European Planemaker Sees The Ruling Differently

The World Trade Organization ruled Tuesday that grants from European governments received by Airbus have given an unfair advantage to the planemaker over its rival Boeing. However, in a news release, Airbus says 70% of the U.S. complaints were "rejected."

Sources with knowledge of the confidential ruling told the Associated Press that the WTO has upheld the interim decision released in September. That document said the risk-free loans, research funds, and infrastructure assistance granted to Airbus from European governments were, in some cases, unfair to Boeing.

In a news release, Airbus claimed it was vindicated by the report. The company holds that:

• 70 percent of the U.S. claims were rejected.
• The European reimbursable loan mechanism is confirmed to be a legal and compliant instrument of partnership between government and industry.
• The Panel refused the US request for remedies as legally inappropriate.
• Past loans were found by the Panel to contain a certain element of subsidy, a finding we will study.
• Possible future funding for the A350 is not affected in any way by today's report. US attempts to include the A350 were specifically rejected.
• Neither European RLI nor any other measure has caused "material injury" to any US interest. This means that the Panel has rejected the US claims that European measure caused job losses or lost profits in the US aircraft industry. Boeing claims of lost US jobs have now been judged and found to be false.
• Research grants have been condemned as structurally non-compliant, with important implications for the coming report on US subsidies to Boeing.

"These results are in stark contrast to Boeing's enthusiastic expectations announced only last (Monday) night in a statement by the company. Airbus, the EU and the Member States will closely analyze today's ruling in advance of a possible review by the WTO appellate body," Airbus said in the release.

A380

Airbus said it expects the WTO to issue the report on Boeing subsidies in June. "Boeing's recent WTO enthusiasm is unlikely to survive WTO confirmation that the B787 is the most highly subsidized aircraft program in the history of aviation," it said in the statement.

Airbus also says it expects the WTO conflict to drag along for at least a few more years. As in all other trade conflicts, resolution will finally only be found in trans-Atlantic negotiations. Airbus claims that Boeing's repeated rejection of European offers for negotiation over years and again Monday night usurp the proper role of the US Government and contradict the US trans-Atlantic partnership with European nations.

The New York Times reports that the WTO ruling says that the subsidies for the massive A380 were the most egregious, and that they should be pulled "without delay." However, it said that subsidies for development of the A300 through A340 aircraft were "actionable," meaning they should be removed within six months.

B787

While the WTO can't force governments to eliminate subsidies, it is free to OK sanctions against countries that do not comply with its rulings. In this case, sources said that those sanctions, if any, could take more than 10 years to implement.

FMI: www.wto.org, www.airbus.com