The WTO Appellate Body has published the first of two rulings expected this year on subsidies in the large commercial aircraft dispute between the US and the EU.
The first ruling is the Appellate Body’s final report on the EU’s compliance with previous World Trade Organisation’s (WTO) findings in the case against Airbus. The second ruling – dealing with Boeing’s case – is expected later this year.
According to Airbus, in its report, the Appellate Body confirms the legality of the loan partnership approach between Airbus and European governments.
“The WTO Panel agrees further with earlier findings that the European repayable launch investment (RLI) loans for civil aerospace development projects do not constitute a prohibited subsidy and only few modifications are needed to achieve full compliance,” Airbus said in a statement.
The WTO confirmed that all aspects of the A320 and A330 programmes are now in full compliance, and that only minor action remains on the A380.
Airbus CEO Tom Enders said significant legal success for the European aviation industry confirms the company’s strategy which it has followed over all those years of the dispute.
“Of course, today’s report is really only half the story – the other half coming out later this year will rule strongly on Boeing’s subsidies and we’ll see then where the balance lies,” he said.
Enders said the current geopolitical climate for trade is worrying, and industry players should not fuel it with unproductive disputes that undermine fair competition world-wide and impact the workers in this industry as well as our customers and operators.
“The consequences of such disputes extend beyond the aerospace industry and affect economic growth on a global scale,” he said.
Boeing, however, said in a statement that the WTO in its final decision, found that the EU has failed to honour multiple previous rulings and has provided more than $22bn of illegal subsidies to European aircraft maker Airbus.
“After examining this case for more than a decade, the WTO has determined the EU must end its unfair business practices and remedy the ongoing harm caused by the illegal subsidies,” Boeing said in a statement.
“This landmark ruling by the WTO Appellate Body is the final decision in this case, which was initiated in 2006. Today’s decision ends the dispute and clears the way for the United States Trade Representative (USTR) to seek remedies in the form of tariffs against European imports to the United States.”
The authorised tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes, Boeing said.
Tariffs could be scheduled as early as 2019. This is expected to be the largest-ever WTO authorisation of retaliatory tariffs.
“Today’s final ruling sends a clear message: disregard for the rules and illegal subsidies is not tolerated. The commercial success of products and services should be driven by their merits and not by market-distorting actions,” said Dennis Muilenburg, Boeing chair, president and CEO.
“Now that the WTO has issued its final ruling, it is incumbent upon all parties to fully comply as such actions will ultimately produce the best outcomes for our customers and the mutual health of our industry. We appreciate the tireless efforts of the U.S. Trade Representative over the 14 years of this investigation to strengthen the global aerospace industry by ending illegal subsidies.”
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