Boeing is hailing yesterday's World Trade Organization ruling as confirmation that European rival Airbus has enjoyed a "massive market advantage" thanks to the "billions in illegal government subsidies provided to fund the company's commercial airplane product line since its inception more than 40 years ago."
The WTO ruling partly upheld a European Union complaint against U.S. state support for Boeing, saying that at least $5.3 billion in aid for the aircraft maker were illegal subsidies. Boeing, however, says that number pales in comparison with the amount of illegal subsidies that have buoyed Airbus over the years. "This WTO ruling shatters the convenient myth that European governments must illegally subsidize Airbus to counter U.S. government assistance to Boeing," said J. Michael Luttig, Boeing executive vice president and general counsel. "The ruling rejects 80% of the EU's claims against the U.S., finding no more than $2.7 billion of impermissible subsidies to Boeing not previously remedied. That amount includes $2.6 billion in NASA R&D funding, which is but a small fraction of the total amount challenged." The ruling stemmed from the European Union's attempt to counter a U.S. case that successfully challenged illegal subsidies to Airbus. Last June, the WTO upheld approximately 80% of the U.S. claim, finding Airbus had received more than $20 billion in illegal government subsidies. Visitors to Boeing's website today are greeted by a large bar graph titled "Airbus Received Over $20 Billion in Illegal Subsidies; Boeing Received $2.78 Billion." Airbus 'Pleased With the Findings' Not surprisingly, Airbus did not see eye-to-eye with Boeing on the March 31 WTO ruling, noting in a press release that the Toulouse, France-based aircraft maker "is pleased with the findings." "Finally the truth emerges: Boeing has received and continues to receive subsidies which have a significantly greater distortive effect than the reimbursable loans to Airbus," said Rainer Ohler, Airbus' head of public affairs and communications. "Taking the cases together, the WTO has now specifically green-lighted the continued use of government loans in Europe and ordered Boeing to end its illegal cash support from U.S. taxpayers. It's time for Boeing to stop denying or minimizing the massive illegal subsidies it gets." Ohler added, "Boeing has shot themselves in the foot with the WTO proceedings." "The company has achieved a massive condemnation of its U.S. funding mechanisms -- provided the U.S. is willing to implement the ruling -- while the European mechanism has been approved as a legal instrument," Ohler said. "The only result of this anachronistic battle is that it limits America's and Europe's ability to compete with emerging competitors that have access to unlimited government funding." Both sides said they are bracing for possible appeals and will support the outcome. But for now, their interpretations of the WTO ruling couldn't be farther apart. "Airbus must take immediate steps to withdraw the outstanding prohibited subsidies provided to the A380, and it must finance the A350 and all other future programs on commercial terms," Boeing's Luttig said. "With $16.6 billion of cash on hand, EADS/Airbus can, and now must, develop its products without illegal government subsidies." See Also:
- "WTO Ruling Vindicates Boeing" in "Planes, Trains and Automobiles" forum