WRAP THESIS Shimada 2012.Pdf
Total Page:16
File Type:pdf, Size:1020Kb
University of Warwick institutional repository: http://go.warwick.ac.uk/wrap A Thesis Submitted for the Degree of PhD at the University of Warwick http://go.warwick.ac.uk/wrap/54056 This thesis is made available online and is protected by original copyright. Please scroll down to view the document itself. Please refer to the repository record for this item for information to help you to cite it. Our policy information is available from the repository home page. EU-US AIRPLANE SUBSIDY DISPUTES AIRBUS vs. BOEING By Stephen Shimada A thesis submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Politics University of Warwick, Department of Politics and International Studies June, 2012 TABLE OF CONTENTS TABLE OF CONTENTS .............................................................................. I ACKNOWLEDGEMENTS ........................................................................ VI DECLARATION ................................................................................... VIII ABSTRACT .............................................................................................IX ABBREVIATIONS ...................................................................................XI INTRODUCTION ..................................................................................... 1 LITERATURE REVIEW ............................................................................. 5 RESEARCH OBJECTIVES ......................................................................... 8 RESEARCH QUESTIONS ......................................................................... 9 RESEARCH METHODOLOGY AND HYPOTHESES .................................. 10 STRUCTURE OF THE THESIS ................................................................. 12 CHAPTER 1 ........................................................................................... 15 THEORETICAL FOUNDATIONS .............................................................. 15 INTRODUCTION .................................................................................. 15 THE THEORY ONE: STATE-BUSINESS RELATIONSHIPS .................... 16 THE THEORY TWO: “VARIETIES OF CAPITALISM” APPROACH TO THE THEORY OF STATE-BUSINESS RELATIONSHIPS ............................... 22 CORE COMPETENCIES ......................................................................... 24 LIBERAL MARKET EONOMIES (LME) AND COORDINATED MARKET .... 25 ECONOMIES (CME) ............................................................................. 25 AMERICAN STATE-BUSINESS RELATIONSHIP ...................................... 27 FRENCH STATE-BUSINESS RELATIONSHIP ........................................... 29 GERMAN STATE-BUSINESS RELATIONSHIP ......................................... 31 AMERICAN LIBERAL MARKET ECONOMY (LME) VS. GERMAN COORDINATED MARKET ECONOMY (CME) ......................................... 33 BRITISH STATE-BUSINESS RELATIONSHP ............................................ 34 CONCLUSION ...................................................................................... 38 CHAPTER 2 ........................................................................................... 41 i AIRBUS, BOEING, AND THE WTO ......................................................... 41 INTRODUCTION .................................................................................. 41 STATE-BUSINESS RELATIONSHIPS IN EUROPEAN AEROSPACE INDUSTRY ............................................................................................................ 42 THREE STATE- BUSINESS RELATIONSHIP MODELS ......................... 44 ACTOR CENTERED CONCEPT AND CORE COMPETENCIES .............. 46 GOVERNMENT SUBSIDY DISPUTES BETWEEN THE EU AND THE US ....................................................................................................... 47 STATE-BUSINESS RELATIONSHIPS .................................................. 48 THE AIRPLANE SUBSIDY CASE IN THE WTO ......................................... 58 AIRBUS ........................................................................................... 59 BOEING .......................................................................................... 60 THE WORLD TRADE ORGANIZATION (WTO)........................................ 65 CONCLUSION ...................................................................................... 68 CHAPTER 3 ........................................................................................... 71 MAKING/MARKETING LARGE COMMERCIAL AIRPLANES ..................... 71 INTRODUCTION .................................................................................. 71 MARKET CHARACTERISTICS ................................................................ 72 MAKING AIRFRAMES .......................................................................... 76 EFFECTS OF SCALE AND SCOPE ECONOMIES ....................................... 77 MARKETING LARGE COMMERCIAL AIRPLANES ................................... 78 AIRBUS MARKETING STRATEGIES ....................................................... 81 Airbus’s Marketing Focus ............................................................... 81 Airbus’s Concept of Hub and Fragmentation ................................. 82 Airbus A380 Launch Customer – Singapore Airlines ...................... 84 Airbus’s Strategies for Asia ............................................................ 85 Airbus’s Portfolio Mix ..................................................................... 86 BOEING’S MARKETING STRATEGIES .................................................... 86 Boeing’s Direct Expansion .............................................................. 86 Vertical and Horizontal Integration ............................................... 86 Boeing’s “Core Competencies” and “Market Shaping” Strategy ... 87 Boeing Marketing Strategy: Boeing B787 vs. Airbus A380/A350 .. 88 Boeing’s Business Strategy ............................................................ 92 Two-Year Delays of Boeing’s “New Generation” B787 .................. 93 Boeing’s Portfolio Mix .................................................................... 93 ii CHAPTER 4 ........................................................................................... 95 THE TERMINATION OF THE 1992 EU-US AGREEMENT ......................... 95 INTRODUCTION .................................................................................. 95 THE 1992 GATT AGREEMENTS AND THE 2004 TERMINATION ............ 96 1992 GATT Agreement ................................................................... 97 The 2004 US Termination of the 1992 Bilateral Agreement .......... 98 The 2004 US’s Allegations and Assertions ................................... 100 THE EU’S ALLEGATIONS AND COMPLAINTS ....................................... 103 THE EU-US DISPUTES OVER FOREIGN SALES CORPORATIONS (FSC) . 104 THE WTO CASE ON AIRBUS SUBSIDIES .............................................. 106 NEGOTIATION OF NEW BILATERAL AGREEMENT .............................. 108 FRAMEWORK FOR NEGOTIATIONS ................................................... 110 CONCLUSION .................................................................................... 114 CHAPTER 5 ......................................................................................... 117 THE CASE OF THE EU AT THE WTO ..................................................... 117 INTRODUCTION ................................................................................ 117 THE EU’S ALLEGATIONS AT THE WTO ................................................ 117 THE EU’S LEGAL CLAIMS .................................................................... 124 WTO DISPUTE PROCESSES FROM 2007 TO 2008 ............................... 125 THE EU WTO CHALLENGE TO US SUBSIDIES TO BOEING (WTO CASE DS353) .............................................................................................. 125 First Panel Hearing ....................................................................... 126 The US Reply to the EU’s Challenge Filed by European Commission ..................................................................................................... 127 CONCLUSION .................................................................................... 137 CHAPTER 6 ......................................................................................... 140 THE CASE OF THE US AT THE WTO ..................................................... 140 INTRODUCTION ................................................................................ 140 US ARGUMENTS - THE US REBUTTAL OF THE EU’S ADVERSE EFFECTS ALLEGATIONS (DS353) ...................................................................... 142 FOUR MAJOR “ADVERSE EFFECTS” ARGUMENTS (THE US COUNTER- ARGUMENTS) ................................................................................... 142 THE US REBUTTAL OF THE EU’S SUBSIDY ALLEGATIONS .................... 146 iii CONCLUSION .................................................................................... 169 CONCLUSIONS ................................................................................... 170 EU-US AIRPLANE SUBSIDY DISPUTES ................................................ 170 POLITICAL-ECONOMIC VARIABLES .................................................... 171 FINDINGS .......................................................................................... 172 THEORETICAL IMPLICATIONS............................................................ 180 CONCLUDING