March 13, 2012

Airbus, Boeing both claim victory in latest round of WTO dispute

The ongoing transatlantic spat over government subsidies to Airbus and Boeing appears to have taken a turn against the US airframer. The World Trade Organisation has dismissed at least some of Boeing's appeal against a March 2011 ruling that found that it could not have launched an aircraft as sophisticated as the 787 for delivery as early as 2008 without subsidies that fall foul of WTO rules. That earlier ruling also found that the resulting quality of the 787 did serious damage to sales of the Airbus A330 and the original A350.

However, while the European Union suit against US support for Boeing claimed adverse subsidies amounting to $19.1 billion over the 1989-2006 period, the WTO appeals panel determined the value of the subsidies to be at least $5.3 billion. As at previous junctures in the two tit-for-tat disputes - the USA-Boeing originally filed a suit in 2004 against European governments for subsidizing Airbus, and the European side responded in kind - both sides are claiming victory in the WTO's latest pronouncement over billions of dollars of US federal and local taxpayer money spent to aid Boeing.

According to Airbus head of communications, Rainer Ohler, who stressed that the WTO has already found European governments' lending of A380 development funds to Airbus to be legal, today's ruling was a "sweeping loss for Boeing" that makes the 787 "the most heavily subsidised aircraft in aviation history".
Boeing, however, says that the ruling "slashed earlier findings of harm to Airbus from US subsidies", adding: "In sum, the WTO decisions in the two cases establish conclusively and finally that European subsidies competitively disadvantage Boeing and American workers and will continue to do so until launch aid is eliminated."

WTO rules now give Boeing and the United States, which is technically the respondent in this case, six months to comply. Meanwhile, Airbus and the European Union claimed on 1 December 2011 to have put themselves in compliance with the WTO ruling in the US-Boeing case against the EU-Airbus that some aspects of launch aid from France, Germany, Spain and the UK for the development of some earlier Airbus models should not have been allowed.

However, one lawyer familiar with the cases notes that unless the two sides either walk away from the dispute or press for resolution via a global agreement on airliner subsidies, the next likely series of moves will involve several years of compliance arbitration and subsequent appeals.

Flight Global

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