1,200 Page Report Widely Seen As Boosting Boeing
The World Trade Organization released a 1,200 page report
Tuesday essentially saying that the European Union provided cheap
loans to Airbus, lowering manufacturing costs and pulling market
share from rival Boeing.
The ruling is widely seen as a win for the Chicago-based
planemaker, which could influence Congress in its decision as to
what company should build the next generation tanker for the U.S.
Air Force.
The New York Times reports that the report found that loans
from European governments for the development of the A380 were
"prohibited subsidies," and it said they should be withdrawn in the
next three months. It also found that the governments had illegally
subsidized nearly every Airbus model, from the A300 to the A340.
The report said that if the governments had not stepped in to help
the company, it “would not have been possible for Airbus to
have launched all these models, as originally designed and at the
times that it did,” and said the level of debt Airbus would
have had to assume would have been "massive."
While the ruling does not cover pledged loans from European
governments for the new A350 aircraft under development, one U.S.
trade official said he would be "very disappointed if any member
states moved forward with disbursing aid for the A350." Work had
not begun on the new composite Airbus, which it is developing to
compete with Boeing's Dreamliner, when the original complaint was
filed.
A380
In a statement, Boeing Chairman, President and Chief Executive
Officer Jim McNerney said "This is a landmark decision and sweeping
legal victory over the launch aid subsidies that fueled the rise of
Airbus and that continue to provide its products a major cost
advantage. The Office of the U.S. Trade Representative deserves
tremendous credit for today's decision. We now join the U.S.
government in urging full compliance with the ruling and a
permanent restoration of fair competition within our
industry," Boeing interprets the ruling as meaning that
Airbus must repay the $4 billion it received in launch aid for the
A380.
Airbus, understandably, sees the ruling in a different light. A
statement on the Airbus website says that the WTO panel report in
the U.S. case against the EU confirms Airbus’s earlier
predictions: 70 percent of the US claims were rejected and wild
allegations have been proven wrong. Neither jobs nor any profits
were lost as a result of reimbursable loans to Airbus.
“These results are in line with the previous versions of
the WTO panel’s findings. Airbus, the EU and the Member
States are closely analyzing the report in advance of a possible
review by the WTO Appellate Body”, said Rainer Ohler, Head of
Public Affairs and Communications of Airbus.
Airbus says that research grants were condemned with important
implications for the coming report on U.S. subsidies to Boeing.
Airbus expects the WTO to issue the interim report on Boeing
subsidies very soon. “Only the availability of the report on
the parallel case on Boeing subsidies will bring the necessary
balance to allow for a possible start of negotiations, without any
preconditions,” Ohler added.
B787
Airbus says that it expects this WTO dispute to continue for a
few more years, but Boeing says that it thinks the case is as good
as closed. "A successful conclusion to this longstanding dispute is
now in sight. Within a year, the U.S. government will have
authority to act decisively to ensure compliance if Airbus has not
entirely restructured the A380 program so that it is financed and
funded on objectively verifiable commercial terms," said Boeing
Executive Vice President and General Counsel J. Michael Luttig.
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