EU Declares Win in Airliner Trade Spat With US

EU Declares Win in Airliner Trade Spat With US

In the long-running subsidies spat between Airbus and Boeing, the World Trade Organization (WTO) has determined in a first ruling that the European Union (EU) failed to stop illegal subsidies used to support the Airbus A380 and A350 programs.

The WTO decision affirmed a ruling that France, Germany, Spain and the United Kingdom had failed to adequately remedy market-distorting aid for the launch of Airbus's A380 superjumbo, infrastructure support and equity investments that unfairly benefited the plane maker. "The EU will now take swift action to bring itself into line with WTO rules as regards its remaining obligations", she said in a statement.

Later this year, a separate WTO compliance panel is expected to deliver its decision on whether the USA complied with the terms of a 2012 ruling against illegal US tax subsidies that gave Boeing an unfair advantage.

Shares of Airbus reversed earlier gains to trade down as much as 1.8 percent immediately after the ruling was published.

"It is long past time for the European Union to end these subsidies", he said.

The size of USA tariffs to be allowed will be determined through a WTO arbitration process, and will be based on the annual harm to US and Boeing - losses that the USA had previously pegged as ranging from $7 billion to $10 billion a year.

Airbus General Counsel John Harrison said: "Airbus recognizes the importance of the WTO and the Appellate Body's findings and will do what is necessary to correct any errors and this report confirms the efforts we are making".

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Malmstrom added: "Also, we look forward to the upcoming ruling by the appellate body on USA compliance with the WTO findings of the massive and persistent government support to Boeing".

The row between the two largest planemakers has been dragging on for more than a decade, and reached a head in 2010 and 2011 when the WTO ruled that both Boeing and Airbus had collected billions in unlawful assistance.

"The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes", the manufacturer continued.

A negotiated settlement remains possible, and the same appellate body that ruled on Tuesday must still decide the other half of the dueling claims: allegations that the United States improperly subsidised Boeing.

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Both companies have cut output of four-engined A380s and 747s due to airlines' preference for smaller models and Boeing has long said the industry's behemoths have had their day. For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm.

The litigation adds to the tension between the U.S. and Europe, two once-cooperative trade partners that are already sparring over U.S. President Donald Trump's steel and aluminum tariffs and his decision to back out of a nuclear treaty with Iran, jeopardizing $40 billion in aircraft sales.

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