Twelve years after the U.S. first launched its claim that Airbus had received state aid for the development of the A380 program, the World Trade Organization (WTO) has upheld a further U.S. claim that the European Union failed to act on what was seen as illegal subsidies for the French aircraft manufacturer.
This latest development is just one episode in a long-running two-way battle between the two manufacturing giants, Boeing and Airbus, relating specifically to large aircraft subsidies. Each claim the other has been in receipt of unfair advantages. The latest WTO finding is a damning report indicating that the EU and certain member states within had failed to act upon previous recommendations and rulings on the dispute. As a consequence, this is seen to be a cause of “serious prejudice to the United States’ interests.”
The WTO, however, indicated that the U.S. had failed in its attempt to demonstrate that France, Germany, Spain and the UK had granted prohibited export subsidies for the A350 and A380 programs. As a consequence, both Boeing and Airbus have claimed this latest ruling has gone in their favor.
According to Airbus, the WTO had confirmed that its public-private partnership model was acceptable under the rules and regulations of international trade law, stating that “The A350 agreements are very close to perfect—only tiny tweaks required,” while launching a counter-attack against Boeing’s 787 and 777X programs.
“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 timeframe. 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 also stated.
In response to the ruling, Boeing said that they saw the WTO had identified new and illegal subsidies for the A350 and had consequently ruled against the UE for failing to remedy US$17 billion in aid.
According to Boeing’s CEO, Dennis Muilenburg, “Today’s historic ruling finally holds the EU and Airbus to account for their flouting of global trade rules,” while Boeing’s EVP, J. Michael Luttig, added: “After any appeal of today’s compliance ruling, the next step for the US government is to obtain WTO authorization to impose billions in retaliatory duties. The US government has previously calculated those to be up to US$10 billion annually.”
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