WTO Gives Ruling on Airbus-Boeing State-Aid Dispute

Feb. 29, 2012
World's most costly trade dispute comes to a head.

Top level talks might be the only way to end a seven year state-aid dispute between aerospace groups Boeing and Airbus, a European Union diplomat said Wednesday after the World Trade Organization sent both sides its ruling on the issue.

The decision, given confidentially, was made on a European Union appeal against U.S. government aid to Boeing, and trade officials hoped the details will be released by mid-March.

After the ruling was transmitted to the EU and the United States, an EU diplomat said he could not comment, though he did indicate that EU-US negotiations might be the only path to a solution.

The WTO decision brings to a head a battle between the aerospace giants in the world's most costly trade dispute, but trade officials expressed doubts that it would settle the core issues.

Airbus has taken a big lead recently over Boeing in terms of orders for new aircraft booked.

"Today's ruling, when it is made public, will provide us with a clear picture of where the two parties stand in the aircraft disputes," EU trade spokesman John Clancy said from Brussels.

"We said all along that only negotiations at the highest political level can lead to a real solution and we hope that today's report provides momentum in that direction.

"The real challenge remains to find a mutually acceptable approach to maintain a healthy and viable aircraft industry producing safe and more environmentally friendly aircraft," said Clancy.

The EU is representing European aircraft maker Airbus and the US government is representing Boeing.

The date of publication of the WTO findings now depends on the number of remarks subsequently submitted by the two parties.

There are two cases lodged with the WTO -- one by Boeing against allegedly illegal subsidies for Airbus and a second by Airbus, which made the same claim against its industry rival.

The EU responded in December to a WTO deadline to say how it intends to comply with the body's ruling to end unfair aid in the battle.

The United States has threatened sanctions as it claims the EU has not only failed to comply with a WTO ruling against subsidies to Airbus but also had even provided it with new aid.

An Airbus source told AFP: "The U.S. has already agreed in writing in the WTO that any sanctions request now would be premature by several years.

"Therefore Boeing's statements on seeking sanctions are misrepresenting the process and legally worthless".

In March 2011, the WTO partly upheld an EU complaint against U.S. government support for Boeing, saying that billions of dollars in state aid for the aircraft maker amounted to illegal subsidies.

Both the EU and US claimed victory, with Brussels slamming Washington's subsidies, while the United States hailed the WTO for finding that state aid for Boeing was far less than that paid to European rival Airbus.

In a 900-page report, the WTO panel found that subsidies to NASA and the U.S. Department of Defense caused significant price suppression, resulting in significant lost sales and exports "from third country markets" in the product category of 200-300 seat wide-body aircraft.

In all, the WTO found that state aid provided to Boeing reached at least $5.3 billion.

The WTO also found against tax breaks, particularly those given by the state of Washington as well as on the federal level, saying that these were subsidies. They amounted to around $2.3 billion.

Airbus, part of the European Aeronautics Defence and Space Company (EADS), has claimed that illicit U.S. subsidies caused it $45 billion of lost civil airliner sales between 2001 and 2006.

However, the U.S. government and Boeing claimed a moral victory, saying that the amount of illegal subsidies paid to the US aircraft maker was much less than that paid to Airbus.

Copyright 2012 Agence France-Presse

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