Sources: WTO to Rule on Boeing Aid Dispute Wednesday

Feb. 27, 2012
There are two cases currently 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 World Trade Organization on Wednesday will rule on an E.U. complaint against U.S. state support for Boeing in a more than seven-year-old aerospace trade war, sources close to the case said.

"The conclusions of the appeal against U.S. aid to Boeing will on Wednesday be transmitted confidentially to the two parties, the European Union representing Airbus and the U.S. government representing Boeing," one of the sources told AFP Saturday.

"This confidential report will be made public at a later date," it added.

The date of publication will depend on the number of remarks then submitted by the two parties.

There are two cases currently 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 European Union 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 seven-year-old battle.

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

An Airbus spokeswoman told AFP on Saturday that the European plane maker does "not expect any change on fundamentals" in the ruling this week.

"It should not surprise us or Boeing. There is no way they can win this case." She said the dispute is "absurd and anachronistic."

"The competitors are not going to restrain their funding systems but, on the contrary, are following every single move here to learn from what they see."

An E.U. official said "the only way ultimately to solve this case will be through political discussions at the highest level."

The Saga Continues

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

Both the European Union and the United States 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 "the effects of the NASA and DOD aeronautics R&D subsidies are significant price suppression, significant lost sales and threat of displacement and impedance of exports from third-country markets" in the product category of 200- to 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 Washington state -- where Boeing has several manufacturing sites -- as well as on the federal level, saying that these were subsidies. They reached around $2.3 billion.

Airbus, part of the European Aeronautics Defence and Space Co., 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 Chicago-based aircraft maker was much less than that paid to Airbus.

A WTO ruling in June 2010 accepted three out of seven claims by Washington that Airbus effectively received illegal export subsidies.

Boeing said that the 2010 ruling faulted $1.5 billion in European R&D subsidies, $1.7 billion in infrastructure subsidies and $2.2 billion in equity injections. It also cited launch aid, which it claimed amounted to $15 billion.

Analysts believe that both sides will eventually be obliged to restructure some state financing and strike an agreement to end the dispute after a lengthy and inconclusive battle.

Copyright Agence France-Presse, 2012

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