WTO panel finds EU has failed to end Airbus subsidies

Eleanor Steed
By Eleanor Steed September 22, 2016 19:45

WTO panel finds EU has failed to end Airbus subsidies

Today, the World Trade Organization compliance panel issued its compliance report for the dispute launching by the US into the provision of illegal subsidies to Airbus by the French, German and UK governments. The case: “European Communities and Certain Member States — Measures Affecting Trade in Large Civil Aircraft – Recourse to Article 21.5 of the DSU by the United States” has been rumbling on for several years but has been reignited now since the panel found that the EU has failed to stem subsidies to Airbus, which it says has enabled the pan-European airframe manufacturer to launch the A350XWB programme.

The full ruling can be accessed here: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e.htm

The European Union has its own counterclaim outstanding that accuses the US government of propping up Boeing. However, the US airframe manufacturer has been quick to comment that case is independent of today’s ruling.

Boeing Executive Vice President and General Counsel J. Michael Luttig stated today that the case against Airbus subsidies are independent of the European cases against the United States and that the EU needs to act now. “The cases are separate and distinct,” he said. “The EU lost this compliance case for the simple reason that it did nothing to remedy its massive subsidies which have had profound effects on the commercial airplane market. Whatever happens in the European cases against the United States, launch aid and other illegal government support for Airbus will now come to an end.”

Boeing chairman, president and CEO, Dennis A. Muilenburg, described the ruling as historic and “a victory for fair trade worldwide and for U.S. aerospace workers, in particular”.

Luttig added in the press release that under prior WTO rulings the EU had an obligation to remedy the subsidies for its past airplanes, including the A380. “Instead, the EU compounded the illegal practice by giving Airbus additional launch aid for the A350 XWB. After any appeal of today’s compliance ruling, the next step for the U.S. government is to obtain WTO authorization to impose billions in retaliatory duties. The U.S. government has previously calculated those to be up to $10 billion annually.”

Boeing calculates subsidies to Airbus to be in the region of $22 billion, which includes $15 billion in launch aid for each Airbus commercial aircraft program from the A300 through the A380, and $2 billion in non-launch aid subsidies, as well as the A350 XWB to the tune of $5 billion.

“No form of government support compares to launch aid – in terms of amount, nature, or effects,” Luttig said. “Launch aid created entire aircraft programs – indeed, an entire aircraft company – as the WTO found today. This is a type of government support that the WTO has found, over and over again, to be unequalled both in nature and amount, unfair to Boeing and United States workers, and flatly illegal under global trade rules. Today’s ruling confirms that these illegal subsidies will now end.”

 

Aviation 100 Asia & Pacific 2016 Awards Survey:
https://www.surveymonkey.co.uk/r/Aviation100AsiaPac2016

Aviation 100 Middle East & Africa 2016 Awards Survey:
https://www.surveymonkey.co.uk/r/Aviation100MidEastAfrica2016

 

Philip Tozer-Pennington
philipt@aviationnews-online.com

Eleanor Steed
By Eleanor Steed September 22, 2016 19:45