European Union still providing illegal subsidies to Airbus

Airbus A380

Boeing said that the tariffs could start in 2019 and could be the largest-ever WTO authorization of retaliatory tariffs. It is anticipated that USA tariffs will be authorized up to the amount of annual harm the subsidies are determined to cause.

The World Trade Organization (WTO) on Tuesday ruled that the European Union (EU) failed to cease subsidies to Airbus and address market-distorting trade practices, which negatively impacted aerospace giant Boeing and US workers.

"This report confirms once and for all that the European Union has long ignored WTO rules, and even worse, European Union aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue", U.S. Trade Representative Robert Lighthizer said in a statement.

A second ruling, about alleged subsidies for Boeing aircraft, is expected later this year. The decision means the USA can now ask an arbitrator to determine how much it can retaliate against the European bloc for failing to comply - raising a new question about how much Washington may recover from the EU through retaliatory tariffs. "The commercial success of products and services should be driven by their merits and not by market-distorting actions", said Dennis Muilenburg, Boeing chairman, president and CEO.

European Trade Commissioner Cecilia Malmstroem insisted that the ruling also rejected "the vast majority" of United States claims against it, while saying in a statement that the bloc "will now take swift action to ensure it is fully in line with the WTO's final decision in this case". Where there were narrow rulings against US practices, they have been fully addressed to the WTO's satisfaction.

The EU has brought two such cases against the U.S. One case ended in favor of the U.S., and in the other, like in the Airbus case, the majority of the allegations the EU made against the U.S. and Boeing were dismissed. It is under appeal and should be decided within the next year.

"Today's report is really only half the story", Airbus Chief Executive Tom Enders said.

Leeham News cites an attorney who explained that Airbus claims that 94% of Boeing's complaints have now been rejected while just 6% of claims involving the A350 and the A380 have been upheld.

Boeing shares were down 0.7% at 342.22 on the stock market today.

But the same panel rejected claims by the United States that Europe had issued cheap loans for Airbus's A320 and A330 models, leading the claim a sort of victory. Boeing has in the past shown complete disregard by ignoring the recommendations and continuing with their illegal behavior. It has meanwhile levelled significant subsidy claims against Boeing. "It shatters Boeing's claim it perpetuated for years that their WTO case undermines European industrial-government partnership".



Other news