U.S.-EC Aircraft Agreement

Pursuant to a congressional request, GAO reviewed the bilateral agreement between the United States and the European Community (EC) on trade in civil aircraft, focusing on provisions concerning prior commitments of EC member governments to provide support for current civil aircraft programs. GAO found that: (1) although EC member governments have provided a list of prior development and production support commitments to their respective Airbus consortium members, the list does not contain key terms and conditions, such as interest rates and royalty payments, of the support; (2) the lack of information limits U.S. ability to monitor, implement, and enforce the agreement, since there is no firm baseline against which to verify EC compliance with the agreement, and it will have to rely on other sources which may supply inaccurate data; (3) the agreement does not require EC members to provide the terms and conditions of past support; (4) a U.S. Trade Representative (USTR) official believes that it would be difficult to modify terms and conditions of support without attracting public scrutiny; (5) the consultative provisions of the agreement would enable the United States to follow up on possible violations; and (6) in response to U.S. protests, Germany has eliminated an exchange rate guarantee to the buyer of its share in the German Airbus and has relaxed the repayment schedule of the subsidies, but USTR is having difficulty in determining if the terms are consistent with the agreement's provisions.