WTO rules against Airbus over subsidies

GENEVA — The World Trade Organization ruled Tuesday that European governments unfairly financed Airbus and harmed the fortunes of rival U.S. planemaker Boeing, officials said, even as the France-based Airbus claimed it won.

Three officials with knowledge of the confidential WTO ruling said it upheld findings of an interim decision handed down last September that faulted European governments for providing Airbus with subsidies through risk-free loans, research funding and infrastructure support.

“This is a powerful, landmark judgment and good news for aerospace workers across America who for decades have had to compete against a heavily subsidized Airbus,” Boeing said in a statement.

Airbus, however, said “70 percent of the U.S. claims were rejected” and that the WTO panel dismissed the Boeing Co.’s claim that its performance suffered as a result of European subsidies. In that case, it would be a victory for Airbus and the European Union ahead of a possible June ruling on alleged U.S. subsidies to Boeing.

While the WTO’s report won’t halt European subsidies for Airbus, the two disputes could provide tighter guidelines for how far governments can go in supporting companies in a market worth more than $3 trillion over the next two decades.

One official said the WTO panel found that Europe was, in some cases, unfairly subsidizing Airbus through “launch aid” because the planemaker only repays the loans as new planes are sold. For some planes, however, the U.S. failed to demonstrate that the subsidies actually harmed Boeing, a key requirement for proving wrongdoing.

Sen. Patty Murray noted the significance of the ruling in regard to the $35 billion U.S. Air Force tanker contest in which Airbus’ parent company, EADS, is considering competing against Boeing. Murray represents Washington state, where Boeing builds commercial aircraft.

“It’s clear that the A330, the very plane Airbus would offer our military, has received illegal subsidies that have hurt American workers,” she said.

The Geneva trade body can’t force countries or companies to eliminate subsidies, but it can authorize retaliatory sanctions against countries that fail to comply with rulings. It generally takes years to reach that stage.

“Our government must consider these findings very seriously and demand tangible remedies especially in light of the European firm’s interest in increasing U.S. business and competing for Defense Department contracts,” said Rep. Norm Dicks, D-Wash.

Boeing, in particular, is interested in halting European funding to Airbus’ new A350 XWB, a jet that like Boeing’s 787 is made mostly of composite materials. Boeing said Tuesday that it urges Airbus and Europe “to change course and fully comply with the WTO’s clear ruling.”

However, Airbus expects the WTO to rule in its favor in June, putting an end to Boeing’s recent enthusiasm for the trade rulings. Airbus anticipates the WTO will confirm the “787 is the most highly subsidized aircraft program in the history of aviation,” Airbus said.

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