U.S. Considering Tariffs on European Aircraft and Aircraft Parts

The Office of the U.S. Trade Representative has announced a preliminary proposal to implement new tariffs on a range of European products with a significant focus on the civil aviation sector, including both parts and completed aircraft.  The proposed tariffs arise as a result of a long-running WTO case brought by the U.S. against the EU and France, Germany, Spain, and the UK.  The WTO found that the EU provided substantial “launch aid” to Airbus and that those subsidies both helped Airbus launch its commercial aircraft and cost Boeing market share.

The purpose of the tariffs (or countermeasures) is to offset the estimated $11 billion per year in trade harm the USTR estimates result from EU subsidies.

It is unclear at this point at what rate tariffs would be imposed on the particular goods identified.  The proposed HTS numbers affected include numbers that are very familiar to the distribution community, including 8803.20.0030, 8803.30.0030, and 8803.90.9030, however, the scope appears to be limited to parts imported “for use in new civil aircraft, not for use by the Department of Defense or the U.S. Coast Guard, of an unladen weight exceeding 15,000 kg provided for in statistical reporting numbers 8802.40.0040, 8802.40.0060 and 8802.40.0070.” Thus from the language it appears the countermeasures target the importation of parts used in the manufacture of new aircraft, but not for the maintenance of the existing fleet.  Anyone supporting the production of new civil aircraft would be well advised to review the HTS numbers proposed for countermeasures.  They can be found here.

The USTR has requested public comments on the proposed action.  Comments can be submitted through http://www.regulations.gov under docket number USTR-2019-0003.  Any comments must be submitted by May 28, 2019.


Delta COO Discusses What Delta Wants in a Supplier

This year’s ACPC keynote speaker was Stephen E. Gorman, the Executive Vice President and Chief Operating Officer of Delta Air Lines. Gorman explained that for Delta, the total cost of ownership (TCO) is based on cost quality and delivery. They expect their highly effective suppliers to provide this TCO. Gorman explained that a highly effective supplier needs to perform.

The Air Carrier Purchasing Conference (ACPC) hosted over 1700 guests in Atlanta this year – over 1400 of them were suppliers. Thus, Delta’s ideas about the supply chain were an important topic at the Conference.

Delta’s position is that the air carrier and its supply chain are linked together. Gorman explained that this relationship starts with delivery on a commitment.

Communication and transparency are important to a successful business relationship. As a tool to support communication and transparency, Gorman explained that Delta is committed to its Supplier Performance Management (SPM) system. The SPM lets suppliers know what is important to Delta. The SPM has clear metrics, and it provides regular feedback to Delta suppliers. The SPM lets the suppliers know on a regular basis whether they are meeting Delta’s expectations.

The SPM lets Delta give suppliers credit for good performance and it also reveals opportunities for improvement. Gorman explained that Delta is committed to working with its effective suppliers to have honest communication and to work through issues cooperatively.

Delta is also looking for suppliers that are flexible within their business models to permit the supplier to respond to Delta’s changing needs during both strong markets and weak markets.

%d bloggers like this: