US claims trade win after WTO says Airbus illegally subsidised

File photo of Airbus employees posing next to an aircraft during a hand-over ceremony in Hamburg, July 28, 2008. — Reuters picFile photo of Airbus employees posing next to an aircraft during a hand-over ceremony in Hamburg, July 28, 2008. — Reuters pic

WASHINGTON, Sept 23 — Boeing and US trade officials declared victory in a long trade battle yesterday after the World Trade Organisation ruled that the European Union failed to end illegal subsidies for Airbus.

The EU and member states did not implement an order to remove subsidies that Boeing alleges helped Airbus beat it in major multi-billion dollar contract battles, the global free-trade arbiter said in Geneva.

The WTO found that Airbus had won aircraft sales deals over Boeing in Europe, China, India and other countries helped by US$22 billion (RM90.36 billion) in illegal subsidies, US Trade Representative Michael Froman said.

“This report is a sweeping victory for the United States and its aerospace workers,” he said. 

‘We have long maintained that EU aircraft subsidies have cost American companies tens of billions of dollars in lost revenue, which this report clearly proves.”

Boeing claimed that the United States could now levy retaliatory duties against the European Union of up to US$10 billion a year as a result of the ruling yesterday, although US officials refrained from saying they would take such a step.

“Today’s ruling confirms that Airbus both failed to withdraw old subsidies and instead put in place new subsidies for a grand total of almost US$22 billion,” the company said.

Ready to negotiate

Shares of both aircraft builders rose on the ruling. 

Airbus was up 2.0 per cent to 53.72 euros (US$59.95) in Paris, and in New York, Boeing finished up 1.0 per cent at US$131.87.

The ruling came after a fight dating back to 2004 over support and subsidies given both sides’ aircraft builders.

Airbus and Boeing are leading employers and exporters on their home turfs, and compete head-to-head to sell to airlines around the world.

The European Union said in a statement that it found some of the WTO findings “unsatisfactory,” noting it has the right to appeal the ruling.

It also pointed out that the WTO is likely to rule in coming months on EU and Airbus complaints about what they say is illegal US support for Boeing.

US trade officials did not say what their next step would be.

“We are ready to negotiate if it (the EU) is interested,” a US trade official said.

An Airbus spokeswoman claimed in a statement that the WTO ruling backs the company’s argument that EU support for the company was mostly legal.

“We only needed to make limited changes in European policies and practices to comply,” she said.

“This case should not be seen in isolation,” she added. 

“There are already decisions condemning Boeing’s abusive and illegal subsidies. 

“So, it appears that Boeing and the US continue to litigate mainly to try to justify their own grab for state cash.”

12 year old case

The WTO had ruled in 2011 that the European Union — and, individually, France, Germany, Spain and Britain — had to take 36 specific steps for withdrawing several support and subsidy programmes for Airbus.

The case particularly focused on EU “launch aid” loans to help Airbus develop and bring aircraft to market.

US officials subsequently complained to the WTO’s compliance panel that the European Union and the named countries had not followed through in most cases.

Washington also expanded its attacks on alleged support for newer aircraft sold by Airbus, the A350 XWB and the A380. 

The compliance panel ruled mostly in Boeing’s favour, including on some subsidies for the A350 XWB.

“Today’s WTO report reinforces the value of international trade rules that ensure US companies and workers can compete and sell their world-class products and services on a level playing field,” Froman said.

“We expect the EU, Germany, France, the United Kingdom and Spain — some of our closest trading partners — to respect WTO rules. We call on them to end subsidised financing of Airbus immediately.” — AFP

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