WTO rules on Airbus subsidiaries

victoria@aviationnews-online.com
By victoria@aviationnews-online.com May 16, 2018 16:29

WTO rules on Airbus subsidiaries

The World Trade Organization (WTO) Appellate body ruled on May 15 to uphold a 2016 ruling that the European Union failed to eliminate billions in illegal aid to Airbus on two aircraft — the A380 and the A350. The European Commission said it would take “swift action” to ensure it was in line with the WTO findings but also stated that the WTO has rejected 204 of the total 218 claims put forward by the US. Airbus commented immediately after the ruling that it the report had confirmed the legality of the loan partnership approach between Airbus and European governments, and also agreed with earlier findings that the European repayable launch investment (RLI) loans for civil aerospace development projects do not constitute a prohibited subsidy and only few modifications are needed to achieve full compliance.

The WTO ruling, Airbus states, confirms that all aspects of the A320 and A330 programs are now in full compliance, and that only “minor action remains on the A380” and that “minor elements” of the RLI on the A350 remain to be addressed. Airbus stated that it is currently implementing changes to respond to these findings, which it says means that “any potential US sanctions, now likely to be minor compared to what we expect on the case against Boeing’s subsidies, could result to be counter-productive and ill-timed”.

Boeing however also claimed victory in the WTO ruling, with Dennis Muilenburg, Boeing’s chief executive, stating that the  final ruling “sends a clear message: disregard for the rules and illegal subsidies are not tolerated. The commercial success of products and services should be driven by their merits and not by market-distorting action.”

The Trump administration called the decision an important victory, with Robert Lighthizer, the US trade representative, claiming that EU aircraft subsidies “have cost American aerospace companies tens of billions of dollars in lost revenue” and warning that unless the EU takes action to stop breaking the rules and harming US interests, the “United States will have to move forward with countermeasures on EU products.”

The WTO’s appellate body will also rule in the coming months on whether the US has complied with an order in 2012 to address its own illegal subsidies to Boeing through Washington state tax breaks.

A ruling in favour of the EU — which claims Boeing has enjoyed more than $20bn in illegal aid — would allow Brussels to impose its own punitive tariffs on US goods under WTO rules.

victoria@aviationnews-online.com
By victoria@aviationnews-online.com May 16, 2018 16:29