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Boeing Claims Win in Dispute Over Airbus Subsidies

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Boeing Claims Win in Dispute Over Airbus Subsidies

Boeing Claims Win in Dispute Over Airbus Subsidies
September 22
15:10 2016

MIAMI — The Boeing Company claimed a victory in its long-running trade dispute over subsidies from the European Union (EU) to Airbus, after a compliance panel from the World Trade Organization (WTO) ruled on Thursday that the EU failed to remedy subsidies provided to Airbus for more than 40 years.

The total due, according to Boeing, is about $22 billion, including $17 billion in past subsidies, and around $5 billion to subsidize the launch of the A350 XWB.

The WTO ruled so-called launch aids given to Airbus by EU members had caused a “genuine and substantial” loss of sales worth tens of billions of dollars for its competitor Boeing.

In June 2011, the WTO found that the EU and four of its member countries —the UK, France, Germany and Spain—  provided billions of dollars in subsidized financing to Airbus. While the EU subsequently claimed to have come into compliance, the United States disagreed and requested the intervention from a compliance panel.

However, the WTO panel dismissed the claims of the US, after failing to prove that such four countries granted prohibited export subsidies for the Airbus A350 and A380 programs.

“Today’s historic ruling finally holds the EU and Airbus to account for their flouting of global trade rules,” Dennis A. Muilenburg, Boeing chairman, president and CEO said in a statement. “This long-awaited decision is a victory for fair trade worldwide and for U.S. aerospace workers, in particular.”

Boeing executive vice president and general counsel J. Michael Luttig said that “the day of reckoning for launch aid has finally arrived”.

“The World Trade Organization has now found that Airbus is and always has been a creature of government and of illegal government subsidy,” he said.

This decision is independent of the EU’s case against the United States, in which the WTO is considering whether Boeing received illegal aids in the United States. This ruling is expected to take place in 2017.

Airbus said the WTO confirmed the conformity of its public-private partnership model under international trade laws.

“We only needed to make limited changes in European policies and practices to comply with the appellate body’s report. We did what we needed to do and did it in the agreed time frame. We will address the few still remaining points indicated by the report in our appeal. As a point of fact, Airbus and its European partners met their obligations to withdraw any subsidy elements or eliminate adverse effects. The only open point is final ruling on the interest rate benchmark for the government loans. We are confident that we will win that point on appeal,” Airbus said.

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