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DISPUTE SETTLEMENT: DISPUTE DS172

European Communities — Measures Relating to the Development of a Flight Management System

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Summary up-to-date at

Consultations requested — no panel established nor settlement notified

Complaint from the United States.

On 21 May 1999, the US requested consultations with the EC in respect of alleged actionable subsidies granted or maintained to a French company, Sextant Avionique (“Sextant”), to develop a new flight management system (“FMS”) adapted to Airbus aircraft. The US alleged that the French government has agreed to grant, and the European Commission has approved, a loan, on preferential and non-commercial terms, in the amount of 140 million French francs, to be disbursed over three years, for a project in which Sextant will develop a FMS adapted to Airbus aircraft. The US considered that this aid:

• is a specific subsidy within the meaning of Articles 1 and 3 of the SCM Agreement, which subsidy has caused and continues to cause adverse effects within the meaning of Article 5 of the SCM Agreement;
   
• has caused and continues to cause serious prejudice within the meaning of Articles 5(c) and 6 of the SCM Agreement because the subsidy may involve the direct forgiveness of debt;
   
• may displace or impede imports of FMS from the United States into France;
   
• may displace or impede exports of FMS from the United States to third country markets;
   
• may cause significant price undercutting by the subsidised product as compared with the price of a like product of another Member in the same market or may cause significant price suppression, price depression or lost sales in the same market; and
   
• has caused and continues to cause a nullification or impairment of benefits accruing directly or indirectly to it under GATT 1994 within the meaning of Article XXIII:1(b) of GATT 1994, and Article 5(b) of the SCM Agreement.

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