On October 6, 2004, the United States requested to the Dispute Settlement of the World Trade Organization for consultation with the Governments of Germany, France, the United Kingdom, and Spain (the "member States"), and with the European Communities ("EC") concerning measures affecting trade in large civil aircraft.
According to the request for consultations from the United States, measures by the EC and the member States provide subsidies that are inconsistent with their obligations under the SCM Agreement and GATT 1994. The measures include: the provision of financing for design and development to Airbus companies ("launch aid"); the provision of grants and government-provided goods and services to develop, expand, and upgrade Airbus manufacturing sites for the development and production of the Airbus A380; the provision of loans on preferential terms; the assumption and forgiveness of debt resulting from launch and other large civil aircraft production and development financing; the provision of equity infusions and grants; the provision of research and development loans and grants in support of large civil aircraft development, directly for the benefit of Airbus, and any other measures involving a financial contribution to the Airbus companies. The subsidies in question include those relating to the entire family of Airbus products (A300 through the A380)
The United States further notes that certain launch aid provided for the A340 and A380 appear to be illegal export subsidies in contravention of certain provisions of Article 3 of the SCM Agreement. The United States is also concerned that the measures appear to be inconsistent with Article XVI: 1 of GATT 1994.
The United States is further concerned that the measures appear to be causing adverse effects to US in a manner contrary to the provisions of Articles 5 and 6 of the SCM Agreement. The United States is concerned that the measures have caused and continue to cause nullification or impairment of benefits to the United States under GATT 1994 within the meaning of Article XXIII: 1.
On June 30, 2010The WTO issued the report of the Panel that had examined a complaint by the United States. In that Panel Report, certain recommendations have been stated which are as following:
1. As per the article 3.8 of the DSU, it has been concluded that, to the extent that the European Communities, France, Germany, Spain and the United Kingdom have acted inconsistently with the SCM Agreement, they have nullified or impaired benefits accruing to the United States under that Agreement.
2. According to article 4.7 of the SCM Agreement, taking into account the nature of the prohibited subsidies that the Panel have found in this dispute, it recommends that the subsidizing Member granting each subsidy found to be prohibited, withdraw it without delay and specify that this be done within 90 days.
3. According to article 7.8 of the SCM Agreement, in light of the Panel's conclusions with respect to adverse effects it recommends that, upon adoption of this report, or of an Appellate Body report in this dispute determining that any subsidy has resulted in adverse effects to the interests of the United States, the Member granting each subsidy found to have resulted in such adverse effects "take appropriate steps to remove the adverse effects or ... withdraw the subsidy".
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Manish Sharma
LL.B. (Hons.), LL.M. (International Trade and Business Laws)
Faculty of Law,
ICFAI University, Dehradun,
Uttarakhand,
INDIA
E-mail: msharma28@gmail.com
Mobile No.: +91 9012372533
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