WTO Rejects 70% of U.S. Subsidy Claims Regarding Airbus

WTO said that reimbursable EU loans made to Airbus amounted to a 'legal and compliant instrument of partnership between government and industry.'

The U.S. claims that the European Union is illegally subsidizing Airbus but the WTO has rejected 70% of those claims. On March 23 the WTO issued a ruling in the dispute.

Airbus said a World Trade Organization dispute settlement panel had determined that reimbursable EU loans made to Airbus amounted to a "legal and compliant instrument of partnership between government and industry."

At the same time, it "refused the U.S. request for remedies as legally inappropriate."

But Airbus acknowledged that past loans, according to the WTO, did contain "a certain element of subsidy," which it said was "a finding we will study."

Airbus also contended that future funding for its long-haul A350 aircraft was "not affected in any way" by the ruling.

WTO said it had issued its full ruling on a six-year-old dispute brought by the United States over EU aid payments to Airbus. The 1,000-page decision was transmitted only to the two sides involved in the litigation and would only be made public in the coming weeks or months, according to officials.

Additionally, this decision is only the first part of the long-running, acrimonious saga, as another ruling on a counter-complaint brought by the EU against U.S. aid for Boeing is expected later this year.

Today's ruling covered the first case filed in 2004 by Washington in which the United States charged that the European Union had illegally provided subsidies worth up to $200 billion to Airbus.

The U.S. argued that an accord that allowed Brussels to provide up to a third of development costs of new airliners was no longer valid since Airbus had become a major industry player and was not fledgling firm it was when the deal was struck. The EU immediately retaliated with a complaint against Washington's help to Boeing, accusing the United States of violating international trade rules by funneling subsidies to civil aviation through military research funds.

Some $23 billion of subsidies were masked as defense research, the EU claimed. If the damage to European aviation industry were calculated using the same figures as the United States, it would amount to some $305 billion, it added.

Copyright Agence France-Presse, 2010

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