US claims win in dispute with EU over aerospace subsidies

Posted September 23, 2016

The WTO said the EU and four nations - Britain, France, Germany and Spain - had failed to comply with earlier rulings against all but two of 36 contested measures, including billions of dollars of European government loans to Airbus. The U.S. said subsidized financing to Airbus amounted to nearly $22 billion.

"This is the largest trade ruling from WTO in history - and they have sided with USA manufacturers", Cantwell said. "I$3 t is apparent that the A350 XWB could not have been launched and brought to market in the absence of LA/MSF [Launch Aid]".

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

The finding by a WTO compliance panel Thursday strikes a blow to the European Union in a long-running dispute with the US over government subsidies to the world's two largest aircraft manufacturers, Airbus and Boeing Co.

The European Commission said, adding the 574-page document should be read in the context of two other WTO reports expected to address USA subsidies to Boeing in coming months: "We are closely analysing the report".

The WTO hadn't previously passed judgment on A350 support because the program in its current form was launched only after the USA initially raised its subsidy concerns with the trade body in 2004.

It comes amid a USA presidential campaign where claims that US companies are suffering from alleged cheating by foreign competitors is a prime topic for both candidates, and amid growing support for protectionism on both sides of the Atlantic.

Trade experts believe the WTO plane subsidy dispute between the USA and European Union could drag on for years. They have cost the United States economy tens of billions of dollars in would-be exports.

According to the Wall Street Journal, it is expected to sustain an European Union complaint that the NASA space agency has channeled $2.6 billion to Boeing, and that the Chicago-based company has received tax breaks and export subsidies.

At the smaller end of the market segment there are other suppliers, and certainly the potential for more from China and Russian Federation, for example, in the future - which could well involve state subsidies that eventually end up in front of a WTO dispute settlement panel. One EU spokesman raise the issue of "massive subsidies" granted to Boeing by the state of Washington, most notably to keep Dreamliner production at Everett.

"This long-awaited decision is a victory for fair trade worldwide and for US aerospace workers, in particular".

Boeing Chief Executive Dennis A. Muilenburg called the latest WTO ruling "a victory for fair trade world-wide and for US aerospace workers, in particular".

The case, which pits the United States against its close trading partners the European Union - as well as France, Germany, Spain and Britain - began in 2004 over alleged government handouts that fall foul of worldwide trade rules.

Officials in both camps said they were ready to negotiate, but robust comments from both planemakers and upcoming elections in the United States as well as France and Germany - the main home to Airbus - suggested little immediate room for manoeuvre.

"We only needed to make limited changes in European policies and practices to comply", it said in a statement.

But the U.S. disagreed and asked the WTO to rule on the issue.