US and Europe commit to preventing transfer of aerospace technology to ‘non-market’ economies | News
The US government and European Union will collaborate to help prevent aerospace technology from falling into the hands of “state-financed competitors” and so-called “non-market economies”.
The governments agreed to more closely review cross-border aerospace investments as part of a broader “framework”, released on 15 June, that addresses the long-running civil aircraft trade dispute between the USA and Europe.
“The European Union and the United States share a common interest in sustaining their large civil aircraft sectors… in the face of new state-financed competitors from non-market actors,” says the US-EU framework document. “To more effectively address the challenge posed by non-market economies, the parties will explore concrete ways to intensify their cooperation in these areas.”
The document does not mention specific countries, though China is among the nations defined by the US Department of Commerce as having “non-market” economies. The Office of the US Trade Representative did not respond to questions.
China has been developing a modern homegrown civil aerospace industry anchored by developer Comac. Concern about China acquiring Western aerospace know-how has swirled for years. In 2018, the US government levied charges against Chinese nationals accused of stealing aerospace information.
The USA-EU trade framework says the governments will collaborate to screen inbound investment into their aerospace sectors by entities “whose financing is supported by a non-market economy”.
“Such inward investment can lead to the appropriation of critical technologies relevant to the sector by a non-market economy or a producer located in the territory of a non-market economy,” says the document.
Likewise, the governments agree to cooperate in reviewing “outward” investments – those into “joint ventures and production facilities in non-market economies”.
The agreement says some countries do not “report transparently all domestic subsidies and provide extensive support to their large civil aircraft sector through subsidised equity investment, state lending and state-directed purchases”.
The US and EU have agreed to “share information about such subsidies”.
The trade framework more broadly eases a US-EU trade dispute related to alleged subsidies provided to aerospace manufacturers. The USA has accused Europe of subsidising Airbus’s development work, and Europe has accused the USA of aiding Boeing.
With the deal, the governments agreed to extend for five years an existing suspension of retaliatory trade counter-measures. The USA and EU had, in March, approved a four-month suspension.
They now agree to “promote a level playing field” for the civil aircraft sector, and to “address shared challenges, overcome longstanding differences and avoid future litigation”.
The sides agree only to support their aerospace sectors on “market terms” and via an “open and transparent process”. The governments will also form a panel to address future disputes.
“Boeing welcomes the agreement by Airbus and the European Union that all future government support for the development or production of commercial aircraft must be provided on market terms,” the US manufacturer says. “The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment.”
Airbus “welcomes” the agreement, saying it will “provide the basis to create a level playing-field”.
“It will also avoid lose-lose tariffs that are only adding to the many challenges that our industry faces,” it adds.
Gloss