GENEVA — The World Trade Organization ruled today that European governments gave planemaker Airbus illegal subsidies in its battle with U.S. competitor Boeing Co., in a first key ruling on a long-running dispute between the European Union and Washington.
Made public three months after it was delivered to U.S. and EU trade officials, the WTO’s decision runs 1,061 pages over the question of whether the European Union unfairly abetted Airbus’ rise to world No. 1 planemaker.
Interpreting the ruling isn’t easy, because the governments and companies have had months to prepare statements that cite different parts of the decision, with both sides claiming victory.
The verdict confirms wrongdoing, but it was unclear how hard it came down against Europe as it awaits the result of a countersuit alleging illegal U.S. support for The Boeing Co.
Together, the two rulings could set important guidelines for an industry worth $3 trillion over the next two decades, and one that may soon include new competitors from China and elsewhere.
“This important victory will benefit American aerospace workers, who have had to endure watching Airbus receive these massive subsidies for more than 40 years,” U.S. Trade Representative Ron Kirk said. “Today’s ruling helps level the competitive playing field with Airbus.”
Reps. Rick Larsen and Jay Inslee, both D-Wash, decried the subsidies.
“The jury is back and the verdict is in: the European Union is guilty of providing Airbus with billions of dollars in illegal subsidies,” Larsen said. “The WTO ruling is clear — the EU’s illegal subsidies have directly harmed American workers.”
Inslee said the ruling validates that illegal subsidies shouldn’t be used to steal U.S. jobs.
Both Inslee and Larsen called on Robert Gates, the secretary of defense, to consider the ruling in deciding whether Boeing or Airbus parent EADS should receive the $35 billion contract to build the new Air Force refueling tanker.
“The WTO ruling must be the final nail in the coffin of Launch Aid,” Larsen said. “Airbus needs to cut off its illegal subsidies for the A350 immediately and try to develop planes the old-fashioned way: using private capital with market interest rates.”
But the EU and Airbus cited a number of findings they said were in their favor.
And the report is so complicated that few reporters, politicians or even company executives will ever get through all of it — let alone understand it.
Take, for example, one key argument in the dispute: did the U.S. prove that Airbus funding was harming Boeing? The U.S. says yes, as the panel recognized the “serious prejudice” suffered by the Chicago-based company.
But the EU is happy that American claims of “material injury” were rejected.
There were differing views on whether that means European subsidies were responsible for lost American jobs or market share.
The WTO “has found that EU support did not damage Boeing’s pricing or profitability, and did not lead to a loss of jobs at the company,” the 27-nation bloc said in a statement.
But Kirk seemed to be saying the opposite.
“These subsidies have greatly harmed the United States, including causing Boeing to lose sales and market share,” he said.
Washington and Brussels have 60 days to lodge appeals, and an Airbus spokeswoman said she expected both sides to challenge elements of the ruling.
“This whole case will go on for years,” Maggie Bergsma said.
Demonstrating that the subsidies actually harmed Boeing was a key requirement for the U.S., which brought the case to the WTO in 2004 after pulling out of a 12-year-old agreement with the EU that regulated subsidies in the civil aviation industry.
In that time, Airbus used hundreds of millions of euros in low-interest government loans — commonly called “launch aid”— to develop the A380 superjumbo. Boeing wants the WTO ruling to pre-empt similar European plans for funding Airbus’ midsize, long-haul A350 XWB that aims to compete with the American company’s 787 Dreamliner.
Boeing claimed the Airbus ruling proved that “each and every instance of launch aid that the U.S. challenged was held to be illegal.”
“The panel said that without the illegal subsidies it received, Airbus would not have the aerospace market share it now enjoys,” said Boeing executive vice president J. Michael Luttig.
Airbus beat rival Boeing in aircraft production in 2009, delivering a record 498 aircraft and maintaining its place as the world’s largest planemaker, with Boeing delivering 481. Airbus also posted 271 orders, beating Boeing’s 142.
The WTO is expected to make a first, confidential ruling on U.S. payments to Boeing sometime next month.
Airbus has sought talks U.S.-EU to end the dispute, but Boeing wants its rival to remove any illegal subsidies first.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
