COMMISSION OP THE EUROPEAN COMMUNITIES 
C0M(92) 222 final 
Brussels, 25 May 1992 
Proposal for a 
COUNCIL DECISION 
concerning the conclusion of an Agreement between 
the European Economic Community and 
the United States of America 
on trade in large civil aircraft 
(presented by the Commission) 
EXPLANATORY MEMORANDUM 
By decision of 4 February 1991, the Council authorised the 
Commission to open negotiations both with the United States of 
America and with other Parties to the 6ATT Agreement on Trade in 
Civil Aircraft in order to conclude new arrangements governing 
trade in civil aircraft. 
2. In accordance with this decision and with the detailed negotiating 
directives adopted by the Council and in consultation with the 113 
Committee, the Commission held negotiations with the United States 
which on 31 March 1992 resulted in the enclosed agreement. 
The enclosed agreement corresponds closely with all points in the 
negotiating directives. In particular the scope of the agreement 
has been limited to large civil aircraft. In this regard, since it 
was not possible to reach a satisfactory definition in terms of 
seating capacity, explicit reference is made to aircraft produced 
in the Community by the Airbus consortium. Moreover, the 
Commission considers that a balanced set of disciplines has been 
introduced covering both indirect and direct support. 
In Article 12 of the Agreement, both the United States and the 
Community re-affirm their determination to achieve revision of the 
GATT Civil Aircraft Agreement. As foreseen in the above-mentioned 
Council decision, the Commission now expects this multilateral 
process to be launched immediately in conjunction with the United 
States Government. 
PROPOSAL FOR A COUNCIL DECISION 
concerning the conclusion of an Agreement between 
the European Economic Community 
and the Government of the United States of America 
on trade in large civil aircraft 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular Article 113 thereof, 
Having regard to the proposal from the Commission, 
Whereas the Agreement negotiated between the European Economic 
Community and the Government of the United States of America on trade 
in large civil aircraft in Brussels on 31 March 1992 should be 
approved, 
HAS DECIDED AS FOLLOWS: 
Article 1 
The Agreement between the European Economic Community and the 
Government of the United States of America on trade in large civil 
aircraft is hereby approved on behalf of the Community. 
The text of the Agreement is attached to this Decision. 
Article 2 
The President of the Council is hereby authorised to designate the 
person empowered to sign the above Agreement in order to bind the 
Community. 
Done at Brussels For the Council 
The President 
AGREEMENT 
CONCERNING THE APPLICATION 
OF THE GATT AGREEMENT ON TRADE IN CIVIL AIRCRAFT 
Between the European Economic Community (hereinafter 
referred to as "the EC") and the Government of the United 
States of America (hereinafter referred to as "the US") on 
trade in large civil aircraft, 
Recognising the need to promote a more favourable 
environment for international trade in large civil aircraft 
and to reduce trade tensions in the area, 
Recognising that the disciplines in the GATT Agreement on 
Trade in Civil Aircraft should be strengthened with a view 
to progressively reducing the role of government support, 
Recalling the principles and objectives agreed upon by 
representatives of the US and of the EC at their meeting 
held in London on 27 October 1987, 
In pursuit of their common goal of preventing trade 
distortions resulting from direct or indirect government 
support for the development and production of large civil 
aircraft and of introducing greater disciplines on such 
support and of encouraging the adoption of such disciplines 
multilaterally within the GATT, 
Noting their intention to act without prejudice to their 
rights and obligations under the GATT and under other 
multilateral agreements negotiated under the auspices of the 
GATT, 
THE EC AND THE US HAVE AGREED: 
Article 1 
Government-Directed Procurement, Mandatory Sub-contracts and 
Inducements 
With respect to issues concerning Article 4 of the GATT 
Agreement on Trade in Civil Aircraft ("Aircraft Agreement"), 
the Parties agree to act in conformity with the 
interpretative note to Article 4 of the Aircraft Agreement 
contained in Annex I of this Agreement. 
Article 2 
Prior Government Commitments 
Government support to current large civil aircraft 
programmes, committed prior to the date of entry into force 
of this Agreement, is not subject to the provisions of this 
Agreement except as otherwise provided below. The terms and 
conditions on which such support is granted shall not be 
modified in such a manner as to render it more favourable to 
the recipients; however, de minimis modifications shall not 
be deemed inconsistent with this provision. 
Article 3 
Production Support 
As of entry into force of this Agreement, Parties shall not 
grant direct government support other than what has already 
been firmly committed for the production of large civil 
aircraft. This prohibition shall apply both to existing and 
to future programmes. 
Article 4 
Development Support 
4.1 Governments shall provide support for the development 
of a new large civil aircraft programme only where a 
critical project appraisal, based on conservative 
assumptions, has established that there is a reasonable 
expectation of recoupment, within 17 years from the 
date of first disbursement of such support, of all 
costs as defined in Article 6(2) of the Aircraft 
Agreement, including repayment of government supports 
on the terms and conditions specified below. 
4.2 As of entry into force of this Agreement, direct 
government support committed by a party for the 
development of a new large civil aircraft programme or 
derivative shall not exceed: 
a) 25 per cent of that programme's total development 
cost as estimated at the time of commitment (or of 
actual development costs, whichever is lower); 
royalty payments on this tranche shall be set at 
the time of commitment of the development support 
so as to repay this support at an interest rate no 
less than the cost of borrowing to the government 
within no more than 17 years from first 
disbursement, plus 
b) 8 per cent of that programme's total development 
cost as estimated at the time of commitment (or of 
actual development costs, whichever is lower); 
royalty payments on this tranche shall be set at 
the time of commitment of the development support 
so as to repay such support at an interest rate no 
less than the cost of borrowing to the government 
plus 1 per cent within no more than 17 years from 
first disbursement. 
These calculations shall be made on the basis of the 
forecast of aircraft deliveries in the critical project 
appraisal. 
4.3 Royalty payments per aircraft shall be calculated at 
the time of commitment of the development support to be 
repaid on the following basis: 
a) 20 per cent of aggregate payments calculated in 
accordance with Article 4.2 above are payable on 
the basis of the delivery of a number of aircraft 
corresponding to 40 per cent of forecast 
deliveries; 
b) 70 per cent of aggregate payments calculated in 
accordance with Article 4.2 above are payable on 
the basis of the delivery of a number of aircraft 
corresponding to 85 per cent of forecast 
deliveries. 
Article 5 
Indirect Government Support 
5.1 Parties shall take such action as is necessary to 
ensure that indirect government support neither confers 
unfair advantage upon manufacturers of large civil 
aircraft benefiting from such support nor leads to 
distortions in international trade in large civil 
aircraft. 
5.2 As of entry into force of the Agreement, identifiable 
benefits to the development or production of any of the 
products covered by this Agreement, net of recoupment, 
derived from indirect support shall not exceed in any 
one year: 
a) 3 per cent of the annual commercial turnover of the 
civil aircraft industry in the Party concerned for 
the products covered by this Agreement, or 
b) 4 per cent of the annual commercial turnover of any 
one firm in the Party concerned for the products 
covered by this Agreement. 
5.3 Benefits from indirect support shall be deemed to arise 
when there is an identifiable reduction in costs of 
large civil aircraft resulting from government-funded 
research and development in the aeronautical area 
performed after the entry into force of this Agreement. 
Where it can be demonstrated that the results of 
research and development have been made available on a 
non-discriminatory basis to large civil aircraft 
manufacturers of the Parties, benefits deriving from 
such technologies shall be excluded from the 
calculation in paragraph 5.2. However, identifiable 
benefits may result when large civil aircraft 
manufacturers are responsible for, or have early access 
to, the conduct or results of such research. 
If a Party has reason to believe that other indirect 
supports provided by a government are resulting in 
identifiable reductions in the costs of large civil 
aircraft, the Parties shall consult with a view towards 
quantifying such reductions and including them in the 
calculation described above. 
Benefits from indirect support resulting from the 
technology obtained through government-funded research 
and development or through other government programmes 
shall normally be calculated in terms of the reduction 
in the cost of research and development and in the 
reduction in the cost of the production equipment or 
production process technology. 
Article 6 
General Purpose Loans 
Parties shall assume no liability for specific loans that 
aircraft manufacturers make or make available, through 
direct loans, guarantees, or otherwise, to airlines, other 
than through official export credit financing consistent 
with the Large Aircraft Sector Understanding of the OECD 
Understanding on Official Export Financing. 
Article 7 
Equity Infusions 
Equity infusions are excluded from the scope of this 
Agreement. Equity infusions will not, however, be provided 
in such a manner as to undermine the disciplines in the 
Agreement. 
Article 8 
Transparency 
8.1 To the extent necessary to ensure effective 
implementation of this Agreement, Parties shall 
exchange on a regular, systematic basis, all public 
information of a kind governments make available to 
their respective national elected assemblies relating 
to matters covered by this Agreement and its Annexes. 
Such public information will include at minimum the 
total amount of government support for new development 
projects and its share of total development costs, 
aggregate data on disbursements and repayments relating 
to direct government supports for commercial aircraft 
programmes, the annual commercial turnovers of the 
civil aircraft industry as specified in Article 8.5 b 
and the aggregate amounts of identifiable indirect 
benefits received by large civil aircraft 
manufacturers. 
8.2 Furthermore, with regard to prior government 
commitments for large civil aircraft programmes 
described in Article 2, a complete list of such 
commitments by the Parties to this Agreement already 
disbursed or committed shall be separately provided, 
including information on the type of repayment 
obligation and the planned period of repayment. Annual 
disbursements and repayments relating to these 
programmes on an aggregate basis shall also be notified 
to the other Party for each government providing these 
supports. In addition, a Party shall notify the other 
Party to this Agreement of any changes which render the 
terms and conditions of such support commitments more 
favourable to the recipient, including: changes in the 
repayment period; failure to repay the support; or 
reduction of the scheduled repayments. 
8.3 Furthermore, with regard to future large civil aircraft 
programmes, Parties shall provide, at the time of 
government commitment, the following specific 
information in relation to development support for each 
of the governments providing such support: 
the total amount of government support; 
the share of government support as a percentage of 
estimated total development cost; 
- the anticipated return to the government; 
the planned period of repayment of government 
support; and 
the forecast number of planes on which the 
calculations made in accordance with Article 4.2 
are based. 
8.4 In the course of the consultations provided for under 
Article 11 of this Agreement, Parties shall exchange 
information on government commitments and support for 
each of the governments providing such support 
including but not limited to: 
- any changes which render the terms and conditions 
more favourable to the recipient, including: changes 
in the repayment period; failure to repay the 
support; or reduction of the scheduled repayments; 
and 
- annual disbursements and repayments on a per 
programme basis for new programmes launched in 
accordance with Article 4. Such information will be 
provided at the first regular consultation taking 
place at least twelve months after the end of the 
year in which the disbursements and repayments are 
made. 
8.5 In the course of consultations under Article 11, 
a) Parties will on an annual basis provide 
information on new government-funded research and 
development undertaken or initiated during the 
previous year and on ongoing research and 
development projects in the aeronautical area, 
including per programme details on those projects 
in which large civil aircraft manufacturers 
participate. This shall include information on 
the area of activity and the amount of government 
funding for such projects. 
b) Parties will provide information on identifiable 
benefits derived from indirect supports for each 
large civil aircraft programme. 
This will include recoupment per programme received 
from large civil aircraft manufacturers. The following 
specific information will be provided on an annual 
basis for each of the governments providing such 
support: 
1) the annual commercial turnover of the civil 
aircraft industry in the Party concerned in 
relation to products covered by the Agreement; 
2) the annual commercial turnover in relation to 
products covered by the Agreement of each firm 
in the Party concerned which manufacturers 
products covered by the Agreement; and 
3) the total amount of indirect benefits as 
defined in Article 5.2 for the civil aircraft 
industry in relation to the products covered 
by the Agreement and for each firm involved in 
the manufacture of such products. 
8.6 If a Party considers that additional information 
directly relevant to the implementation of the 
provisions of this Agreement is necessary, such 
information will be provided upon duly motivated 
request. 
8.7 Parties shall upon duly motivated request provide at 
the time of commitment of new development support non­
proprietary information on the critical project 
appraisal in so far as this relates to the provisions 
of Article 4.1. 
8.8 Any information not in the public domain, which a Party 
may provide, shall at the request of the Party 
providing the information, be considered as 
proprietary. A recipient government shall take all 
measures necessary to ensure that information thus 
designated not be disclosed to anyone outside that 
government even after expiry or termination of the 
present Agreement. In addition, proprietary 
information shall not be used in possible trade 
disputes except for the purposes of confidential 
internal government discussion and decisions in 
relation to the implementation of the Agreement. 
8.9 Parties shall, unless otherwise indicated, exchange the 
information specified above on an annual basis. Any 
disagreement concerning information to be provided 
pursuant to this Article shall be resolved through 
consultations under Article 11. 
8.10 Parties shall provide information on new infusions of 
equity or changes in equity positions by governments 
into firms engaged in civil aircraft production, 
including the amount and type of equity provided. 
8.11 Parties will encourage firms engaged in the manufacture 
of large civil aircraft to increase the public 
disclosure of disaggregated financial results of their 
civil aircraft operations through the separation of 
reporting on military and civilian aircraft operations 
and the adoption of lines of business financial 
reporting. These disaggregated financial results would 
at a minimum be expected to include information on 
sources and uses of funds including specific 
information on revenue, operating income, net assets, 
capital investment and government equity infusions. 
8.12 Nothing in this Agreement shall be construed to require 
any contracting Party to furnish any information the 
disclosure of which it considers contrary to its 
essential security interests. 
Article 9 
Exceptional Circumstances 
9.1 Where, as a result of an unforeseen, exceptional 
situation, the survival of a significant proportion of 
the civil aircraft manufacturing activities in one of 
the Parties1 and the continued financial viability of 
the company or the division of a company responsible 
for such civil aircraft manufacture are put in 
jeopardy, that Party may derogate temporarily from the 
disciplines laid down in this Agreement. In this 
context, the disaggregated financial results of civil 
aircraft operations will be reported publicly by that 
company or division2. This derogation may not be 
invoked, however, in respect to the disciplines 
applying to the launch of new civil aircraft programmes 
as specified in Article 4. 
9.2 The Party concerned shall provide notice of its 
intentions to the other Party and an opportunity for 
prior consultations unless it is prevented from doing 
so for legal reasons and shall in any event notify the 
other Party immediately of its reasons for invoking 
this Article and fully disclose the specific measures 
which it has taken, including the amount and nature of 
the measures, and their expected duration. 
9.3 Specific measures taken by a Party in accordance with 
this Article: 
a) shall be limited in scope and duration to the 
extent strictly necessary to remedy the 
difficulties referred to in paragraph 1; 
b) shall be designed to return as quickly as possible 
the beneficiary company to commercial viability; 
c) shall take due account of the possible 
implications for other large civil aircraft 
manufacturers and shall avoid depressing prices on 
the world market for civil aircraft by the 
manufacture of inventory for which no firm order 
exists. 
1 For the purposes of this paragraph, "Parties" shall be deemed to include any of the individual Member 
States of the EC. 
2 These disaggregated financial results would at a minimum include information on sources and uses of 
funds including specific information on revenue, operating income, net assets, capital investment and 
government equity infusions. 
10 
9.4 If, after consultations pursuant to Article 11, a Party 
determines that the action taken under this Article 
significantly undermines the objectives of this 
Agreement, it shall have the right to suspend some or 
all of the provisions of this Agreement or to terminate 
it within 15 days of the conclusion of consultations. 
Article 10 
Avoidance of Trade Conflicts and Litigation 
10.1 Parties shall seek to avoid any trade conflict on 
matters covered by the present Agreement3. 
10.2 They will not self-initiate action under their national 
trade laws with respect to government supports granted 
in conformity with this Agreement for as long as this 
Agreement is in force. However, nothing in this 
paragraph shall prevent a Party from abrogating this 
Agreement on grounds of non-compliance by the other 
Party. 
10.3 In order to avoid trade conflict they will strongly 
encourage private parties to request the use of the 
provisions of Article 11 to resolve any disputes on 
matters covered by this Agreement. If, however, 
private petitioners request that action be taken under 
national laws on matters covered by this Agreement, the 
petitioners' government will immediately inform the 
other Party and offer to enter into consultations in 
accordance with Article 11. The Party against whom 
such action is brought shall have the right either to 
suspend the application of some or all the provisions 
of the present Agreement or to terminate the Agreement 
15 days after the conclusion of consultations. 
10.4 In the conduct of any investigations of trade 
allegations concerning products covered by this 
Agreement that have been initiated under national trade 
laws as the result of private petitions, Parties shall, 
consistent with their law take account of 
representations concerning compliance with the terms of 
this Agreement. 
? Action with respect to "matters covered by the present Agreement" refers to trade actions relating to 
direct and indirect government support as defined by this Agreement. It does not include actions relating 
to dumping, intellectual property protection, or anti-trust or competition laws. 
11 
Article 11 
Consultations 
11.1 Parties shall consult regularly and, in any case, at 
least twice a year, to ensure correct functioning of 
the Agreement. 
11.2 A Party may request consultations on any development 
related to the functioning of the present Agreement. 
Such consultations shall be held not later than 30 days 
following the date on which the request is received. 
11.3 Parties agree to seek to resolve any disputes within 
three months of the date of the initial request for 
consultations. Consultations will not be deemed to be 
concluded for the purposes of Articles 8 and 9 of this 
Agreement before this three-month period has expired. 
Article 12 
GATT Agreement on Trade in Civil Aircraft 
12.1 The Parties shall propose jointly to other signatories 
of the Aircraft Agreement that disciplines along the 
lines of those laid down in the present Agreement and 
the interpretative note given in Annex I be 
incorporated into the aforementioned GATT Agreement. 
The Parties shall also propose that the improved 
dispute settlement provisions agreed in the Uruguay 
Round be used to resolve any dispute arising out of the 
implementation of the new Aircraft Agreement. 
12.2 The Parties shall make their utmost efforts to ensure 
that these or similar disciplines are incorporated into 
the Aircraft Agreement or adopted by key signatories at 
the earliest possible date, and also to expand the 
coverage of the disciplines provided by this Agreement 
to all of the products covered in the Aircraft 
Agreement. 
12.3 If multilateralisation has not been achieved in one 
year, the Parties shall review the question of the 
continued application of this bilateral Agreement. 
12 
Article 13 
Final Provisions 
13.1 This Agreement shall enter into force on the date of 
its acceptance by both Parties. 
13.2 This Agreement may be amended by mutual consent of the 
Parties to take into account any new situation which 
may arise including possible amendments to the Aircraft 
Agreement. 
13.3 One year after the entry into force of this Agreement, 
either party may withdraw from the Agreement. If a 
Party wishes to withdraw from the present Agreement it 
shall notify the other Party in writing of its 
intentions. The withdrawal shall take effect 12 months 
after the date on which the notification was received. 
13 
ANNEX I 
INTERPRETATION OF ARTICLE 4 OF THE 
GATT AGREEMENT ON TRADE IN CIVIL AIRCRAFT 
BY SIGNATORIES OF THE AGREEMENT 
Article 4 of the GATT Agreement on Trade in Civil Aircraft 
("the Agreement") deals with three specific issues: 
government^directed procurement (paragraph 2) 
mandatory sub-contracts (paragraph 3) 
inducements (paragraph 4) 
ARTICLE 4-1 
Paragraph 4.1 states the general principle, applicable 
throughout Article 4, that purchasers of civil aircraft4 
should be free to select suppliers on the basis of 
commercial and technological factors. 
ARTICLE 4.2 (Government-Directed Procurement) 
This paragraph states that "signatories shall not require 
airlines, aircraft manufacturers, or other entities engaged 
in the purchase of civil aircraft, nor exert unreasonable 
pressure on them, to procure civil aircraft from any 
particular source, which would create discrimination against 
suppliers from any signatory". 
This means that signatories must abstain from imposing 
preference policies in favour of or against the suppliers of 
one or more signatories. 
Unreasonable government pressure relating to the selection 
of suppliers by airlines, aircraft manufacturers or other 
entities engaged in the purchase of civil aircraft 
("purchasers") is also prohibited. "Unreasonable pressure" 
is any action favouring products or suppliers, or which 
influences procurement decisions in a manner which creates 
discrimination against suppliers from any other signatory. 
4 For the purpose of the Annex, "civil aircraft" is defined as in Article 1 of the GATT Agreement on 
Trade in Civil Aircraft. 
14 
The signatories agree that the following are examples of 
practices which are not considered as exerting unreasonable 
pressure: 
the participation of government or former government 
representatives on the boards of wholly or partly 
government-owned purchasers but only if they act in the 
best commercial interest of the purchaser concerned, 
and do not influence procurement decisions in a manner 
which creates discrimination against suppliers from any 
other signatory. 
government decisions concerning safety and 
environmental considerations. 
ARTICLE 4.3 (Mandatory Sub-Contracts) 
The first sentence states that "signatories agree that the 
purchase of products covered by the Agreement should be made 
only on a competitive price, quality and delivery basis". 
This means that signatories will not intervene to obtain 
favoured treatment for particular firms and that they will 
not interfere with the selection of vendors in a situation 
where vendors of different signatories are competing. 
By emphasising that the only factors which should be 
involved in purchase decisions are price, quality and 
delivery terms, the signatories agree that Article 4.3 does 
not permit Government-mandated offsets. Further, they will 
not require that other factors, such as subcontracting, be 
made a condition or consideration of sale. Specifically, a 
signatory may not require that a vendor must provide offset, 
specific types or volumes of business opportunities, or 
other types of industrial compensation. 
Signatories shall not therefore impose conditions requiring 
subcontractors or suppliers, to be of a particular national 
origin. 
The second sentence of this paragraph states that "in 
conjunction with the approval or awarding of procurement 
contracts for products covered by this Agreement a signatory 
may... require that its qualified firms be provided with 
access to business opportunities on a competitive basis and 
on terms no less favourable than those available to the 
firms of other signatories." This means that a signatory 
may require that the manufacturer not discriminate against 
the signatory's qualified firms with respect to any bid 
opportunities and to the evaluation of any competitive bids 
made by those firms. 
15 
Article 4.4 (Inducements) 
This paragraph states that "signatories agree to avoid 
attaching inducements of any kind to the sale or purchase of 
civil aircraft from any particular source which would create 
discrimination against suppliers from any signatory". 
This means that signatories shall refrain from the use of 
negative or positive linkages between the sale or purchase 
of civil aircraft and other government decisions or policies 
which might influence such sale or purchase whenever there 
is a competition between suppliers of signatories. The 
following is an agreed illustrative, non-exhaustive list of 
such prohibited inducements: 
rights and restrictions relating to the airline 
industry such as landing or route rights. 
- general economic programmes and policies, such as 
import policies, measures aiming at changes in 
bilateral trade imbalances, policies on alien workers 
or debt rescheduling. 
- development assistance programmes and policies, such as 
grant aid, loans and infrastructure financing; it is 
understood that the use of such assistance for the 
purchase of civil aircraft does not fall under this 
category to the extent that the granting of these funds 
is not conditional on such purchase taking place. 
- defence and national security policies and programmes. 
Without prejudice to Article 4.3, this also means that 
signatories shall not intervene in any way, nor exert any 
direct or indirect pressure on other governments or any 
entity involved in procurement decisions, including the 
establishment of any link of a negative or positive 
character between decision concerning the procurement of 
civil aircraft and any other issue or action in any other 
area which might affect the interest of the importing 
country. 
ARTICLE 4.2 and 4.4 (Political Representations) 
All participants of signatories in the domestic political 
decision-making process shall not take any action, including 
but not limited to political representations, pressure or 
inducements to other governments or foreign airlines, which 
would be contrary to Article 4 as interpreted in this Annex. 
Signatories shall draw the participants' attention to this 
interpretation of Article 4, and shall also use their best 
efforts to assure that the participants do not take such 
action. 
16 
ANNEX II 
For the purposes of the present Agreement the following 
definitions shall apply: 
1. "large civil aircraft" 
With respect to such aircraft produced in the US by 
existing manufacturers of large civil aircraft and in 
the European Community by the Airbus consortium, or 
their successor entities, all aircraft, as defined in 
Article 1 of the GATT Agreement on Trade in Civil 
Aircraft, except engines as defined in Article 1.1(b) 
of the Aircraft Agreement, that are designed for 
passenger or cargo transportation and have 100 or more 
passenger seats or its equivalent in cargo 
configuration. 
2. "derivative" means an aircraft model the major design 
elements of which are derived from a prior aircraft 
model. 
3. "total development cost" as referred to in Article 4.2. 
The following cost items, incurred prior to the date of 
certification, are those which may be taken into 
account in assessing the "total development cost" 
referred to in Article 4.2. 
preliminary design 
engineering design 
wind-tunnel, structural, system and 
laboratory tests 
- engineering simulators 
equipment development work, except for work 
directly financed by equipment and engine 
manufacturers 
flight tests, including associated ground support, 
and analysis necessary to obtain certification 
documentation required for certification 
17 
- the cost of manufacture of prototypes and test 
aircraft, including spares and such modifications 
as may be necessary to obtain certification, less 
the estimated fair market value of flight aircraft 
after refurbishment 
- jigs and tools, except machine tools, for use 
on specific programmes. 
4. "production" 
All manufacturing, marketing and sales activities other 
than those described under point 3 above with the 
exception of official export credit financing 
consistent with the Large Aircraft Sector Understanding 
of the OECD Understanding on Official Export Financing. 
5. "indirect government support" 
Financial support provided by a government or by any 
public body within the territory of a Party for 
aeronautical applications, including research and 
development, demonstration projects and development of 
military aircraft, which provide an identifiable 
benefit to the development or production of one or more 
specific large civil aircraft programmes. 
6. "direct government support" means any financial support 
provided by a government or by any public body within 
the territory of a Party which is provided: 
(1) for specific large civil aircraft programmes or 
derivatives or 
(2) to specific companies to the extent that large 
civil aircraft programmes or derivatives directly 
benefit. 
7. "royalty payment" means repayment of a certain 
predetermined amount of development support per 
aircraft delivered. 
ISSN 0254-1475 
COM (92) 222 final 
DOCUMENTS 
EN 07 
Catalogue number: CB-CO-92-232-EN-C 
ISBN 92-77-44492-4 
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