International Business - World Trade - Essay Example

Also the governments' interest in the health or the profits of the industry as well as the capitol flow which in turn affect the states' economy is highlighted in this case study. With regards to the civil aviation industry, the various products, their launch aid from the governments and other agencies directly or indirectly through favoured contracts and subsidies and tax cuts and waivers on loans also called soft loans are among the issues discussed in the case study. However, the direct and indirect support and patronization by the governments are also subject to some of the World Trade Organization's provisions prohibiting any support from the governments under the Agreement on Subsidies and Countervailing Measures (SCM), the European Union (EU) and the US governments' Agreement on Trade in Large Civil Aircrafts which restricts the governments to cap the direct or indirect financial aid to the companies producing these aircrafts; are all related to the issues relating to the governments protectionist policies as these are in one or the other way related to international trade as well as the economies of the respective states.

Each government has identified their need to provide support to the large and complex civil aircraft industry as investing in it can give them an advantage and also create as they observe employment for their skilled and unskilled resource while help build new technologies and generate huge amounts of corporate taxes for the state's revenue. However, the international trade responsibilities of each country or state have also been looked into with respect to the affect of the different governments supporting the industry at various levels.

The trade practices themselves are questioned as relating to the governments protectionist policies which are interested in protecting their interests. Further, the EU governments' public policies identify the need for providing key services like healthcare, public transport, banking, etc. which enable them to play a strong role in building the economy of the nation. Hence, EU governments consider greater intervention in the market is necessary for building a growing economy. France took steps in this direction by regulating the private sector work hours to a minimum of 35hrs a week and also increasing the corporate taxes, along with Germany.

Owing to the governments intervention in the markets, civil aviation in the US and EU has benefited. Boeing received huge orders from the US Department of Defence during World War II and the Cold war which helped it to consolidate its position in the market. Further, after 9/11 it is being supported by tax money through subsidies and soft loans. On the other hand, the EU governments have formed alliances to found Airbus to make large civil aircrafts as part of their public policies. France, Germany, Britain and Spain hold stock in the company jointly and sanction subsidies and soft loans individually.

In the early 2000s the Airbus annual sales for A350 exceeded that of