EU paid Airbus billions in illegal subsidies, WTO rules

0
27
A380 planeImage copyright Getty Images
Image caption Airbus’ A380 was unfairly subsidised, WTO says

The World Trade Organisation (WTO) has ruled that the European Union (EU) failed to comply with requests to end subsidies for Airbus.

The US Trade Representative (USTR) said the ruling in the dispute opens the way for placing tariffs on EU goods.

The USTR argued that European countries had given $22bn in state aid to Airbus to help launch its A380 and A350 jets, causing losses to US rival Boeing.

The European Commission said most of the disputed support ended in 2011.

It said it had “only a few” remaining things to do to be compliant and pledged “swift action” on those fronts.

Tuesday’s ruling in favour of the US, which brought the case on behalf of plane-maker Boeing, brings an end to a dispute which began in 2004 over $22bn (£16.3bn) in subsidised European financing for Airbus.

The WTO initially found in favour of the US in 2011. The US subsequently complained that the EU and certain member countries were not in compliance with the decision, prompting further wrangling between the two sides.

The WTO dismissed an appeal by Airbus saying the European plane maker had failed to fix the harm done to US rival Boeing.

Boeing chairman and chief executive Dennis Muilenburg said: “Today’s final ruling sends a clear message: disregard for the rules and illegal subsidies are not tolerated.”

The EU and Airbus argued that the WTO had rejected many of Boeing’s initial claims in the suit.

Airbus is also waiting for the outcome of a similar case brought over aid to Boeing that is awaiting a WTO ruling.

Airbus chief executive Tom Enders said: “Of course, today’s report is really only half the story – the other half coming out later this year will rule strongly on Boeing’s subsidies and we’ll see then where the balance lies.”

Subsidies

Analysts said the decision could lead to sanctions as early as 2019. Boeing said they could be the “largest-ever WTO authorisation of retaliatory tariffs”.

The ruling could also give the US greater leverage as it negotiates with the EU over steel and aluminium tariffs.

On Tuesday, US Trade Representative Robert Lighthizer said: “It is long past time for the EU to end these subsidies.”

“Unless the EU finally takes action to stop breaking the rules and harming US interests, the United States will have to move forward with countermeasures on EU products.”

During the 1990s the EU and the US followed agreed rules on subsidising aircraft makers until the US pulled out of the deal and both sides filed complaints against each other in 2004.

Analysis by Theo Leggett

The WTO panel has issued a ruling, and both sides have claimed victory. To anyone who has followed the ins and outs of this A380-sized trade dispute over the past 14 years, that will not come as any surprise.

Boeing and the US are trumpeting their view that it shows “disregard for the rules and illegal subsidies is not tolerated”. Meanwhile Airbus is portraying the decision as a “significant legal success” because many of Boeing’s original complaints have been dismissed along the way.

And still grinding through the WTO machinery is a separate complaint the EU has filed against Boeing over allegedly illegal subsidies from Washington State, the US Department of Defense and NASA.

The reality is that developing large aircraft requires huge amounts of money – and the best source of that, one way or another, is governments. It isn’t only happening in Europe either. Russia and China, for example, are both funding major civil aircraft programmes.

In fact, this dispute looks increasingly like a relic of the days when Boeing and Airbus enjoyed a cosy duopoly, and could afford the distraction of years of complex litigation.

LEAVE A REPLY

Please enter your comment!
Please enter your name here