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.
TOKYO (Reuters) – Japan’s Mitsubishi Heavy Industries said on Thursday it will book a 496.4 billion yen ($4.5 billion) special loss after its aircraft unit delayed the delivery of its SpaceJet regional jet for at least another year until after March 2021.
The sixth delay announced by Mitsubishi Aircraft is a fresh blow to Japan’s commercial jet ambitions and could stretch Mitsubishi Heavy Industries’ finances.
The company cited the special loss as one reason for wiping out a forecast for operating profit of 220 billion yen in the business year ending March 31.
The new postponement also means an aircraft that Mitsubishi Heavy had planned to bring to market in 2013, will have to compete against a new generation of regional jets built by Brazil’s Embraer SA <ERJ>.
Japan’s biggest airline by revenue, ANA Holdings Inc., is now to take the first delivery of the jet sometime after March 2021.
Mitsubishi Heavy, which builds products ranging from nuclear reactors and ships to rockets and industrial machinery, has traditionally relied on stronger units to support weaker businesses.
“We use cashflow and borrowing to finance our projects and going forward the SpaceJet development will require further funds,” a spokesman for Mitsubishi Heavy said. The company, he added, had no plan at the moment to raise capital for aircraft development.
Government funding would not be an option for Japan’s biggest heavy machinery maker even though the SpaceJet is backed by the government because doing so would contravene World Trade Organization (WTO) rules banning taxpayer subsidies.
A spokeswoman for Mitsubishi Aircraft declined to say how much development of the SpaceJet has cost so far.
The company on Thursday said it had appointed Takaoki Niwa, the head of its U.S. operations, as its new president, replacing Hisakazu Mizutani, who will become chairman.
(Reporting by Tim Kelly; Editing by Kim Coghill and Christopher Cushing)
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
Record U.S. tariff award over Airbus aid could fuel trade tensions Logo of Airbus is pictured at the aircraft builder’s headquarters of Airbus in Colomiers near Toulouse
BRUSSELS/PARIS (Reuters) – Transatlantic trade ties face renewed disruption this week when global arbiters are expected to grant the United States a record award allowing it to hit European imports with billions of dollars of tariffs in a long-running aircraft subsidy dispute.
The World Trade Organization (WTO) has found that both European planemaker Airbus <EADSY> and its U.S. rival Boeing <BA> received billions of dollars of illegal subsidies in a pair of cases that have run for 15 years.
Both sides have threatened tariffs after the Geneva body found neither adhered fully to its findings. However, the United States has a head start, with the European Union having to wait until early in 2020 to hear what level of retaliation it can exact over Boeing.
The WTO is expected this week to reveal the amount of EU goods the United States can target. People familiar with the case say the three-person tribunal is expected to award it around $7.5 billion, a record for the 24-year-old watchdog.
Such retaliation rights are rarely granted by the WTO – most parties reach settlements – and in many cases complainants do not exercise their rights. The United States though has indicated it will target EU goods to the fullest extent.
It has already published a $25 billion list from which it will pick items to target from aircraft and aerospace parts to wine, cheese and luxury goods.
The WTO award in the world’s largest corporate trade dispute could fuel already strained trade tensions, diplomats say.
EU manufacturers are already facing U.S. tariffs on steel and aluminum and a threat from U.S. President Donald Trump to penalize EU cars and car parts. The EU has in turn retaliated.
Trade talks between the two, designed to ease tensions and ward off the threat of a tit-for-tat tariff war, have not gone well. The two sides have made some progress on regulatory cooperation, but a proposed deal to reduce duties is stuck, with Washington saying agriculture should be included and Brussels insisting it cannot.
The Trump administration has concluded that tariffs were effective in bringing China to the negotiating table over trade, and in convincing Japan to open its agricultural market to U.S. products. Washington is unlikely to skip the opportunity to implement tariffs in the case over aircraft subsidies, according to current and former U.S. officials.
Airbus has said this would lead to a ‘lose-lose’ trade war.
Some U.S. airlines have urged the administration not to go ahead with the tariffs, saying they could lead to layoffs.
NO SETTLEMENT IN SIGHT
The parties could still theoretically resolve the issue and stave off sanctions, but both sides accuse the other of failing to respond to invitations to reach a negotiated settlement.
U.S. officials say the decision about next steps will be up to U.S. President Trump.
The EU cannot retaliate immediately to any tariffs as it did following the U.S. imposition of metal tariffs in 2018.
It can either wait until a pronouncement in the parallel Boeing case or possibly revive an existing right to hit $4 billion of U.S. imports in a WTO dispute over U.S. tax breaks for exports, even though the two sides settled in 2006. Such a move would likely be strongly contested by Washington.
EU trade chief Cecilia Malmstrom has urged Washington to hold off sanctions and seek an overall deal on aircraft support, but Washington has shown no sign it wants to talk.
A U.S. government official said Washington has been willing since the very beginning to negotiate a solution, but that the EU gave more support to Airbus rather than fixing the problem.
EU-U.S. trade relations are likely to be a major focus in Brussels during a parliamentary hearing of the next trade commissioner, Irishman Phil Hogan, on Monday, and of national trade ministers meeting on Tuesday.
(Additional reporting by Andrea Shalal in Washington, reporting by Philip Blenkinsop; Editing by Elaine Hardcastle)
Record U.S. tariff award over Airbus aid could fuel trade tensions FILE PHOTO: Boeing Co’s logo is seen above the front doors of its largest jetliner factory in Everett
GENEVA/PARIS, May 15 (Reuters) – The World Trade Organization ruled on Tuesday the European Union had ignored requests to halt all subsidies to planemaker Airbus, prompting the United States to threaten sanctions against European products unless the EU stops “harming U.S. interests”.
The WTO said the EU had failed to remove support in the form of preferential government loans for the world’s largest airliner, the A380, and Europe’s newest long-haul plane, the A350, causing losses for Boeing and U.S. aerospace workers.
However, the Geneva watchdog dismissed U.S. claims that loans for Airbus’s most popular models, the A320 and A330, were costing Boeing significant sales and in so doing narrowed the scope of one of the world’s longest and costliest trade spats.
Airbus shares fell shortly after the WTO issued its findings and were poised to close down around 0.86 percent.
The report comes at a time of mounting trade tensions over U.S. aluminium and steel tariffs and the impact on European firms of Washington’s decision to exit the Iran nuclear pact.
U.S. Trade Representative Robert Lighthizer said in a statement the United States would slap countermeasures on European goods unless the EU fell into line.
Boeing predicted such tariffs could reach billions of dollars a year starting as early as 2019.
“This is expected to be the largest-ever WTO authorisation of retaliatory tariffs,” it said in a statement.
The EU’s Executive Commission said most of the aid faulted in earlier rounds of the long-running case had expired in 2011 and that it would swiftly comply on the remaining measures.
Tuesday’s finding wraps up a case against the EU dating back to 2004 and means the U.S. can now seek WTO backing to impose sanctions on an as yet unspecified list of European goods.
At the same time, the WTO is close to finalising a similarly drawn-out case against subsidies for Boeing, and Airbus says this could in turn spark EU sanctions against the United States.
