Tag: subsidies

Embraer Cheers Brazilian Government Decision to Review Aeronautic Sector Subsidies

February 18, 2021 / WIL BALDWIN

São Paulo, Brazil, February 18, 2021 – Embraer (NYSE: ERJ) welcomes the Brazilian Government’s decisions to withdraw its ongoing World Trade Organization (WTO) dispute with Canada regarding aeronautical subsidies and to launch negotiations on more effective disciplines to regulate government support in the Commercial Aviation segment.

At the WTO, Brazil challenged more than USD 3 billion in illegal subsidies that the Governments of Canada and Quebec provided to Bombardier for the launch, development and production of the C-Series program. These subsidies distorted the conditions of competition in the global market for commercial aircraft, causing serious prejudice to Embraer, in clear violation of WTO rules.

Although Brazil has a strong case, the WTO dispute became ineffective to address the Canadian subsidies and to remedy the distortions generated in the market. After Bombardier exited the Commercial Aviation segment and transferred the C-Series program (now called A220) to Airbus, which has a second assembly line in the United States, the trade dispute against Canada at the WTO is no longer the most effective means to achieve Brazil’s and Embraer’s goal of reestablishing a level playing field in this sector.

Embraer also supports Brazil’s initiative to launch negotiations for more effective disciplines on government support in the commercial aviation segment, as the best way to achieve this goal, as previously seen with the successful experience of the OECD’s Aircraft Sector Understanding (ASU), signed in 2007 to regulate export credits. Ultimately, Embraer believes that commercial aircraft manufacturers should compete against each other based on the merits of their product, not on the amount of funding they receive from their governments.

U.S. Leaves Tariffs on Airbus Aircraft Unchanged at 15%

August 12, 2020 / WIL BALDWIN

WASHINGTON (Reuters) – The U.S. government on Wednesday said it would maintain 15% tariffs on Airbus <AIR.PA> aircraft and 25% tariffs on other European goods, despite moves by the European Union to resolve a 16-year-old dispute over aircraft subsidies.

U.S. Trade Representative Robert Lighthizer (USTR) said the EU had not taken actions necessary to come into compliance with World Trade Organization decisions, and Washington would initiate a new process to try to reach a long-term solution.

USTR said it would modify its list of $7.5 billion of affected European products to remove certain goods from Greece and Britain and add an equivalent amount from Germany and France.

It ignored calls from EU officials and U.S. lawmakers to drop tariffs on EU food, wine and spirits, but did not add tariffs to vodka, gin and beer as it had threatened.

Airbus said it “profoundly regrets” the U.S. decision to keep tariffs in place on its aircraft.

Washington’s decision to refrain from increasing the tariff rates would help prevent a further escalation, an EU official said, calling for intensified efforts to resolve trade conflicts between the powerful economic blocs.

EU trade commissioner Phil Hogan would continue his active engagement with Lighthizer to reach a negotiated settlement, the official said, noting that the current economic slowdown underscored the urgency of ending the conflict.

Last month, Airbus said it would increase loan repayments to France and Spain in a “final” bid to reverse U.S. tariffs and jog the United States into settling the long-running fight over billions of dollars of aircraft subsidies.

The United States declared itself in full compliance with WTO findings in May after Washington state abolished aerospace industry tax breaks that largely benefited Boeing.

Trade groups are bracing for an escalation of the row in the autumn when the EU is expected to win WTO approval to hit back with its own tariffs over subsidies for Boeing <BA>.

Airbus said in a statement it “trusts that Europe will respond appropriately to defend its interests and the interests of all the European companies and sectors, including Airbus, targeted by these tariffs.”

Boeing urged the EU and Airbus to launch prompt and “meaningful negotiations with the U.S. to address the full scope of their noncompliance and finally bring this case to an end.”

USTR in October 2019 imposed 25% tariffs on an array of EU food, wine and spirits, including Italian cheese and single-malt Scotch whisky in retaliation for EU subsidies on large aircraft.

It initially imposed 10% tariffs on Airbus aircraft but hiked that to 15% in March.

(Reporting by Andrea Shalal, David Lawder, David Shepardson and Eric M. Johnson; Editing by Chris Reese, Richard Pullin and Tom Brown)

Airbus Offers Subsidy Concession to End U.S. Tariffs

July 26, 2020 / WIL BALDWIN

PARIS (Reuters) – Europe’s Airbus <AIR.PA> said on Friday it would increase loan repayments to France and Spain in a “final” bid to reverse U.S. tariffs and jog the United States into settling a 16-year-old dispute over billions of dollars of aircraft subsidies.

The European Union, France and Spain said the move to raise interest rates paid by Airbus on A350 aircraft development loans should settle the row at the World Trade Organization and urged Washington to withdraw tariffs on EU goods.

“In the absence of a settlement, the EU will be ready to fully avail itself of its own sanction rights,” EU Trade Commissioner Phil Hogan said.

The loans are part of a system targeted by the United States in the world’s largest corporate trade dispute, which has also aired condemnation of U.S. support for Boeing <BA>.

The United States last year won WTO authorization to impose tariffs on up to $7.5 billion of EU goods from wine to whisky.

Trade groups are bracing for an escalation of the row in the autumn when the EU is expected to win WTO approval to hit back with its own tariffs over subsidies for Boeing.

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https://finance.yahoo.com/news/airbus-offers-final-concession-jet-073157204.html

Spirit Airlines to Buy 100 Airbus A320neo Family Aircraft

December 23, 2019 / WIL BALDWIN

A logo of low cost carrier Spirit Airlines is pictured on an Airbus plane in Colomiers near Toulouse

(Reuters) – U.S. budget carrier Spirit Airlines Inc <SAVE> said on Monday it will buy 100 Airbus <EADSY> A320neo-family jets to be delivered through 2027, with options to purchase up to 50 additional aircraft.

The deal includes a mix of Airbus A319, A320, and A321 models, the company said.

The purchase agreement finalizes an October provisional deal for the aircraft, when Spirit picked European planes despite Washington imposing tariffs on them.

Depending on the number of each variant of the A320 single-aisle family chosen, the deal could be worth $11 billion to $12 billion at the most recent 2018 Airbus list prices, but industry sources say such deals typically involve discounts of at least 50%.

Washington has imposed 10% tariffs on some of the planes Airbus offers to U.S. carriers, as part of a long-running transatlantic trade dispute over aircraft subsidies.

Spirit currently operates an all-Airbus fleet of 140 jets.

Aircraft are typically ordered several years in advance, meaning any planes ordered now would only be covered by tariffs in the event of an extended transatlantic tariff war. Airbus jets assembled at a plant in Alabama are not currently included.

(Reporting by Rachit Vats in Bengaluru and Allison Lampert in Montreal; Editing by Shounak Dasgupta and Lisa Shumaker)

U.S. Says May Raise Tariffs on EU Products in Aircraft Subsidy Row

December 2, 2019 / WIL BALDWIN

WASHINGTON, Dec 2 (Reuters) – The U.S. government on Monday said it would review the possibility of raising tariffs on European Union products and applying tariffs to more products, given what it called lack of progress in resolving a dispute over aircraft subsidies.

The U.S. Trade Representative’s office said Monday’s decision by the World Trade Organization (WTO) affirmed the U.S. position that European Union launch aid to planemaker Airbus continued to harm the U.S. aerospace industry.

“In light of today’s report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs,” USTR said in a statement. It said it would release more information about the process later this week.

(Reporting by Andrea Shalal; Editing by Lisa Shumaker)

EU hasn’t ended illegal subsidies to Airbus, WTO panel says

Germany to Hike Electric Car Subsidies as VW Launches Car

November 4, 2019 / WIL BALDWIN

– Germany to expand electric car infrastructure

– German Chancellor asks industry to help with charging

– Volkswagen unveils start of production of its ID.3 electric car

BERLIN, Nov 4 (Reuters) – Germany plans to increase by half the grants available to buyers of electric cars over the five years from 2020, according to a government document seen by Reuters, the latest in a series of measures to speed the adoption of low-emissions vehicles.

According to the document, due to be discussed at a meeting of high-level government and car-company officials on Monday evening, grants for plug-in hybrids will rise from 3,000 to 4,500 euros. For vehicles priced over 40,000 euros the grants will rise to 5,000 euros.

The government wants to have 10 million electric vehicles on the roads by 2030, part of an offensive designed to turn round the German car industry’s perceived laggard status in e-mobility compared to its rivals in the United States and China.

The paper came to light on the day that Chancellor Angela Merkel gave a speech at Volkswagen’s Zwickau factory, where the German watched the carmaker start mass production of its ID.3 electric car, a vehicle costing around 30,000 euros.

“We can now say that Zwickau is a pillar of today’s German auto industry and of its future,” Merkel said at the launch. “Our task as politicians is to create a framework where new technological innovations can take hold.”

Merkel said the government would invest 3.5 billion euros ($3.90 billion) to 2035 in building charging stations for electric cars.

On Sunday she had said Germany needed 1 million charging stations by 2030 and urged carmakers and utility companies to play their part in helping to build the necessary infrastructure.

As part of an auto industry push, BMW plans to build 4,000 electric car charging stations, a source familiar with the discussions said on Monday.

In September, at the Frankfurt auto show, Europe’s carmakers warned governments that the EU rules could be disastrous for profits and jobs because mainstream customers were not buying electric vehicles.

German carmakers are accelerating plans to launch electric vehicles, under pressure from a European Union mandate to deliver a 37.5% cut in carbon dioxide emissions between 2021 and 2030, on top of a 40% cut in emissions between 2007 and 2021.

($1 = 0.8970 euros)

(Reporting by Markus Wacket in Berlin and Joern Poltz in Munich, writing by Thomas Escritt and Edward Taylor; editing by Paul Carrel)

Trump Meets With Airline CEO’s Over Qatar Subsidies

July 20, 2019 / WIL BALDWIN

WASHINGTON (Reuters) – U.S. President Donald Trump met on Thursday with the chief executives of major American airlines to discuss their accusations that subsidies by Qatar and United Arab Emirates are costing jobs in the United States.

The meeting between Trump and the CEOs of American Airlines, United Airlines, JetBlue Airways Corp, FedEx Corp, and Atlas Air included Vice President Mike Pence, the White House said.

The meeting also included the CEO of state-owned Qatar Airways, Akbar al-Baker, who was also at the White House last week to tout its decision in June to buy five new Boeing 777 freighters.

The White House did not immediately provide details of the meeting.

Since 2015 the largest U.S. carriers – Delta Air Lines, American and United Airlines – have argued their Gulf rivals are being unfairly subsidized by their governments, distorting competition and costing U.S. jobs – something the Gulf carriers deny.

The Partnership for Open & Fair Skies, a group representing Delta, American, United and aviation unions, said it had a “productive meeting” with Trump.

“The president shares our concerns and instructed us to keep working with the U.S. Department of Transportation, which we plan to do,” Scott Reed, the group’s managing partner, said in a statement.

The CEOs of JetBlue, FedEx and Atlas Air have warned that restricting the rights of Qatar Airways could lead to retaliation against U.S. carriers and added, in an April letter, it could lead to “a rapid unravelling of hard-fought aviation rights around the world when other governments take similar action to shield their state-owned airlines from competition.”

Last week, the CEOs of Delta, United and American wrote a joint USA Today op-ed urging the White House to act “decisively to hold Qatar and the UAE accountable.” They suggested that failing to respond would “signal to other countries that they too are free to exploit American workers.”

In April, Secretary of State Mike Pompeo said the administration was scrutinizing Qatar Airways’ acquisition of a 49% stake in Air Italy, which has been flying to U.S. destinations since 2018 in a move seen by U.S. lawmakers as flouting a deal not to add new flights to the domestic market.

Both Republicans and Democrats in Congress have said they were concerned that the deal with the Italian carrier contravened an understanding Qatar Airways reached with the United States in early 2018.

Qatar Airways acquired the 49% of Italian airline Meridiana in 2017, rebranded it Air Italy and transformed it into a carrier with five announced nonstop U.S. destinations from Milan.

The Qatari government said in 2018 it was unaware of any plans to launch flights from Qatar to U.S. destinations via stops in Europe known as “Fifth Freedom” flights.

(Reporting by Steve Holland and David Shepardson; Additional reporting by Jeff Mason; editing by Marguerita Choy, Tom Brown and Richard Chang)

Airbus Seeks Resolution To German Arms Export Row

May 21, 2019 / WIL BALDWIN

PARIS (Reuters) – Airbus is in discussions to try to find solutions to a row with the German government over a ban on arms exports to Saudi Arabia that threatens a border security contract, Chief Executive Guillaume Faury said on Tuesday.

The planemaker has warned of legal action against Germany after taking financial charges over the long-delayed border contract between Airbus’s defence unit and the Gulf kingdom.

“We are not yet there,” Faury told reporters when asked about possible legal action.

“We are very much impacted by the situation which is now being extended and trying to find different solutions,” Faury said, adding that Airbus had been forced into a corner by the unexpected national export embargo.

Germany acted alone with a ban in October after the murder of Saudi journalist Jamal Khashoggi in Istanbul, irritating other European arms exporters including France, where Airbus is based. The measure was extended in March.

The row comes as France and Germany study a new combat jet, in which Airbus is the industrial partner on the German side.

Faury said Airbus remained committed to the manned and unmanned system, adding it could be eventually opened to other nations including Britain “as a more united Europe”.

The arms row also coincides with a separate spat with Germany over 600 million euros of development loans for the A380 passenger jet, which Airbus has said it will stop producing.

The Berlin government said in March it was in talks with Airbus about the outstanding loans, which also feature in a separate trade dispute about mutual claims of illegal aircraft subsidies between the European Union and the United States.

Faury said Airbus “would not be where it is” without its project to build the world’s largest airliner.

Asked at a media event whether the separate disputes with Germany could be settled in a single negotiation, Faury said “We just want to execute the contracts as they are and I will not say more.”

Airbus continues to have good relations with Germany and other founder Airbus nations, Faury said at the event, taking place as Airbus celebrates its 50th anniversary as a planemaker.

(Reporting by Tim Hepher; Editing by Susan Thomas)

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