GD/213

German Exchange Rate Scheme for Deutsche Airbus

View all disputes

Other titles

EEC Airbus (Source: GATT Analytical Index)

Parties

Complainant
United States
Respondent
EEC
EEC-12
Third Parties
Brazil

Products at Issue

Products at issue
Civil aircraft
Type of product
Non-agricultural
Product sub-type
Vehicles, aircraft, vessels

Related disputes

GATT
WTO

Key legal aspects

Legal basis
  • SCM Article 12:1
Claims raised
  • SCM Article 9
Defences raised
  • SCM Article 8:3
  • TCA Article 6:1

Adjudicators

Type Panel
Chairperson Julio Lacarte-Muró (Uruguay)
Other members Peter Hussin (Australia), Pekka Huhtaniemi (Finland)

Report

Type Panel
Legal basis at issue
  • SCM Article 12:1
Claims at issue
  • SCM Article 9
Defences at issue
  • SCM Article 8:3
  • TCA Article 6:1
No of Pages (total / legal reasoning) 30
  • -
  • Inconsistency found
  • Not in report conclusions
  • Not in report conclusions

Timeline

Request for consultations
Request for conciliation
Conciliation meeting
Request for establishment
Establishment
Composition
Report

Outcome

Outcome of the proceedings
Report issued
Additional Info SCM/142 (04/03/1992) Committee on Subsidies and Countervailing Measures - German Exchange Rate Scheme for Deutsche Airbus - Report by the Panel: The Panel noted that the issue before it was whether the German exchange rate guarantee scheme was inconsistent with the prohibition of exchange risk programmes in Article 9 of the Subsidies Agreement as set out in Item (j) of the Illustrative List of Export Subsidies. Item (j) covered "the provision by governments ... of exchange risk programmes, at premium rates, which are manifestly inadequate to cover the long-term operating costs and losses of the programmes".

The Panel noted three features of the scheme: (i) no interest accrued in favour of the German Government on money paid by it to Deutsche Airbus, between the time of disbursement and the date at which an eventual repayment became due; (ii) the scheme did not provide for any recovery of administrative costs which in all cases were borne by the German Government; and (iii) any repayment to the German Government of the funds disbursed was contingent on a rise in the dollar/deutschemark exchange rate above a certain level. The Panel therefore concluded that there were long-term operating costs and losses of the German exchange rate guarantee scheme which manifestly were not covered by its repayment mechanism.

A further question to be examined was whether the scheme was granted on exports. In the absence of any clear indication in the Subsidies Agreement, the Panel could not assume that, where a customs union but not its constituent member states had signed the Agreement, national borders within the customs union were not relevant for the purpose of determining the existence of an export subsidy. Thus, the Panel found that all inputs delivered by Deutsche Airbus to Airbus Industrie were, at the time when the scheme was established as well as at present, exported from Germany to France. The scheme therefore applied to payments for transfers of inputs, which transfers were found to be exports only. Therefore, the scheme was granted on exports and was contingent on transfers which were found to be exports only. The Panel concluded that the German exchange rate guarantee scheme resulted in a subsidy granted on exports and that the scheme was prohibited in terms of Article 9, as an export subsidy covered by Item (j) of the Illustrative List.

Adoption of Panel Report (SCM/142) was requested, but not adopted, in SCM Committee Meetings of 28/04/1992 (document SCM/M/59 of 08/07/1992) and 21/07/1992 (document SCM/M/61 of 17/09/1992). C/182 (23/10/1992) Status of Work in Panels and Implementation of Panel Reports - Report by the Director-General to the Council (04/11/1992) Dispute reported at the panel stage.