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

Consultations

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.