ANNOUNCEMENT 26 Jan 2009In January 2009, the government of France announced a change in financial export support.
NUMBER OF INTERVENTIONS
1) Portail du Gouvernement, 27 January 2009 (http://www.gouvernement.fr/gouvernement/la-societe-de-financement-de-l-economie-francaise-va-lever-des-fonds-pour-le-secteur-ae)
2) Portail du Gouvernement, Interview with Anne-Marie Idrac, 6 February 2009 (http://www.gouvernement.fr/gouvernement/anne-marie-idrac-la-competitivite-de-la-france-a-cesse-de-se-degrader)
3) Bloomberg, 15 June 2009 (http://www.bloomberg.com/apps/news?pid=20601102&sid=aKB63ZwJ9OZo)
4) Reuters, 8 July 2009 (http://www.reuters.com/article/AIRDEF/idUSL76895820090707)
On 26 January 2009, Ms. Anne-Marie Idrac, the French Minister of State for Foreign Trade, announced that the French government had decided to make EUR 5 billion available to support the sales/exports of the aviation sector, in particular Airbus. The funds would be managed by anew refinance institution called Société de Financement de l'Economie Française (SFEF). Specifically, SFEF lends the government's funds on to French banks which are specialized in giving credits to the buyers of aircraft.
This financing aid is part of a EUR 7 billion export credit package, to which French banks are obliged to participate in in exchange of new EUR 10.5 billion state aid to reinforce banks' equity capital.
According to an official article on the government's website (Portail du Gouvernement) on 27 January 2009, this measure has been coordinated with other countries in which Airbus has factories, i.e. Germany, the U.K., and Spain. Similar interventions were discussed in Germany, but for none of the mentioned countries direct support to Airbus customers (via banks) could be identified.
Our assessment of this case is that:
(i) in France, support for the aviation sector is tantamount to support for the one large-body aircraft producer in France, namely Airbus;
(ii) under this scheme financial support is not available to Airbus' direct competitor, Boeing; therefore the support is selective, and
(iii) the financial support is not confined to purchases by French customers therefore potentially affecting international trade. The measure almost certainly adversely affects the commercial interests at least one of France's trading partners.