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#Bombardier #Brexit


[Thread] People saying #Bombardier is a warning about life after #Brexit: you are right. Let me explain. /1
What’s my qualification? In 1993-4 I was in the UK’s DTI covering the long-running GATT dispute between the EU & US over Airbus v Boeing. /2
The US eliminated the UK’s large passenger aircraft industry in the 50s. In the 70s a new EU consortium challenged US dominance: Airbus. /3
Selling airliners isn’t like selling widgets. Investments are so huge, timelines so long, normal market rules don’t apply. /4
It takes literally decades for a multi-billion investment in a new airliner to return a profit. No bank will lend on those terms. /5
So the aircraft industry would not exist without state support. Every aircraft maker relies on some form of subsidy. /6
As aircraft makers fight for dominance, state aids have become the key battleground. Slapping on a punitive tariff can ruin a competitor. /7
In the EU, we hit upon a solution called Launch Aid. Govt invests huge sums in developing new models, is repaid from royalties on sales. /8
The level of subsidy in Launch Aid can’t be determined because royalties continue to be paid throughout a product’s life. /9
So far, all EU Launch Aid for Airbus has ultimately returned a profit to state investors. ie zero subsidy. http://trade.ec.europa.eu/doclib/docs/2010/september/tradoc_146485.pdf /10
US calls foul & says it’s unfair, but it also uses state aids eg indirect subsidies. US aero manufacturers get billions in defence work. /11
US aero makers cross-subsidise development of civil airliners & engines by using tech developed under defence contracts. /12
This is how the Boeing 747 was developed, for example. http://www.economist.com/node/14214813 /13
Only huge economies like EU & US can afford large civil aircraft industries. But smaller countries can compete: eg Canada, Brazil. /14
But they can’t compete on a level playing field if they’re punished for legal state aids. They have to be able to defend themselves. /15
And this is where being an EU member is so important. The EU has the weight to defend itself. We can retaliate. /16
The UK acting alone can’t take on the US. This is why it lost its post-war lead in civil aviation. https://academic.oup.com/ahr/article/113/1/151/41355/Jeffrey-A-Engel-Cold-War-at-30-000-Feet-The-Anglo /17
International trade is dirty, that’s why we need rules. Free trade Brextremists like Minford don’t get it, or deliberately hide from it. /18
By advocating unilateral free trade, “liberal” Leavers are bringing chocolate spoons to a knife fight. UK industry will be decimated. /19
Acting collectively, fronted by the exceptional trade specialists in the European Commission’s DG Trade, the EU defends its corner. /20
It’s a big bad world out there. If your livelihood depends on exports, do you want May, Fox, and Johnson defending your interests? /21
PS - if you found this interesting/useful, you might also be interested in my thread on the EU & free trade here:
PPS - see this & other tweets on @ANMarshall's timeline for detail on US taxpayer, ahem, assistance to Boeing.
Some follow-up thoughts (warning: not very cheerful)

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