Case Studies in Global Business Journalism No. 1
The Airbus 380 Project and Boeing’s WTO Complaint
Prepared by John BERTHELSEN
The Assignment
You are a business reporter for a top-tier global news medium such as the New York Times,
Financial Times, or Wall Street Journal. You might also work for a news wire such as the
Associated Press, Bloomberg News, Reuters, or Dow Jones Newswires. You are assigned to
prepare a substantial story of up to 3,000 words regarding the development of the Airbus
380 jumbo jet, and how Airbus Industrie managed to keep the project on track despite huge
cost overruns and technical problems as it tried to compete with Boeing’s 747 jumbo.
Like any good reporter, your first step is to research your assignment. This case study
represents the research that you gather from the Internet and other sources. Your job now
is to digest this material and decide what direction your story will take. Before beginning
your reporting, you must make several decisions.
To make these decisions, you must first decide the conceptual framework you will give
your stories. Please see How to Approach Case Studies in Global Business Journalism. In
this document you’ll find a hard-news conceptual framework for business stories, and a
similar framework for features and analytic stories. You must also take care to source your
story carefully; How to Approach also includes a grid of source categories. Ask yourself
how you might adapt each to your story and whether it's essential to gather information
from the specific sources you select.

What will be the story's theme—the backbone that holds all its elements together?
What is the central point you are making or the crucial question you will answer?

What sources—documentary and human—must you pursue to ensure your story is
accurate, fair and complete? What information must you gather from those sources?

Which conceptual framework will you use to structure your story?

What do you envision as the lead passage to your story?

What is the "nut" of your story? This is the central point that gives your article unity.
If you had to put the story on Twitter, what would you tweet say?

What sections, such as history or context, or consequences, will you include in the
gut, or middle portion, of your story?

How will you end your story on a compelling note?
Remember that your understanding and your plan of attack will probably change as you
report. You might, for instance, encounter a better lead. You might have to modify your nut
section. This case study is designed to help you sift through large amounts of disparate
information; decide what the focus of your story should be; and organize your reporting
around a default plan for the story's organization.
The point of this case is to help you link thinking, reporting and writing beginning the
moment you receive your assignment. You will find this a superior alternative to reporting
without focus and then trying to give coherence to the pile of unfocused material that you
bring back to your newsroom.
Your work product from this assignment should consist of concise answers to the eight
questions highlighted above. There are numerous possible themes and areas of focus in the
case material. Consider them all and pick yours. Your job is to decide which one is most
important for your readers. Be prepared to defend your decision and to explain in detail
how your story will come together. Good luck.
Boeing and Airbus: Global Air War
In 1969, at the very start of the biggest expansion of air travel in history, Boeing Aircraft Co.
brought out what would become by far the industry’s most successful big jet, the 747. It
nearly bankrupted both Boeing and Pan American Airways, which ordered 25 of the big
planes.
In 2007, at the start of what might turn out to be the biggest downturn in air travel history,
Airbus Industrie brought out the huge A380, which landed in Singapore two years late
because of production delays amid projections that it might take 11 years to break even.
Airbus officials expressed confidence that the company was in no financial difficulty.
How was that possible? Using your analytical skills, look at the industrial structure of the
two companies at the time of their biggest developments, along with the global trade
picture and the structure of protectionist industries in both the United States and the
Eurozone. Try to determine how Airbus Industrie has been able to succeed at cutting into
Boeing’s lead, and whether the European company has used unfair advantage.
A Tale of Two Plane Makers
In 1969, at the urging of Pan American Airways President Juan Trippe, Boeing brought out
what was then the largest airplane in the world – the Boeing 747, produced in just 16
months by an army of 50,000 men and women. The 747 came into existence after Trippe
and Pan Am signed a sales contract for 25 planes at a cost of US$550 million, the biggest
such contact in history. It nearly bankrupted both Boeing and Pan Am. The airplane took to
the skies only two months behind schedule and flew directly into the 1970 recession. The
cost of development and other problems resulted in debt of US$1 billion and forced Boeing
to reduce its staff from 100,000 in 1968 to 38,000 in 1970.
Boeing had developed a plane that could carry 440 passengers at the very start of the
greatest expansion in air travel in history. Between 1970 and 1992, the number of
passengers handled by the world's airlines rose from 383 million to more than 1.2 billion.
By length of trip, growth in passenger miles was even greater, rising from 286 billion in
1970 to more than 1,200 billion in 1992, a four-fold increase. By June 2009, Boeing had
sold 1,416 of the various versions of the 747, with 107 orders remaining to be filled.
If the 747 came off the drawing board at the dawn of expanded air travel and nearly
bankrupted both the manufacturer and its launch customer, what has kept Airbus
Industrie, the European consortium that built the A380, now the biggest plane in the world,
from economic disaster in the worst economic downturn since the Great Depression of the
1930s?
The program to build the A380 was approved in December 2000 at a cost of 8.8-billion
euros. Final configuration was set in early 2001, and manufacturing of the first A380 wing
box component started on January 23, 2002. Before the first aircraft was ever completed,
the cost had risen to 11 billion euros. Years of delays ensued, primarily because of
complications attributed to the installation of some 530 km of wiring in each aircraft. The
first delay, for six months, was announced in June 2005, with the number of planned
deliveries by the end of 2009 reduced from 120 to between 90 and 100. A second delay was
announced a year later, in June of 2006, for an additional six to seven months, with 2009
deliveries falling to only 70 to 80 aircraft. A third delay ensued, pushing the first delivery to
October 2007, with only 13 deliveries in 2008 and 25 in 2009. Singapore International
Airlines finally took the first delivery on October 15, 2007, two years late.
Airbus Industrie originally predicted break-even for the A380 at 270 units. However, the
delays have pushed that figure up to 440 and possibly higher. According to the website
Aerospaceweb.org, Singapore Airlines, Qantas, Virgin Airways, Emirates, Malaysian
Airlines, and Thai Airways have forced Airbus to pay millions of dollars in compensation
for the delays in production. Although some customers have also threatened to reduce or
cancel their A380 orders, the only cancellations so far were from cargo operators FedEx
and UPS, when both companies canceled their orders for up to 20 A380-800F freighters
each. The move, the website said, left no customers for the freighter model and further
development of this variant has been postponed indefinitely.
Cost overruns have risen to US$3 billion, driving up the unit cost by at least 25 percent.
These delays and cost increases may deter future orders. Despite these troubles,
Aerospaceweb.org says, A380 production continues, and 16 had been delivered to airlines
by mid-2009. Airbus planned to deliver 14 planes in 2009 and at least 20 in 2010.
“However, these goals may suffer due to the currently poor economy and reductions in air
travel that have caused nine airlines to defer upcoming orders by an average of two to
three years. Industry analysts estimate the A380 production rate may have to be cut to 12
planes per year until demand improves,” the website said.
The 747-800, Boeing’s attempted answer to the A380, has not fared particularly well. Only
20 of the 747-8 Intercontinental (both not including VIP orders) had been ordered by late
2009, although 81 747-8F freighters were on order. Airbus officials originally projected a
market of 1,250 A380s over the next 20 years, although Boeing, in its deliberations over
whether to build the new 787 Dreamliner or a new generation superjumbo, projected
demand at only 325. Given the savage economic downturn of 2007-2009, Boeing may be
closer. In 2009, in the midst of the global economic slowdown, Airbus announced it was
cutting annual production rates from 18 to 14 – a dramatic comedown from 2005
projections of 120 planes per year. By some projections, given the current economic
climate, it will take 11 years for Airbus to reach the breakeven point.
In 2005, ACI Worldwide Air Transport forecast that air travel from 2010 to 2020 would
increase from 4.9 billion to 7.4 billion passenger miles traveled. However, passenger traffic
was actually expected to have declined by 4 percent, and cargo by 14 percent for 2009.
Boyd Group International forecast that in the U.S. alone, enplanements would fall from
748.9 million in 2008 to 674.6 million in 2010, before beginning a slow rebound.
Nevertheless, there will be 16 million fewer passenger trips in 2014 compared with 2008.
Those losses are expected to be repeated across the planet. Airbus’s latest 2009 Global
Market Forecast predicted a 4.7 percent annual increase in overall world passenger traffic
from 2010 to 2028.
Airbus says it will take "mitigating actions" against the "negative effects" of the revised
A380 production plan on cash flow. Airbus also said it would be forced to reduce
production rates of its workhorse A320, the main competitor to Boeing’s popular 737, from
36 to 34 a month.
Your Assignment
Here’s the catch: Airbus said this situation would have "no significant impact" on earnings.
How can that be so for a company that has encountered so many internal and external
problems? In reviewing the documentation below, try to come up with a possible answer to
that question and build a story plan around it. Consider the position of Boeing and its
filings with the World Trade Organization as you plan your reporting and writing.
Remember, though, that good reporters don’t answer questions themselves and then
gather quotes to support the conclusion. Good reporters come up with a “default”
explanation or two or three, and then conduct research and interviews to test their
understanding against reality. Using either or both of the thought models we’re using in
this case study, generate your own default story lines, along with a plan of attack for
interviews and research.
Background Documentation
Boeing Operational Summary from 2008 Annual Report
For further details of annual report, see
http://www.envisionreports.com/ba/2009/12ja09001m/document_0/Boeing_AR_0
3-11-09_Preflighted_01.pdf
Earned $2.7 billion on revenues of $60.9 billion, both down from 2007 levels due to the
strike that halted commercial airplane production for nearly 60 days, a 747 program
charge and increased costs on an airborne early warning program.
Increased our record order backlog to $352 billion at year end, an eight percent increase
over 2007, reflecting 662 net commercial orders and important new defense contracts won
during the year.
Returned value to shareholders by increasing our quarterly dividend by five percent to 42
cents a share, our sixth dividend increase since 2003, and by repurchasing 42.1 million
shares.
Added key new business, including 484 orders for 737s, 93 for the 787, 54 for the 777,
NATO and Qatar orders for C-17s, a follow-on F-15 order from the Republic of Korea and
U.S. contracts for CH-47, V-22 and C-17 support activities.
Reached significant Integrated Defense Systems program execution milestones, including
successfully completing the most challenging Ground-based Midcourse Defense system test
to date; completing final assembly of the U.S.
Navy’s first P-8A; achieving the first on-board firing of the Airborne Laser’s high-energy
chemical laser; delivering the 200,000th Joint Direct Attack Munitions tail kit; rolling out
the first F-15SG for Singapore; and finalising several strategically important defenserelated acquisitions.
Also achieved major program milestones at Boeing Commercial Airplanes, including
powering on the first 787 and testing the landing gear, horizontal stabilizers, wing box, and
airframe pressurisation for that program; flight testing the 777 Freighter; and delivering
the 700th 777 and 1,400th 747.
Broadened our environmental leadership with numerous accomplishments, including
receiving ISO 14001 certification for all major manufacturing facilities; completing two
biofuel demonstration flights with different airline, aircraft engine manufacturer and fuel
refining technology development partners; and working with three airline partners to
demonstrate significant reductions in fuel consumption and carbon-dioxide emissions
made possible by using an innovative Air Traffic Management concept called “Tailored
Arrivals.”
Airbus Annual Review 2008
For additional details, see:
http://www.airbus.com/store/mm_repository/pdf/att00013220/media_object_file_Airbus
-AnnualReview2008.pdf
Overview
The year 2008 was a very demanding one with volatile oil prices, while the worldwide
financial situation and turbulent economy has impacted overall investment. Despite this
challenging environment, Airbus has achieved a tremendous amount. The most apparent
successes include the delivery of 483 aircraft – 30 more than in 2007, which is a new
record for Airbus.
In terms of new contracts across all our programmes, Airbus has booked 777 aircraft
orders (net) valued US$ 100 billion at list prices, leading to a solid market share of 54
percent (aircraft above 100 seats). This commercial achievement comfortably exceeds that
originally predicted at the start of the year, a remarkable success in a difficult year, and
clearly a vote of confidence in our products from our customers. Importantly, as the new
orders in 2008 are much higher than our already high delivery rate, our order book has
expanded even further. Indeed, our total backlog amounts today to over 3,715 civil aircraft,
worth US$ 438 billion at list prices, equaling six years of full production. It should be noted
that since 2002 Airbus has achieved a successive delivery increase in each subsequent year
– a telling success for our single-aisle and long-range programmes, and indeed, for the
entire supply chain.
Our youngest development programme – the A350 XWB – has made very good progress in
2008. In December 2008 we passed A350 detailed-definition freeze review at aircraft level,
and we now have an excellent architecture for this aircraft. Airbus’ successes in 2008 are
not limited only to the programme side. Rather, the new organisation and leaner processes
developed through ‘Power8’, combined with careful cash management, have resulted in
Airbus again exceeding our annual targets. To this end we have already achieved gross
savings of over 1.3bn euros – which is halfway to our 2010 objective.
A key facet of Power8 – our aerostructures strategy – has also seen very good progress in
2008: Laupheim and Filton manufacturing sites are now in the hands of experienced Airbus
partners – Diehl/Thales and GKN respectively. Meanwhile Aerolia in France and Premium
Aerotec in Germany began operation just a few weeks ago. The overall objective is to
combine the divestment of non-core activities and sites in order to establish a network of
strong suppliers. This, in turn, will allow Airbus to concentrate on its core business of being
an aircraft architect and integrator. Not only will all companies be significantly involved in
the A350 XWB programme, they will also commit to the EADS/Airbus Power8 targets.
Aerolia for example has already decided to extend its enterprise and invest in a new plant
in Tunisia. Moreover, the importance of Power8 and Power8+ for our performance in 2009
will increase given the prevailing economic conditions.
In parallel with Power8, Airbus also made great strides towards internationalisation by
expanding its industrial footprint. The new A320 Final Assembly Line in Tianjin, China is a
good example which will help gain access to strategic markets and tap into the best and
brightest talents worldwide.
Selected Online Resources


Airbus traffic projections:
http://www.airbus.com/store/mm_repository/pdf/att00014408/media_
object_file_gmf-2009-2028.pdf
http://www.amtonline.com/article/article.jsp?siteSection=1&id=9475
http://www.iata.org/pressroom/pr/2009-09-15-01.htm
http://www.flightglobal.com/articles/2009/05/06/326096/airbus-cutsa380-production-rates-again.html
http://www.boeing.com/history/boeing/747.html
Multimedia: The Discovery Channel
http://video.google.com/videoplay?docid=6853359534780959649#docid=7991708317060833876\

Multimedia: First Airbus A380 lands in Sydney:
http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_706000
0/newsid_7061100?redirect=7061169.stm&news=1&bbram=1&bbwm=1
&nbram=1&nbwm=1&asb=1
http://airlineworld.wordpress.com/2007/10/15/airbus-a380-the-firstdelivery/

Industry Insight, Aerospace America, January 2005, by Richard Aboulafia, Teal
Group
http://www.aiaa.org/aerospace/images/articleimages/pdf/insightsjanua
ry05.pdf

Boeing 747-800 factsheet:
http://www.boeing.com/commercial/747family/747-8_background.html

Airbus A380 factsheet:
http://www.zap16.com/zapnew/2008/10/02/airbus-a380-big-goose/

Multimedia
http://www.flightlevel350.com/aviation_videos.php?airplane=Airbus+A380&pa
ge=6
http://www.airbus.com/store/mm_repository/pdf/att00014408/media_object_
file_gmf-2009-2028.pdf

Boeing’s latest Annual Report, 10-K, proxy statement and all SEC filings can be
found here:
http://www.envisionreports.com/ba/2009/12ja09001m/index.html

Airbus Industrie’s key documents including 2008 Annual Review, 2008 Annual
Results and other information can be found here:
http://www.airbus.com/en/presscentre/
http://www.airbus.com/store/mm_repository/pdf/att00013220/media_objec
t_file_Airbus-AnnualReview2008.pdf
Boeing 747 Facts
BOEING 747 AIRCRAFT AIRLINER FACTS, DATES, PICTURES AND HISTORY - NEW BOEING 747-8
INTERCONTINENTAL
Boeing 747 Fact Sheet
Specifications
First flight:
Feb. 9, 1969
Model number:
747-100/-200
Classification:
Commercial transport
Span:
195 feet 8 inches
Length:
231 feet 4 inches
Gross weight:
735,000 pounds
Cruising speed:
640 mph
Range:
6,000 miles
Ceiling:
45,000 feet
Power:
Four 43,000-pound-thrust
engines
Accommodation:
33 attendants, 374 to 490 passengers
P&W
JT9D-3
The Boeing 747 is the second largest passenger airliner after the Airbus A380. Until the
first commercial flight of the A380 in 2006, however, it no longer remains the largest
passenger aircraft in commercial service.
The four-engine 747, produced by Boeing Commercial Airplanes, uses a two-deck
configuration, the small upper deck is usually used for business-class passengers. A typical
three-class layout accommodates about 400 passengers while a one-class layout
accommodates a maximum of 600 passengers. The hump created by the upper deck has
made the 747 a highly recognisable icon of air travel.
The 747 flies at high-subsonic speeds (typically 0.85 Mach or 565 mph or 909 km/h) and
features intercontinental range (8,430 statute miles, or 13,570 km, for the 747-400
version), in some configurations sufficient to fly New York-Hong Kong (roughly a third of
the globe) non-stop. In 1989 a Qantas 747-400 flew non-stop from London to Sydney, a
distance of 11,185 miles, in 20hrs 9min: this was a delivery flight with no passengers or
freight aboard. By May 2004 , a total of 1381 aircraft have been built or ordered in various
747 configurations, making it a profitable product for Boeing.
The 747 was born from the explosion of air travel in the 1960s. The era of commercial jet
transportation, led by the enormous popularity of the Boeing 707, had revolutionised long
distance travel and made possible the concept of the "global village." Boeing had already
developed a study for a very large airplane while bidding on a US military contract for a
huge airlifter. Boeing lost the contract to Lockheed 's C-5 Galaxy but came under pressure
from its most loyal airline customer Pan Am to develop a giant passenger plane which
would be over twice the size of the 707. In 1966 Boeing proposed a preliminary
configuration for the airliner, to be called the 747. Pan Am ordered 25 of the initial -100
series. The design was a full length double decker, but due to issues with evacuation routes
this idea was scrapped in favor of a wide-body design.
At the time, it was widely thought that the 747 would be replaced in the future with an SST
( supersonic transport ) design. Boeing took the shrewd move and designed the 747 so that
it could easily be adapted to carry freight, knowing that when sales of the passenger
version dried up, it could remain in production as a cargo aircraft. The cockpit was moved
to a shortened upper deck so that a nose cone loading door could be included, creating the
747's distinctive "bulge." However, the supersonic transports such as Boeing's still-born
SST and the Concorde never lived up to their promise, being too expensive to operate
profitably at a time when fuel prices were soaring. The upper deck was initially used as a
luxurious first-class lounge/bar area, but is now most often used for extra seating capacity.
After being expected to wither on the vine with only 400 sales, the 747 outlived many of its
critics and production passed the 1,000 mark in 1993. The expected slow-down in sales of
the passenger version in favor of the cargo derivative has only happened in the early
2000s.
The development of the 747 was a huge undertaking. Boeing did not have a factory large
enough to assemble the giant aircraft, so the company built an all-new assembly building
near Everett, Washington. This factory is the largest building ever built. Pratt and Whitney
developed a massive high-bypass turbofan engine, the JT9D , that was, in the beginning,
exclusively for the 747. To appease concerns about the safety and flyability of such a
massive aircraft, the 747 was designed with four backup hydraulic systems, split control
surfaces, multiple structural redundancy, and sophisticated flaps which allow it to use
standard-length runways.
Initially, Boeing found that the 747 was being treated with skepticism by many airlines. At
the time, Boeing's rivals, McDonnell Douglas and Lockheed, were working on wide-body
three-engine "tri-jets", which were significantly smaller than the proposed 747. Many
airlines wondered if the 747 would prove too large for an average long distance flight and
instead invested in tri-jets. Furthermore, there was worry about whether the 747 would be
compatible with existing airport infrastructure.
Another issue raised by the airlines was fuel efficiency. A three-engine airliner burns
significantly less fuel per flight than a four-engine, and with airlines trying to lower costs,
fuel efficiency was a large issue (this issue would return to haunt Boeing during the 1970s).
Boeing had promised the 747 to Pan Am by 1970, so it had less than four years to develop,
build and test the 747. Work progressed at such a breakneck pace that all those who
worked on the development of the 747 were given the nickname "The Incredibles". The
massive cost of developing the 747 and building the Everett factory meant that Boeing had
gambled its very existence on the 747's success, and the company was nearly bankrupted
in the early 1970s. The gamble paid off however, and Boeing enjoyed a monopoly on very
large passenger transports that has only been broken 35 years later with the advent of the
Airbus A380.
The Boeing 747-8 Intercontinental and 747-8 Freighter are the new high-capacity 747s
that offer airlines the lowest operating costs and best economics of any large passenger or
freighter airplane.
The 747-400 incorporates major aerodynamic improvements over earlier 747 models,
including the addition of winglets to reduce drag, new avionics, a new flight deck and the
latest in-flight entertainment systems. And, the 747 continues to be the world's fastest
subsonic jetliner, cruising at Mach .855 -- or 85.5 percent of the speed of sound. Along with
the popular Boeing 777, the 747 is a key element of the Boeing long-range market strategy.
With the lowest operating cost per ton-mile in the industry, the new-technology Boeing
747-400 Freighter is the all-cargo transport member of the 747-400 family. It can carry
twice as much cargo, twice as far, as the competitor's leading freighter. Along with earlier
versions, 747 Freighters -- about 225 in all -- carry half of all the world's freighter air cargo.
Boeing has taken another huge step in the continuing evolution of the world's most
recognized jetliner, the 747. The 747-400ER Family -- available in both passenger and
freighter versions -- provides the same size as current 747-400s, and offers an even more
unbeatable combination of payload, range and speed.
Did you know the 747-400 wing measures 5,600 square feet (524.9 sq m), an area large
enough to hold 45 medium-sized automobiles?
***
BOEING 747 AND AIRBUS A380 COMPARISON CHART
Figure 1: Boeing 747 and Airbus A380 Comparison Chart
***
THE NEW BOEING 747-8 INTERCONTINENTAL
The 747-8 Intercontinental and 747-8 Freighter use 787 technologies to significantly
improve the economics and functionality of the 747-8 - all while improving fuel efficiency
and reducing emissions and noise.
New wing design, next generation GEnx engines, a modern flight deck and new materials
are just some of the ways the new 747-8 benefits from the breakthrough technologies of
the 787.
Courtesy Boeing Aircraft Co.
Airbus A380 Facts
Airbus A380
Posted on Thursday, August 31 @ 15:09:02 BST by aircraftinfo.com.
Formerly known as the A3XX, Airbus' double-decker passenger jet,
the A380, will be the largest airliner ever built. Lengthwise, it would
nearly stretch from goal line to goal line of a football field while its
wing tips would hang well beyond the sidelines. Three full decks will run along the entire
length of the plane. Upper and main decks will serve as passenger areas, and will be
connected by a grand staircase near the front of the plane and by another smaller staircase
at the back.
Although the lower deck will be reserved primarily for cargo, it could be outfitted for
special passenger uses such as sleeper cabins, business centresor even child care service. In
a one-class configuration, the A380 could accommodate as many as 840 passengers. The
more likely three-class configuration will still offer an unprecedented 555 passenger seats.
Either way, the A380 would offer 30 percent - 50 percent more seating than its direct
competition, the Boeing 747-400.
Although the A380 will be able to fly a distance of over 10,000 miles, the plane's usefulness
will not be limited to long-haul flights. For instance, many flights within Japan are among
the highest in passenger capacity and would be well suited for A380 service, despite their
short distances. Whatever the flight distance, a new breed of engines will be required to lift
the plane's 1.2 million pounds into the air. Rolls Royce and GE/Pratt & Whitney are both
working on engines to provide thrust that will max out at 75,000 pounds. By comparison,
the first American jet airliner in service, the Boeing 707, was powered by only 10,000
pounds of thrust.
As amazing as it will be for this behemoth to take off into the air, the A380 faces significant
challenges on the ground as well. To integrate into existing airports, the A380 must fit the
standard airport-docking plan. The plane's nearly 262-foot wingspan meets this
requirement by about 18 inches. Its outer-most engines, however, would hang just beyond
the standard 150-foot runway width, requiring upgrades at many airports. The plane's
weight will be distributed to 20 landing gear wheels, actually producing less weight per
wheel than the 747. The cockpit location, between the main and upper decks, is designed to
give pilots a vantage point on the runway similar to that of current airliners.
Due to recent technological advances, Airbus claims the A380 will be a more efficient plane
than its rival, the 747. Airbus states the A380 will use 20 percent less fuel and will fly
quieter, cheaper and more environmentally friendly than the 747. Airlines seem to be
impressed. So far, ten carriers have declared their interest in the plane, placing options to
order a total of 66 planes. The first A380 is scheduled to take flight in September of 2004
and may enter commercial service as early as October of 2005.
Airbus A380 History
The 555 seat, double deck Airbus A380 is the most ambitious civil aircraft program yet.
When it enters service in March 2006, the A380 will be the world's largest airliner, easily
eclipsing Boeing's 747.
Airbus first began studies on a very large 500 seat airliner in the early 1990s. The
European manufacturer saw developing a competitor and successor to the Boeing 747 as a
strategic play to end Boeing's dominance of the very large airliner market and round out
Airbus' product line-up. Airbus began engineering development work on such an aircraft,
then designated the A3XX, in June 1994. Airbus studied numerous design configurations for
the A3XX and gave serious consideration to a single deck aircraft which would have seated
12 abreast and twin vertical tails. However Airbus settled upon a twin deck configuration,
largely because of the significantly lighter structure required.
Key design aims include the ability to use existing airport infrastructure with little
modifications to the airports, and direct operating costs per seat 15-20 percent less than
those for the 747-400. With 49 percent more floor space and only 35 percent more seating
than the previous largest aircraft, Airbus is ensuring wider seats and aisles for more
passenger comfort. Using the most advanced technologies, the A380 is also designed to
have 10-15 percent more range, lower fuel burn and emissions, and less noise.
The A380 would feature an advanced version of the Airbus common two crew cockpit,
with pull-out keyboards for the pilots, extensive use of composite materials such as GLARE,
and four 320 to 347kN (72,000 to 78,000lb) class Rolls Royce Trent 900 or Engine Alliance
(General Electric/Pratt & Whitney) GP-7200 turbofans now under development. Several
A380 models are planned: the basic aircraft is the 555 seat A380-800 and high gross
weight A380-800, with the longer range A380-800R planned. The 380-800F freighter will
be able to carry a 150 tonne payload and is due to enter service in 2008.
Future models will include the shortened, 480 seat A380-700, and the stretched, 656 seat,
A380-900. (The -700, -800, and -900 designations were chosen to reflect that the A380
will enter service as a "fully developed aircraft" and that the basic models will not be soon
replaced by more improved variants).
With orders and options from nine world-renowned customers (Air France, Emirates (the
first customer), Federal Express (the cargo model launch customer), International Lease
Finance Corporation, Lufthansa, Qantas, Qatar Airways, Singapore Airlines, and Virgin
Atlantic), the Airbus A380 was officially launched on December 19, 2000, and production
started on January 23, 2002. More airlines have placed orders since. The out of sequence
A380 designation was chosen as the "8" represents the twin decks.
The first flight is scheduled for the fourth quarter of 2004, and the entry into commercial
service, with Singapore Airlines, is scheduled for March 2006.
A380 final assembly will take place in Toulouse, France, with interior fitment in Hamburg,
Germany. Major A380 assemblies will be transported to Toulouse by ship, barge and road.
Copyright Aerospace Publications.
Airbus A380 Weights
A380-800 - Operating empty 275,000kg (606,000lb), max takeoff 548,000kg (1,208,000lb).
A380-800HGW - Max takeoff 560,000kg (1,235,000lb).
Airbus A380 Performance
A380-800 - Max cruising speed M 0.88. Long range cruising speed M 0.85. Range 15,100km
(8,150nm). Service ceiling FL430.
A380-800HGW - same
Airbus A380 Dimensions
A380-800 Wing span 79.8m (261ft 10in), length 73m (239ft 6in). Height 24,1 m (79ft 1in).
Airbus A380 Powerplants
A380-800 - Four 302kN (67,890lb) thrust class Rolls-Royce Trent 900 or Engine Alliance
(General Electric-Pratt & Whitney) GP-7200 turbofans.
A380-800HGW - Four 311kN (69,915lb) Trent 900s or GP-7200s.
Airbus A380 Capacity (Accommodation)
A380-800 – Flight crew of two. Standard seating for 555 passengers on two decks in a three
class arrangement. Qantas plans to fit its aircraft with 523 seats (in three classes). A380 has
49 percent more floor area but only 35 percent more seats (in 555 seat configuration) than
the 747-400, allowing room for passenger amenities such as bars, gymnasiums and duty
free shops. Cargo capacity 38 LD3s or 13 pallets.
Independent Passenger Traffic Projections
International Civil Aviation Organisation
Tel.: +1 (514) 954-8220/8221 Fax: +1 (514) 954-6376
Website: www.icao.int
ICAO NEWS RELEASE
FOR IMMEDIATE RELEASE PIO 08/09
MARGINAL TRAFFIC GROWTH AND FUEL HEDGING LOSSES
TAKE TOLL ON AIRLINE INDUSTRY IN 2008
MONTREAL, 5 June 2009 — Passenger traffic expressed in terms of passenger kilometres
performed (PKP) increased marginally by 1.3 percent in 2008 compared to 2007, according
to preliminary data provided to the International Civil Aviation Organisation (ICAO) by its
Member States.
This represents the slowest rate of growth for the air transport industry since 2002. Cargo
traffic expressed in terms of freight tonne kilometres performed decreased by 1.2 percent
from 2007, also the slowest rate of growth since 2002.
International passenger traffic in terms of revenue passenger kilometres grew by 3.4
percent, as a result of strong growth rates for air carriers of Latin America and the
Caribbean (10.3 percent), the Middle East (7.5 percent), Europe (4.1 percent) and North
America (3.8 percent). These regions account for nearly 70 percent of global international
traffic. No growth was recorded for Asia/Pacific carriers, which collectively account for
nearly 27 percent of international traffic.
Domestic traffic adversely affected overall traffic growth as most regions experienced
negative results.
North American carriers, who account for nearly 57 percent of global domestic traffic, saw
their traffic decline last year by an astounding 5.1 percent over 2007. Asia/Pacific carriers,
at nearly 28 percent of global domestic traffic, grew by only 3.7 percent, achieved mainly
due to a 6 percent growth by air carriers of China. Most emerging economies showed a
negative growth in traffic compared to 2007.
Growth was shared unequally between member carriers of the International Air Transport
Association (IATA) and other categories, notably low cost carriers. In 2008, several
European low cost carriers experienced double-digit growth rates compared to the 3.3
percent growth rate in total PKPs for Europe.
Airline Finances
The scheduled air carriers of the world are estimated to have incurred an estimated
operating loss of approximately US$ 9.8 billion in 2008 compared to a record US$ 19.7
billion operating profit in 2007. The significant decline in profitability was due to a
slowdown in traffic growth on account of a weak global economy and fuel hedging losses
for some of the major world air carriers. Oil prices were volatile and prices ranged from a
high of approximately U.S. $147/barrel in July 2008 to a low of approximately U.S.
$34/barrel in December 2008. Consequently, air carriers who had hedged anticipating
higher fuel prices had to record significant losses in the last quarter of 2008.
Defining the precise level of losses airlines will incur in 2008 is difficult at this stage mainly
because the final accounting figures are not yet in for carriers having a fiscal year ending
other than calendar year 2008 and also due to the variances in accounting of fuel hedging
losses practiced by different air carriers.
Some air carriers who have hedged their fuel prices two to three years in the future,
account for the losses actually incurred for the year 2008 and the probable losses of the
future years in their income statement.
Other carriers, however, follow the practice of accounting future hedging losses in their
balance sheets and not in their income statement. If fuel hedging losses are excluded, the
industry is expected to have ended the financial year 2008 with an estimated provisional
operating loss of U.S. $3.8 billion.
Short-term forecast
Global air traffic, expressed in terms of passenger-kilometres performed, is now projected
by ICAO to decline by approximately 4 percent in 2009. This bleak forecast reflects the
worsening of economic prospects as the world GDP is now projected to shrink by about 1.7
percent, according to Global Insight, a major economic forecasting organisation. After steep
declines in traffic in the first months of the year, signs of stabilisation have emerged and
further improvements in traffic results are expected for the remaining months of the year.
The markets of North America and Asia/Pacific will be the most adversely affected as the
recession in the United States and Japan and the downturn in China take their toll.
European airlines are also expected to suffer limited traffic declines due to the relatively
good performance of low cost carriers. While traffic of African airlines is also projected to
decline, the Middle Eastern and Latin American markets will register a positive growth, due
to aggressive airlines and airports strategies and strong domestic demand.
As the economy improves, a moderate recovery is forecast for the year 2010 with a positive
growth rate of about 3.3 percent and the momentum to continue in 2011 with a growth of
5.5 percent. The regional breakdown of these forecasts is provided in the table below:
Regional Growth in Passenger Kilometres Performed (PKPs) (percent change over
previous year)
2009
2010
2011
Regional
Preliminary Forecast
Africa
-4.2
6.5
7
Asia/Pacific
-4.5
3.6
6.5
Europe
-3
2.9
5.5
Middle East
8
9.5
12
North America
-7.2
1.3
2.6
Latin
America/Caribbean
5.3
7.5
8
World
-3.8
3.3
5.5
A specialised agency of the United Nations, ICAO was created in 1944 to promote the safe
and orderly development of international civil aviation throughout the world. It sets
standards and regulations necessary for aviation safety, security, efficiency and regularity,
as well as for aviation environmental protection. The Organisation serves as the forum for
cooperation in all fields of civil aviation among its 190 Contracting States.
Launch Aid
One of the biggest and muddiest questions revolves around “launch aid” from governments.
According to the office of the United States Trade Representative, the US exported US$50 .7
billion worth of civil aircraft, engines and aircraft parts, the country’s single largest
manufactured export product. The US government, equally with Boeing, charges that
Airbus has used unfair advantage to seek to cut into that export base. Prior to the creation
of Airbus Industrie by four European countries, only three manufacturers of heavy jets
existed. They were Lockheed, McDonnell Douglas and Boeing.
Airbus Industrie is a subsidiary of European Aeronautic Defence and Space Company NV, a
consortium formed in the 1960s from the detritus of Daimler Aerospace AG of Germany,
Aerospatiale –Matra of France and Construcciones Aeronauticas SA of Spain and given the
mission of competing against American technological aerospace prowess to ensure that
Europe was not left totally out of the technology race.
With Airbus Industrie, they have succeeded. Today both Lockheed and McDonnell Douglas
are out of the large jet aircraft manufacturing business and Airbus builds about half of the
world’s passenger jets. The two companies, particularly through the decade starting in
2000, have regularly traded back and forth world leadership for airplane orders.
American planemakers and the government have complained bitterly that European
governments had subsidised the creation of the company and continued to pour money
into the formation of new products, giving Airbus an unfair advantage against the
Americans. The Europeans have responded that American manufacturers have benefited
from defense contracts to subsidise their own products.
Boeing, for instance, charged in 2004 that Airbus Industrie had received at least US$15
billion in government aid to help it develop new planes since the company was founded,
including US$3.7 billion to help develop the A380. According to one report, a Boeing
analysis of the information that it collected in a two-year probe concluded that had Airbus
had to pay prevailing commercial loan rates that were available at the time it received
various government launch aid, it would have another $35 billion of debt on its books.
Instead, Boeing charged, only about $4 billion to $5 billion shows up as debt from launch
aid.
Ultimately, attempts at settling the dispute privately between the two companies ended in
failure in 2005. The United States took the case to the World Organisation, asking the WTO
to establish a panel to determine whether the European Union had given billions of dollars
in illegal aid to Airbus. Within 24 hours, the EU retaliated, filing a counter-complaint
against Boeing, which it accused of receiving hidden subsidies through defense department
contracts. It has been characterised as the biggest trade dispute in world history.
Airbus’s counterclaim alleges that Boeing benefited from billions of dollars in unfair
subsidies in US government contracts for space and military research and development.
The European governments, for instance, point out that defense-funded work on the B-47
and B-52 bombers helped to create the first Boeing passenger jet, the 707, which to all
intents and purposes began the age of jet travel despite the earlier development of the UK’s
de Havilland Comet, which went into service in 1952 but never recovered after a series of
crashes. In fact, the KC135 jet tanker is basically a hollowed-out 707. Also, they charge
development work for the super large jet transport which resulted in the C5A – won by
Lockheed – helped to subsidise the design of the Boeing 747 itself.
The latest charges revolve around the KC767 jet tanker to replace ageing Lockheed aircraft.
The plane is a refitted Boeing 767-220R, which has been in passenger service since 1982.
The squabble over the tanker contract has turned into yet another messy trade dispute.
EADS, in concert Northrop Grumman, US planemaker, has offered a refitted Airbus A330
passenger jet redesignated the KC-30. The dispute has thrown the program to replace the
Air Force’s aged tankers years behind schedule.
Airbus and its European allies also charge that Boeing’s access to Japanese public money
through the pro-Boeing Heavy Industry companies in Japan which have access to low-cost
government loans, and would have a difficult time participating in Boeing development
programmes if they had to rely on private-sector funding. Airbus, however, has benefited
from similar aid, although to a lesser extent, in China, South Korea and Japan itself.
For a full discussion of the issues before the World Trade Organisation in reference to
Boeing and Airbus, this 55-page briefing, “The Boeing-Airbus Trade Dispute: Implications
for Transatlantic Relations and Global Trade,” is very valuable. It can be found at:
http://www.brookings.edu/comm/events/20050602.pdf.
Boeing World Trade Organisation Complaint 2005
European Communities — Measures Affecting Trade in Large Civil Aircraft
This summary has been prepared by the Secretariat under its own responsibility. The
summary is for general information only and is not intended to affect the rights and
obligations of Members.
6 October 2004
Summary of the dispute to date
Summary up-to-date at 21 January 2009
Complaint by the United States (See also dispute WT/DS347).
On 6 October 2004, the United States requested consultations with the Governments of
Germany, France, the United Kingdom, and Spain (the “member States”), and with the
European Communities (“EC”) concerning measures affecting trade in large civil aircraft.
According to the request for consultations from the United States, measures by the EC and
the member States provide subsidies that are inconsistent with their obligations under the
SCM Agreement and GATT 1994. The measures include: the provision of financing for
design and development to Airbus companies (“launch aid”); the provision of grants and
government-provided goods and services to develop, expand, and upgrade Airbus
manufacturing sites for the development and production of the Airbus A380; the provision
of loans on preferential terms; the assumption and forgiveness of debt resulting from
launch and other large civil aircraft production and development financing; the provision of
equity infusions and grants; the provision of research and development loans and grants in
support of large civil aircraft development, directly for the benefit of Airbus, and any other
measures involving a financial contribution to the Airbus companies. The subsidies in
question include those relating to the entire family of Airbus products (A300 through the
A380).
The United States further notes that certain launch aid provided for the A340 and A380
appear to be illegal export subsidies in contravention of certain provisions of Article 3 of
the SCM Agreement.
The United States is further concerned that the measures appear to be causing adverse
effects to US in a manner contrary to the provisions of Articles 5 and 6 of the SCM
Agreement.
The United States is also concerned that the measures appear to be inconsistent with
Article XVI:1 of GATT 1994.
Finally, the United States is concerned that the measures have caused and continue to
cause nullification or impairment of benefits to the United States under GATT 1994 within
the meaning of Article XXIII:1.
On 31 May 2005, the United States requested the establishment of a panel. At its meeting
on 13 June 2005, the DSB deferred the establishment of a panel. At its meeting on 20 July
2005, the DSB established a panel. Australia, Brazil, Canada, China, Japan and Korea
reserved their third-party rights.
At its 23 September 2005 meeting, the DSB initiated the procedures provided in Annex V of
the SCM Agreement.
On 7 October 2005, the United States requested the Director-General to compose the panel.
On 17 October 2005, Deputy Director Alejandro Jara, acting in place of the Director-General
who recused himself on this matter, composed the panel.
On 13 April 2006, the Chairman of the Panel informed the DSB that the Panel would not be
able to complete its work within six months due to the substantive and procedural
complexities involved in this dispute, including the process of developing information
concerning serious prejudice under Annex V of the SCM Agreement, another request for
consultations by the United States, the Panel's subsequent agreement, at the parties'
request, to set aside the original timetable for the dispute until an unspecified date in the
future, and another request for the establishment of a panel by the United States. The Panel
expected to complete its work in 2007. On 14 December 2007, the Chairman of the Panel
informed the DSB that due to the substantive and procedural complexities involved in this
dispute, it now expected to complete its work in 2008.
History of the Agreement on Trade in Civil Aircraft 1980
Courtesy US Trade Representative’s Office
The Agreement on Trade in Civil Aircraft (Aircraft Agreement) requires Signatories to
eliminate tariffs on civil aircraft, engines, flight simulators, and related parts and
components, and to provide these benefits on a nondiscriminatory basis to other
signatories. In addition, the Signatories have agreed provisionally to provide duty-free
treatment for ground maintenance simulators, although this item is not covered under the
current agreement.
It entered into force on January 1, 1980, and is one of two WTO plurilateral agreements
(along with the Agreement on Government Procurement) that are in force only for those
WTO Members that have accepted it.
The Aircraft Agreement
The Aircraft Agreement also establishes various obligations aimed at fostering free market
forces. For example, signatory governments pledge that they will base their purchasing
decisions strictly on technical and commercial factors.
There are 30 Signatories to the Agreement:
Canada
European Union
20 Member States are also Signatories to the Aircraft Agreement in their own right: Austria,
Belgium, Bulgaria, Denmark, Estonia, France, Germany, Greece, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, Spain, Sweden and the
United Kingdom, Egypt, Georgia, Japan, Macao, China, Norway, Switzerland, Chinese Taipei,
United States.
Those WTO Members with observer status in the Committee are:
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Argentina
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Australia
Bangladesh
Brazil
Cameroon
China
Colombia
Gabon
Ghana
India
Indonesia
Israel
Republic of Korea
Mauritius
Nigeria
Oman
Saudi Arabia
Singapore
Sri Lanka
Trinidad and Tobago
Tunisia
Turkey
In addition, the Russian Federation, the International Monetary Fund and United Nations
Conference on Trade and Development are also observers.
Enforcement
European Union-Subsidies on large civil aircraft (DS316)
On October 6, 2004, the United States requested consultations with the European Union
(EU), as well as with Germany, France, the United Kingdom, and Spain, with respect to
subsidies provided to Airbus, a manufacturer of large civil aircraft. The United States
alleged that such subsidies violated various provisions of the Agreement on Subsidies and
Countervailing Measures, as well as Article XVI:1 of the General Agreement on Tariffs and
Trade 1994. Consultations were held on November 4, 2004.
On January 11, 2005, the United States and the EU agreed to a framework for the
negotiation of a new agreement to end subsidies for large civil aircraft. The parties set a
three-month time frame for the negotiations and agreed that, during negotiations, they
would not request panel proceedings.
The United States and the EU were unable to reach an agreement within the 90-day time
frame.
Therefore, the United States filed a request for a panel on May 31, 2005. The panel was
established on July 20, 2005. The U.S. request challenges several types of EU subsidies that
appear to be prohibited, actionable, or both.
On October 17, 2005, the Deputy Director-General composed the panel as follows: Mr.
Carlos Pérez del Castillo, Chair, and Mr. John Adank and Mr. Thinus Jacobsz, Members.
Following a series of extensions, the panel is expected to complete its work sometime later
this year.
***
The World Trade Organisation in Brief
THE MULTILATERAL TRADING SYSTEM–PAST, PRESENT AND FUTURE
The World Trade Organisation came into being in 1995. One of the youngest of the
international organisations, the WTO is the successor to the General Agreement on Tariffs
and Trade (GATT) established in the wake of the Second World War. So while the WTO is
still young, the multilateral trading system that was originally set up under GATT is well
over 50 years old.
The past 50 years have seen an exceptional growth in world trade. Merchandise exports
grew on average by 6% annually. Total trade in 2000 was 22-times the level of 1950. GATT
and the WTO have helped to create a strong and prosperous trading system contributing to
unprecedented growth.
The system was developed through a series of trade negotiations, or rounds, held under
GATT. The first rounds dealt mainly with tariff reductions but later negotiations included
other areas such as anti-dumping and non-tariff measures. The last round – the 1986-94
Uruguay Round – led to the WTO’s creation.
The negotiations did not end there. Some continued after the end of the Uruguay Round. In
February 1997 an agreement was reached on telecommunications services, with 69
governments agreeing to wide-ranging liberalisation measures that went beyond those
agreed in the Uruguay Round.
In the same year, 40 governments successfully concluded negotiations for tariff-free trade
in information technology products, and 70 members concluded a financial services deal
covering more than 95% of trade in banking, insurance, securities and financial
information.
In 2000, new talks started on agriculture and services. These have now been incorporated
into a broader work programme, the Doha Development Agenda (DDA), launched at the
fourth WTO Ministerial Conference in Doha, Qatar, in November 2001. The agenda adds
negotiations and other work on non-agricultural tariffs, trade and environment, WTO rules
such as anti-dumping and subsidies, investment, competition policy, trade facilitation,
transparency in government procurement, intellectual property, and a range of issues
raised by developing countries as difficulties they face in implementing the present WTO
agreements.
WTO AGREEMENTS
How can you ensure that trade is as fair as possible, and as free as is practical? By
negotiating rules and abiding by them. The WTO’s rules – the agreements – are the result of
negotiations between the members. The current set were the outcome of the 1986-94
Uruguay Round negotiations which included a major revision of the original General
Agreement on Tariffs and Trade (GATT). GATT is now the WTO’s principal rule-book for
trade in goods.
The Uruguay Round also created new rules for dealing with trade in services, relevant
aspects of intellectual property, dispute settlement, and trade policy reviews. The complete
set runs to some 30,000 pages consisting of about 30 agreements and separate
commitments (called schedules) made by individual members in specific areas such as
lower customs duty rates and services market-opening. Through these agreements, WTO
members operate a non-discriminatory trading system that spells out their rights and their
obligations. Each country receives guarantees that its exports will be treated fairly and
consistently in other countries’ markets. Each promises to do the same for imports into its
own market. The system also gives developing countries some flexibility in implementing
their commitments.
GOODS
It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating
lower customs duty rates and other trade barriers; the text of the General Agreement spelt
out important rules, particularly non-discrimination. Since 1995, the updated GATT has
become the WTO’s umbrella agreement for trade in goods. It has annexes dealing with
specific sectors such as agriculture and textiles, and with specific issues such as state
trading, product standards, subsidies and actions taken against dumping.
SERVICES
Banks, insurance firms, telecommunications companies, tour operators, hotel chains and
transport companies looking to do business abroad can now enjoy the same principles of
freer and fairer trade that originally only applied to trade in goods. These principles appear
in the new General Agreement on Trade in Services (GATS). WTO members have also made
individual commitments under GATS stating which of their services sectors they are willing
to open to foreign competition, and how open those markets are.
INTELLECTUAL PROPERTY
The WTO’s Intellectual Property Agreement amounts to rules for trade and investment in
ideas and creativity. The rules state how copyrights, patents, trademarks, geographical
names used to identify products, industrial designs, integrated circuit layout-designs and
undisclosed information such as trade secrets – “intellectual property” – should be
protected when trade is involved.
DISPUTE SETTLEMENT
The WTO’s procedure for resolving trade quarrels under the Dispute Settlement
Understanding is vital for enforcing the rules and therefore for ensuring that trade flows
smoothly. Countries bring disputes to the WTO if they think their rights under the
agreements are being infringed. Judgements by specially-appointed independent experts
are based on interpretations of the agreements and individual countries’ commitments.
The system encourages countries to settle their differences through consultation. Failing
that, they can follow a carefully mapped out, stage-by-stage procedure that includes the
possibility of a ruling by a panel of experts, and the chance to appeal the ruling on legal
grounds. Confidence in the system is borne out by the number of cases brought to the WTO
– more than 300 cases in ten years compared to the 300 disputes dealt with during the
entire life of GATT (1947-94).
TRADE POLICY REVIEW
The Trade Policy Review Mechanism’s purpose is to improve transparency, to create a
greater understanding of the policies that countries are adopting, and to assess their
impact. Many members also see the reviews as constructive feedback on their policies. All
WTO members must undergo periodic scrutiny, each review containing reports by the
country concerned and the WTO Secretariat.
DEVELOPING COUNTRIES
DEVELOPMENT AND TRADE
Over three-quarters of WTO members are developing or least-developed countries. All
WTO agreements contain special provision for them, including longer time periods to
implement agreements and commitments, measures to increase their trading
opportunities, provisions requiring all WTO members to safeguard their trade interests,
and support to help them build the infrastructure for WTO work, handle disputes, and
implement technical standards.
The 2001 Ministerial Conference in Doha set out tasks, including negotiations, for a wide
range of issues concerning developing countries. Some people call the new negotiations the
Doha Development Round. Before that, in 1997, a high-level meeting on trade initiatives
and technical assistance for least-developed countries resulted in an “integrated
framework” involving six intergovernmental agencies, to help least-developed countries
increase their ability to trade, and some additional preferential market access agreements.
A WTO Committee on Trade and Development, assisted by a Sub-Committee on LeastDeveloped Countries, looks at developing countries’ special needs. Its responsibility
includes implementation of the agreements, technical cooperation, and the increased
participation of developing countries in the global trading system.
TECHNICAL ASSISTANCE AND TRAINING
The WTO organises hundreds of technical cooperation missions to developing countries
annually. It holds on average three trade policy courses each year in Geneva for
government officials. Regional seminars are held regularly in all regions of the world with a
special emphasis on African countries. Training courses are also organised in Geneva for
officials from countries in transition from central planning to market economies.
The WTO has set up reference centres in over 100 trade ministries and regional
organisations in capitals of developing and least-developed countries. These centres
provide computers and internet access to enable ministry officials to keep abreast of events
in the WTO through online access to the WTO’s immense database of official documents
and other material. Efforts are also being made to help countries that do not have
permanent representatives in Geneva.
Assisting developing countries in trade policy issues, through technical assistance and
training programmes
Cooperating with other international organisations
THE ORGANISATION
FUNCTIONS
The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and
predictably. It does this by:
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Administering trade agreements
Acting as a forum for trade negotiations
Settling trade disputes
Reviewing national trade policies
STRUCTURE
The WTO has 153 members, accounting for over 97% of world trade. Around 30 others are
negotiating membership. Decisions are made by the entire membership. This is typically by
consensus. A majority vote is also possible but it has never been used in the WTO, and was
extremely rare under the WTO’s predecessor, the General Agreement on Tariffs and Trade
(GATT).
The WTO’s agreements have been ratified in all members’ parliaments.
The WTO’s top level decision-making body is the Ministerial Conference which meets at
least once every two years.
Below this is the General Council (normally ambassadors and heads of delegation in
Geneva, but sometimes officials sent from members’ capitals) which meets several times a
year in the Geneva headquarters. The General Council also meets as the Trade Policy
Review Body and the Dispute Settlement Body.
At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS)
Council report to the General Council.
Numerous specialised committees, working groups and working parties deal with the
individual agreements and other areas such as the environment, development,
membership applications and regional trade agreements.
Secretariat
The WTO Secretariat, based in Geneva, has around 625 staff and is headed by a director
general. It does not have branch offices outside Geneva. Since decisions are taken by the
Members themselves, the Secretariat does not have the decision-making role that other
international bureaucracies are given. The Secretariat’s main duties are to supply technical
support for the various councils and committees and the ministerial conferences, to
provide technical assistance for developing countries, to analyse world trade, and to
explain WTO affairs to the public and media.
The Secretariat also provides some forms of legal assistance in the dispute settlement
process and advises governments wishing to become members of the WTO. The annual
budget is roughly 189 million Swiss francs.
Fact File
The WTO
Location: Geneva, Switzerland
Established: 1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 153 countries (on 23 July 2008)
Budget: 189 million Swiss francs for 2009
Secretariat staff: 625
Head: Director-General, Pascal Lamy
Functions:
Administering WTO trade agreements
Forum for trade negotiations
Handling trade disputes
Monitoring national trade policies
Technical assistance and training for developing countries
Cooperation with other international organisations
FURTHER INFORMATION
10 Benefits of the WTO Trading System and 10 Common Misunderstandings about the
WTO
Companion pamphlets in this series.
Understanding the WTO
In booklet and interactive electronic versions,obtainable from WTO Publications,
downloadable from the WTO website.
Guide to the Uruguay Round Agreements
By the WTO Secretariat, published jointly by the WTO and Kluwer Law International.
The WTO Website: http://www.wto.org
CONTACTING THE WTO
Rue de Lausanne 154, CH-1211 Geneva 21, Switzerland
Tel.: +41 (0) 22739511 Fax: +41 (0) 227314206
WTO Information and External Relations Division
Tel.: +41 (0) 227395007/519 Fax: +41 (0)227395458
E-mail: enquiries@wto.org
WTO Publications
Tel.: +41 (0) 227395208 /7395308 +41 (0) 227395792
E-mail: publications@wto.org