Boeing has received approximately $90 billion in subsidies since 2000, from local, state and federal sources in the form of taxes, grants, and loan guarantees. [0]
[0] subsidytracker.goodjobsfirst.org/parent/boeing
[0] subsidytracker.goodjobsfirst.org/parent/boeing
> “The WTO has now rejected every allegation of unlawful subsidies to Boeing with the single exception of one measure—a Washington State business and occupancy (B&O) tax rate. Boeing has pledged from the beginning of this case to comply with the WTO’s rulings, and the B&O tax rate will be no exception. Boeing will support the United States and Washington State as they take steps necessary to fully comply with today’s ruling.
> In 2006, after attempts to negotiate a bilateral agreement, the U.S. Government (USG) filed a case with the World Trade Organization claiming Airbus had received $22 billion in illegal subsidies. U.S. officials estimated the economic benefit of those subsidies (in 2006 dollars) at more than $200 billion.
http://www.boeing.com/company/key-orgs/government-operations...
The general interpretation of the issue states that allowable subsidies are, "those which are applied to research and pre-competitive development activities, and others which assist disadvantaged regions" [0]
Tens of billions of dollars in tax breaks and loan guarantees doesn't really seem like it could all fit under that definition, and indeed it looks likely that the WTO will rule that way as well.
The main problem with this case isn't just that AirBus received illegal subsidies. That can be true at the same time that Boeing also received them, making this a somewhat ridiculous thing to argue about, for Boeing to claim to be the aggrieved party here when any grievance or disadvantage has been offset by their own subsidies.
The end result will be additional tariffs imposed in both directions, making consumers pay more, at a time that tariffs and trade wars exacerbate a minor economic slowdown, increasing the chance that it will turn into something more.
[0] https://www.thefreelibrary.com/Trade+Liberalization+Under+th...
Illegal as defined by the WTO.
This is misleading, because the WTO has already ruled on this Airbus stuff.
And the WTO thinks that the stuff that the EU did is illegal. Therefore it is illegal, and you shouldn't imply that it is not illegal.
So yes, the stuff that the EU did is illegal. Full stop. It is illegal according to the WTO, and therefore it is irelevant to say that Boeing is Biased, because the authorities agree with Boeing and the authorities have ruled that it was illegal.
Consumers will pay more, roughly in proportion to their consumption of a product that is at once a luxury good and environmentally unfriendly. The money mostly won't be destroyed - it will go to governments who can increase social spending or cut other taxes instead.
Sounds like a very progressive change to the tax regime. Who's complaining about this again?
Which might lead to similar option for tariffs in the other direction. Our, possibly all aid to Boeing was legal. But this think that would have been noted - these cases have been dragging around for a while. (2014 or something)
EDIT: I'm not saying the 737 Max issues are Airbus's fault. I'm saying that the existence of competition is why we ended up with the quick&dirty stopgap solution instead of a better solution further in the future.
See: https://mattstoller.substack.com/p/the-coming-boeing-bailout
- Airbus started later, so they started with newer technology, on top of it the fly-by-wire / all electronics commands. Boeing is weighted by its legacy. Dozens of thousands of pilots have been trained on mechanical systems, it’s hard to migrate them. Airbus benefited from watching Boeing’s experience and starting at the age of electronics.
- Boeing bought McDonnell Douglas in the 2000’s which has extremely bad engineering records (Half of episodes of Air Crash Investigation are about the DC-9/DC-10/MD-11, involving FAA leniency on the flying doors, FAA leniency on extending the length without doing the proper engineering, and I don’t know if one sees a ressemblance with current events). So the MD acquisition may have entirely modified Boeing’s middle management approach to « handling FAA ». By negotiating FAA’s leniency, or by having people exchange jobs and offices...
- Since the MD purchase 20 years ago, Boeing has chosen to collude with FAA to become the certifier instead of the FAA, in order to win competition against Airbus. Unfortunately it has eroded customer trust when we noticed the FAA isn’t doing its job at all, for example about the metal frames where workers had to drill extra holes next to misplaced ones, or bend the frames, compromising structural integrity entirely [1], the batteries or the MCAS.
- Now with 200 aircrafts 737 Max grounded since 6 months, and perhaps in need of being thrown away entirely, although Boeing isn’t paying directly, it’s still a very good solid stable reason on the long term for customers to choose... not them.
So Boeing had an incumbent, and played the card of « Let’s bypass the safety process and see whether we recover our advance ». It can’t bankrupt because it’s financially as engineered as a subprime, and a governmental strategic asset, but its future isn’t bright.
It's a really fubar situation.
I thought Airbus started with the Concorde, the project of UE willing to do something industrial and inspiring together to increase our pride, interdependence and more interestingly our engineering skills. The Concord itself failed as a market but the skills/organizations we developed resulted in Airbus/EADS and their civil planes, in which the acquisition of smaller companies was a mere tool participating to a grand scheme decided by Europe.
Are you suggesting that this storytelling is rather reversed, and that Airbus was the result of a natural, organic merge of several companies?
As far as I can tell Airbus started as a consortium of European aerospace manufacturers to allow them to compete with US manufacturers. Several of the cooperating companies that became Airbus such as VFW-Fokker and Aérospatiale were themselves the result of mergers.
The history of mergers at Airbus doesn't look much different from that of Boeing. Concorde was one of the first designs but Airbus was not created specifically to build it. It appears Airbus was instead created to build what the industry called an "airbus" which seems to mean "airliner".
> Are you suggesting that this storytelling is rather reversed, and that Airbus was the result of a natural, organic merge of several companies?
Yes, it appears that Airbus is the result of a natural, organic merge of several companies. Over many years and many layers.
[1]: https://en.wikipedia.org/wiki/History_of_Airbus#Origins