World Body Reviews Airbus' Compliance With Subsidy Decision

The fight between Airbus and Boeing over government subsidies to the planemakers is likely to heat up again, as the World Trade Organization (WTO) has held a hearing to review compliance by Airbus and the EU with its decision.

The battle has been simmering for nine years. In 2010 and 2011, the WTO released reports that seemed to indicate that both sides had probably violated international trade law to some degree in developing aircraft over the past decade. Each side claimed victory over the other, saying their rival's transgressions were far worse than their own, and demanding that they make amends.

The hearing, which was held in private on Wednesday, focused on Airbus, which is legally allowed to accept loans from its sponsor countries. Boeing, however, charged that the planemaker was receiving illegal government subsidies to develop its aircraft, including the A350XWB, which had been outside the scope of the original complaint. Airbus says that development of its newest airliner, which it is building to compete with Boeing's Dreamliner, has been completely in compliance with the WTO's rules, according to a report from Reuters.

Airbus says that its recent restructuring into what it said is a more "normal" company with less state involvement makes it a far more independent enterprise. Boeing holds that the government subsidies have not changed, and Airbus continues to benefit from them.

Airbus, meanwhile, says that after the restructuring, it is "as normal as Boeing" when it comes to the government-funded grants for airplane development. They continue to call on the U.S. planemaker to comply with the a WTO's ruling concerning its government loans made some 10 months after the Airbus ruling was issued.

The hearing marked the first time the two sides met face-to-face in the dispute. Boeing is hoping to be able to broaden the scope of the original case to include the A350. Airbus, meanwhile, is also in a dispute with the German government over that airplane. Berlin reportedly recently withheld some $800 million in anticipated loans as they discuss where the new airliner will be built.

FMI: www.wto.org