Global Trade Alert

On 23 July 2015 the Russian Government approved Decree No. 745. It forms part of the state programme 'Development of the aviation industry in the period 2013-2025'. It introduces a new form for state subsidy support of domestic manufactures of aircraft for:item (1) reimbursement of costs associated with the organization of the warehouses of spare parts, providing ground support, and item(2) training of aviation personnel. The official document states that the purpose of this state measure is to boost the sales of Russian passenger aircrafts by reducing their production costs.
 
The new subsidy will be used to support two types of Russian aircraft (Suhoj Superjet and MC-21) to be supplied in the period 2016 - 2022 as part the state programme 'Development of the aviation industry in the period 2013-2025'.
 
Article 7 of Decree No. 745 specifies the upper limits and parameters of the subsidised aircraft costs:

• The state subsidy covers 90% of the costs of the manufacturer incurred in the formation of the initial stock of spare parts for the buyer, provision of ground handling and re-training of aviation personnel for aircraft.
• The maximum amount of subsidised costs under item (1) vary between 115 and 120 million Russian Roubles. 
• The maximum amount of subsidised costs under item (2) vary between 25 and 26 million Russian Roubles.

The affected trading partners are identified on the basis of the provided articles in Rossiyska Gazeta, an official newspaper of the Russian Government and Suhoj Superjet confirmed orders.
 
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.