SUBSIDY CONTROL IN WTO CASE STUDY: UNITED STATES – MEASURES AFFECTING TRADE-IN LARGE CIVIL AIRCRAFT – SECOND COMPLAINT

Abstract

The case of US – Large Civil Aircraft was arise in 2004, where European Union on behalf of Airbus submitted their complaint toward violation conducted by the United States on behalf of Boeing. European Union claimed that there were numerous subsidies provided by the United States to Boeing. The subsidies were in the form of tax exemption, tax incentives, property and sales tax breaks, payments and access to government facilities, equipment and employees. Those subsidies were provided by numerous U.S government institutions. European Communities (EC) will suffer losses if U.S kept on supplying Boeing through the subsidies, especially if the characteristic of subsidy is included as prohibited subsidies. By that, EC filed the complaint of DS353 to avoid more losses and violation conducted by its rival. In this thesis, the research concerned on how the subsidy controls are conducted by World Trade Organization in order to make a fair and just international trade competition, what kind of prohibited subsidies given by United States to Boeing, and the reasons that make the subsidies are categorized as prohibited subsidies. To help answering the issues, this thesis used the normative legal research through analyzing legal documents provided by World Trade Organization, which are the Agreement on Subsidies and Countervailing Measures, the DS353 case documents. Also, this research used two approaches which were statutory approach and conceptual approach. The researcher also conducted qualitative data analysis from numerous sources, not only from the legal documents, but also some journals and articles. From the research methods that used, this research thesis was able to answer the issues on how World Trade Organization controls the subsidy and what are the reasons of subsidies from U.S to Boeing were categorized as prohibited subsidies. The researcher answered the subsidy controls conducted through a special institution under the World Trade Organization, namely the Committee on Subsidies and Countervailing Measures, and this committee is responsible on receiving subsidy notifications from Members State. Second, the prohibited subsidies received by Boeing are concerning the special legislations from U.S relating to the tax exemption, by the legislation, Boeing could avoid and delay their company on paying taxes. Thus, there is a need to make the subsidies regulation more assertive, in order to make the Member States respect the applicable law, and create fair trade competition.