LOBBY FOR FREER TRADE AND INVESTMENT More nations are liberalizing markets to create partly from the eflons of firms to lobby and increase tax revenues. The trend results and foreign governments to lower their trade and achieved much In China, n reducing trade barriers by lobbying US and regulati domestic and f firms lobby the ons that make Chi na a diffi have government place to do business. Foreign firms often hire obtained officials to help lobby their former former various colleagues. European by lobbying individual state governments in south States, BMW leased its 1,039-acre factory site dollar. The private sector lobbies federal authorities trade negotiations, aimed at lowering barriers. Private firms bring complaints to world especially the WTO to address unfair trading practices of international markets. key CLOSING CASE Government Intervention at Airbus and Boeing In the 1960s, United States companies such as Boeing (www.boeing aid has financed como and McDonnell Douglas were the dominant players in global European governments have forgiven Airbuss debt provided aircraft manufacturing. Boeing 1916 in Seattie, and uity infusions, dedicated infrastructure support, and financed R&D had many years to develop the critical mass necessary to become t world’s leading aerospace manufacturer During World War and the currently a stock-held company jointy owned by te bsequent Cold War years, Boeing was the recipient of many lucrative British, Germans, French, and Spanish It is based in Toulouse, contracts from the U.S. Department of Defense but has R&D and production operations scattered throughout Europe European governments justify their financial aid to Airbus on In Europe, no single country possessed the means to launch an aerospace company capable of challenging Boeing complex and capital-intensive and requires a grounds. First, AirbusR&D activities nesult in the development commercial aircraft is led workforce. In the 1970s, technologies. Second, Airbus provides jobs to some 53.000 Germany, Spain, and the United the governments of France, skilled and semiskilled Europeans Third, its ported with massive government Kingdom formed an alliance, sup- tract massive a of captai into Europe. Final Arbus geneae (www.airbus com). By subsidies. to create Airbus SAS enormous tax revenues becoming the world’s number two civil aircraft manufacturer. Airbus Complaints about Unfair Government Intervention launched the A300, among the best-selling commercial aircraft of al Boeing and US. government have long complained about te Airbus also created the A320, receiving more the and soft loans that were responsible not only before its first flight and becoming than 400 orders massive subsidies in history. By 1992. the fastest-selling large Airbuss birth, but also for its ongoing success. The outcry became of the global commercial Airbus had captured roughly one-third louder in the 2000s, when Airbus surpassed Boeing in annual sae aircraft market. the world’s leading commercial aircraft manufactue Government Support for Airbus Boeing has argued that Airbus never would have gotten this far Since the 1940s, European governments have pursued public policies In 2005, the US. Trade Representative brought its case to the wnt socialism. this system, the government The case arose because EU member states based on democratic plays a strong role in the national economy and provides key services S3.7 bilion in re subsidies and soft loans to Airbus. The case alleged that financial a Most Europeans are accustomed to government housing. for the A350, A380, and earlier Airbus aircraft qualified as subsid role in guiding the national economy playing a significant under the WTOs Agreement on Subsidies and Countervaling Measu In this context, Airbus has benefitted enormously from government (ASCM and that the subsidies were actionable because they ades support. The firm has received tens of billions of euros of subsidies and affected international trade. Under the AscM, subsidestospectcf Airbus had from a government or other public bodies are prohbt applied to the governments of France. Germany 5pan soft loans from the four founding country governments and the EU Airbus must repay the loans only if it achieves profitability Governm the United Kingdom for ad to Launch its model A3so.

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