial than ever. This much we know. EADS has been widely criticised and doubts have been raised as regards both its seriousness and its reliability.
The Commission must reaffirm two things today: on the one hand, that Boeing's appeal, in the context of the tanker procurement process, must in no way affect the quality of the proposal for the EADS/Northrop Grumman partnership, because only the selection process has been challenged by Boeing. A reversal of the US Air Force's decision would be unacceptable. The Commission must be clear in making this point.
The Commission must also remember that the attacks on Airbus before the WTO are unjustified. Not only is the system of repayable financing beyond reproach because, by definition, it is repaid, but the position of the United States is all the more surprising, since US aid is incompatible with WTO rules and with the binding agreements between Europe and the United States.
To avoid a sterile confrontation that would undermine the industrial interests of the parties concerned and EU/US relations, which we have to improve, the only possible solution for the future is a negotiated one. This must be preceded by a preliminary phase in which both parties demonstrate their goodwill.
One final question: does the new situation influence the decision that might be made during settlement of this dispute?
Richard Seeber
(DE) Madam President, I should like first to apologise on behalf of my colleague, Mr Sturdy, who has been delayed and cannot be here for the plenary session.
I should like to say in advance that both the United States and Europe - at least most of the Member States - are NATO partners. This is a conflict between groups that are on friendly terms. I would also say in advance that the United States and the EU signed an agreement on large civil aircraft in 1992. It actually functioned very well until the United States departed from the terms of the agreement by calling upon the WTO Dispute Settlement Body in 2004.
We know that, to a certain extent, State aid is common practice, particularly in this market for large commercial and military aircraft. Nevertheless, it is important that very strict controls and conditions be imposed on this State aid. The European Union has so far held strictly to these, and EADS Airbus, too, has paid back most of the subsidies or even paid back more than it received from public funds. We have documented this in detail. In contrast, the United States has still not come up with such documentation and it is not exactly clear to what extent Boeing has complied with these obligations.
Overall, I should like to say that, whilst the European Union naturally advocates free trade, this resolution should not result in us calling for anti-American rhetoric. It is important that we seek fair treatment for both partners, and I assume that the WTO body will take its decision in this spirit.
Straight anti-Americanism would be too narrow an approach, but we must still call upon the United States to keep to the rules that we all agreed upon.
Glyn Ford
Madam President, I will be supporting this resolution and the majority of the amendments that have been tabled to it, including those on behalf of my colleague Erika Mann.
In my constituency thousands of jobs depend on Airbus directly, particularly in the Filton area of Bristol, and of course across the United Kingdom and in the European Union tens of thousands of jobs depend on the success of Airbus.
I would have criticised Mr Kamall to his face for his approach, which is widely Eurosceptical and anti-European, but as he buggered off within about two minutes of speaking I will not have the opportunity to direct my criticism to himself. I hope it will be reported by one of his colleagues, who will tell him that normally we try and stay to the end of the debates we participate in, rather than call in, speak and then rush off to do your press release.
In 1992 there was an agreement between Boeing and Airbus - or rather between the European Union and the United States - to mutually desist from complaining, even though it was to the advantage of Boeing, who get direct subsidies from the US Government through NASA and the Department of Defense, whereas Airbus merely gets launch loans which have to be repaid with interest. Already EUR 7 billion have been repaid.
In 2004 the United States broke that agreement by referring the whole matter to the WTO. The union Unite and the management in the United Kingdom are united in insisting that we put as much pressure as possible on the United States over this matter.
The criticism from Boeing and from Congress needs to be resisted - and resisted strongly. If we are to lose our competitivity with respect to Airbus, leaving Boeing alone in the world with a monopoly position, then we will see a loss of contracts and a loss of jobs. A negotiated settlement is clearly the best solution and the best way forward - maybe 1992 plus. But, in its absence, we have no alternative but to vigorously defend our position and the interests of Europe's economy, competitivity and jobs.
President
I have received one motion for a resolution in accordance with Rule 108(5) of the Rules of Procedure.
The debate is closed.
The vote will take place on Wednesday 9 July 2008.
Written statements (Rule 142)
Christine De Veyrac  
Following the debate that we had on this issue of the Boeing complaint against Airbus before the WTO, and in response to the US Senate resolution on the same subject, I am pleased to see that we are today defending a resolution that will ensure the European Parliament's support for Airbus.
Boeing's complaint against Airbus seems to have more to do with commercial interests than with actual compliance issues relating to competition rules.
It was only when Airbus won a series of aircraft orders that Boeing filed a complaint with the WTO. The US aircraft manufacturer is also in violation of the 1992 bilateral agreement, since it received subsidies that were prohibited under this agreement.
Yes, Airbus also received subsidies, but these consisted of repayable financing allowed under the rules. Not only was this financing fully repaid, but Airbus also paid back 40% on top of the amount lent to it by EU governments.
I support the resolution that we will be voting on tomorrow. The European Parliament must call for a fair and swift end to the dispute while making a public show of support for Airbus.
