US and Europe commit to preventing transfer of aerospace technology to ‘non-market’ economies | News
The US government and the European Union will work together to prevent aerospace technology from falling into the hands of “government-funded competitors” and so-called “non-market economies”.
Governments agreed to encourage cross-border investments in aerospace through a Sept.
“The European Union and the United States share a common interest in maintaining their large civil aircraft sectors … in the face of new government-funded competitors from non-market actors,” the US-EU framework document reads. “In order to cope with the challenges of the non-market economy more effectively, the parties will explore concrete ways of intensifying their cooperation in these areas.”
The document makes no mention of specific countries, although China is one of the nations defined as a “non-market economy” by the US Department of Commerce. The US Trade Representative’s office did not respond to questions.
China has developed a modern domestic civil aerospace industry anchored by developer Comac. Concerns about China’s acquisition of Western space expertise have been around for years. In 2018, the US government brought charges against Chinese nationals accused of stealing aerospace information.
The US-EU trade framework states that governments will work together to review in-depth investments in their aerospace sectors by companies “whose funding is supported by a non-market economy”.
“Such foreign investment can lead to the acquisition of critical technologies relevant to the sector by a non-market economy or a manufacturer based in the area of a non-market economy,” the document says.
The governments also agree to work together to review “foreign” investments – that is, in “joint ventures and production facilities in non-market economies”.
The agreement states that some countries “do not transparently report all domestic subsidies and fully support their large civil aircraft sector through subsidized equity investments, government loans and government-directed purchases.”
The US and the EU have agreed to “exchange information on such subsidies”.
The trade framework generally facilitates a US-EU trade dispute over alleged subsidies to aerospace manufacturers. The US has accused Europe of subsidizing Airbus development work and Europe has accused the US of helping Boeing.
With the deal, governments agreed to extend an existing suspension of retaliation against the trade by five years. The US and the EU agreed to a four-month suspension in March.
They now agree to promote “a level playing field” for the civil aircraft sector and “to address common challenges, to overcome longstanding differences and to avoid future legal disputes”.
The sides agree to support their aerospace sectors only on “market terms” and through an “open and transparent process”. Governments will also set up a body to deal with future disputes.
“Boeing welcomes the agreement between Airbus and the European Union that all future government support for the development or production of commercial aircraft must be based on market conditions,” says the US manufacturer. “The agreement reached today commits the EU to jump-start and leaves the necessary rules in place to ensure that the EU and the United States honor that commitment.”
Airbus “welcomes” the agreement and says it will “lay the groundwork for a level playing field”.
“It also avoids loose-lose tariffs, which only add to the many challenges our industry is facing,” she adds.