Depending On Which Company Is Asked, It's High Crimes Or Much
Ado About Nothing
The World Trade Organization has handed over its final report
concerning government subsidies received by Boeing to both the U.S.
and European governments. While the report is supposed to be kept
confidential, both Boeing and Airbus had immediate statements
putting their spin on the document.
Boeing, for its part, said the report backed up its claims that
the WTO had rejected nearly all of the allegations made by the EU
against the planemaker.
"Today's reports confirm the interim news from last September
that the WTO rejected almost all of Europe's claims against the
United States, including the vast majority of its R&D claims
– except for some $2.6 billion," Boeing said in a statement
released to the media. "This represents a sweeping rejection of the
EU's claims.
"Nothing in today's reports even begins to compare to the $20
billion in illegal subsidies that the WTO found last June that
Airbus/EADS has received (comprised of $15 billion in launch aid,
$2.2 billion in equity infusions, $1.7 billion in infrastructure,
and roughly $1.5 billion in R&D support).
"The WTO's decisions confirm that European launch aid stands
alone as a massive illegal subsidy only available to Airbus, which
has seriously harmed Boeing, distorted competition in the aerospace
industry for decades, and resulted in the loss of tens of thousands
of good-paying U.S. jobs," the statement continued.
"Today's decision will not require any change in policy or
practice, or other remedy that comes close to approaching the
billions of dollars of launch aid that must be repaid by Airbus or
restructured on proven commercial terms. As a result of the June
WTO ruling, EU governments and Airbus/EADS must repay or
restructure $4 billion in still outstanding illegal launch aid
subsidies Airbus received to develop the A380. They must also
remedy the adverse effects of the additional $16 billion in other
illegal subsidies Airbus received.
"Under the WTO's decisions, Airbus must now compete in the
global marketplace without the massive illegal subsidies it has
received since its inception and without which, the WTO held,
Airbus would be 'a much different, and we believe a much weaker'
company than it is today. It will be required to finance airplanes
the same way Boeing does – with its own money. Having
recently announced it has more than $13 billion dollars of cash on
hand, Airbus should have no problem with this new requirement.
"Today's ruling underscores our confidence in the WTO processes
and dispute-resolution procedures. We applaud the body for its work
and continue to look to Airbus/EADS and the EU to recognize that in
today's global market, everyone must play by the rules and abide by
WTO requirements. Playing by the rules, for Airbus/EADS, means
withdrawing the still-outstanding A380 prohibited launch aid
subsidy and financing the A350 on commercial terms. Airbus should
confirm its intention to comply with the WTO's decisions."
Airbus, not unexpectedly, had a very different view of the
findings. The European plane maker contends that the final
decision shows Boeing received "massive and illegal government
subsidies for many decades," which negatively affected European
industry.
According to Airbus, "(T)he final WTO-report to be publicly
released in a few weeks can be expected to say:
- Boeing would not have been able to launch the 787 without
illegal subsidies.
- Boeing has received at least $5 billion of US taxpayer dollars
which has been determined illegal. Quantification of the additional
subsides beyond this figure will take place in later stages of this
dispute if Boeing chooses to pursue it.
- An additional more than $2 billion in state and local subsidies
that Boeing will receive in the future are illegal.
- The effect of the subsidies is significantly larger than the
face value of the subsidies in light of their particularly
pervasive nature.
- The pervasive subsidies have thoroughly distorted competition
within the aviation industry, directly resulting in significant
harm to the European aerospace industry.
- The effect of these subsidies will continue in the future,
putting Airbus at a significant disadvantage.
- In concluding that Department of Defense (DoD) and NASA funding
are illegal subsidies, the WTO decision will require fundamental
changes to the US funding mechanisms."
Airbus contends that the WTO decision will also confirm that
Washington State and the City of Everett must stop subsidising
Boeing. Unless stopped, Airbus says, these subsidies will increase
annually through 2024.
"The WTO can be expected to say that the billions in subsidies
benefiting Boeing have a significantly greater distortive effect
than the Reimbursable Loans to Airbus," the European planemaker's
statement continued. "Airbus estimates at least $45 billion as a
realistic figure based on identified lost sales to Airbus as a
result from the subsidies. Taking the cases together, the WTO will
be seen to now have specifically green-lighted the continued use of
loans in Europe and commanded Boeing to end its illegal R&D
cash support from NASA, DoD and the US taxpayers.
"Airbus applauds the excellent result achieved by the European
Commission and the Member States. From today, Boeing can no longer
pretend that it doesn't benefit from generous and illegal state
subsidies. It has been doing so from the start and it's time to
stop the denial," said Rainer Ohler, Airbus' Head of Public Affairs
and Communications. "We expect the WTO dispute to carry on for
several more years and as in all trade conflicts, a resolution will
only be reached through negotiations. The myth that Boeing doesn't
receive government aid is over and we hope this sets the tone for
balanced and productive negotiations going forward."