May 17, 2020

Could bin Laden's death affect the global supply chain?

al Qaeda
bin Laden
Disasters
Japan
Freddie Pierce
2 min
Obama’s announcement of al Qaeda leader bin Laden’s death in Pakistan could spur supply chain recovery
Citizens of humanity are celebrating around the world following the news U.S. President Barrack Obama announced late last night, that al Qaeda leader O...

Citizens of humanity are celebrating around the world following the news U.S. President Barrack Obama announced late last night, that al Qaeda leader Osama bin Laden was reportedly killed in Pakistan.

But when this mixture of celebration and relief of bin Laden’s death wears off, where will that leave the global supply chain?

Whether it’s a direct result of bin Laden’s death in Pakistan or not, global markets are up today, and oil prices are down.

The Dow Jones Industrial Average rose more than 25 points after ending April at multi-year highs, while the S&P 500 and Nasdaq reported moderate gains. JP Morgan analysts wrote in a note to clients that the news of bin Laden’s death should also be a positive for stocks, as more investors are expected to buy into the market.

Crude oil prices also fell as much as three percent overnight before making a modest recovery on Monday morning.

If those trends continue, that could help spell relief for a global supply chain that’s been taxed by the Japan disasters. Cheaper oil prices could directly lead to cheaper travel, shipping and manufacturing costs, while a more confident market could lead to economic growth and job openings.

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According to a Wall Street Journal blog, analysts are questioning the drop in oil prices and the long-term effect on the global supply chain. Dave Kansas writes:

“Some analysts questioned the sharp drop, saying that while bin Laden’s demise might trim some of the ‘terror’ premium built into oil prices, supply-demand challenges will remain.”

Considering it is not clear that Osama bin Laden’s reported death is a direct contributor to the market’s changes, things could change, but the early telling signs from the breaking news out of Pakistan are good for the world’s supply chain.

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

supplychain
Boeing
Airbus
tariffs
3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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