Research On Subsidies Of Large Civil Aircraft Project Within The WTO Framework

Large Civil Aircraft (LCA) Project is the most important part of AviationIndustry which is one of strategic industries. The Chinese government pays adequateattention to LCA Project. As the national volition, LCA project is one of the majorprojects which are identified by the12th Five-Year Special Development Plan(2011-2015). However, we should pay attention to that one of the keys to thedevelopment of LCA Project is adequate subsidies from the government.The Dispute Settlement Body (DSB) of the World Trade Organization （WTO）adopted the appellate report of European Communities-Measures Affecting Trade inLarge Civil Aircraft in March23,2012. It ends the LCA trade dispute which haslasted for nine years between United States and European Communities. In thiscontext, the research on subsidies of China’s LCA Project within the WTO frameworkis highly relevant because we will get to know how to establish a subsidy systemwhich not only promote China’s LCA Project but also is compatible with WTO rulesfrom the research.Besides the preface and the conclusion, the paper consists of the following fivechapters:Chapter Ⅰ introduces the basic concept of LCA. Based on practice, the chapterdiscusses status and present situation of LCA projects, analyzes inside reasons, market reasons and economic reasons causing subsidies to LCA projects from governments.Combined with present WTO rules, Chapter Ⅱ examines the concept of LCA projectssubsidy, the classification of subsidy, the ‘specificity’ requirement, and identifies therelationship between Agreement on Trade in Civil Aircraft and Agreement onSubsidies and Countervailing Measures (ASCM). And then Chapter Ⅱ furtherdiscusses what LCA projects subsidy ought to be within the WTO framework fromthe theoretical view.In accordance with the theoretical frame presented in Chapter I and Chapter II,the present situation of LCA projects subsidies in United States and EuropeanCommunities are analyzed in Chapter Ш. Then Chapter Ш summarizes four generalcharacters between United States and European Communities: they both focus oninvesting in technology and R&D area, strengthening indirect subsidies, havingseveral entities to subsidize and the indirect effect arising from the support of militaryprojects. Based on Chapter Ш and combined with LCA trade dispute between UnitedStates and European Communities, Chapter Ⅳ discusses what LCA projects subsidyought to be within the WTO framework from the practical view. In this chapter,instead of revealing all subsidy measures in United States and European Communities,subsidy measures are classified into several categories according to the focuses in thetrade dispute and the complex provisions in ASCM and then the issues of whethersuch measures comply with WTO rules are also examined and identified.Finally, combined with front theoretical frame and case analysis, Chapter Vdiscusses basis and present situation of China’s LCA projects subsidies and thenoffers suggestions. As to the way forward, we should adjust and modify relevant lawsand regulations, focus on the integration of military and civilian technology, increaseR&D investment, make non-government organizations function effectively anddeepen industry ties with other countries, so that we could promote China’s LCAprojects sustainable, healthy and rapid development.