Published: Wed, May 16, 2018
Economy | By

European Union failed to stop subsidizing Airbus — WTO

European Union failed to stop subsidizing Airbus — WTO

The European Commission said the US had lost most of its claims and that much of the aid faulted by the WTO in earlier rounds of the 14-year-old case had expired in 2011.

One of longest-running and most bitterly contested trade disputes came to a head yesterday after the World Trade Organisation (WTO) ruled that the European Union illegally paid Airbus $18bn (£13.3bn) in subsidies, paving the way for retaliatory tariffs from the US.

The next stage of the 14-year battle decided Tuesday will be over the size of the tariffs the US will be allowed to impose to compensate for lost exports.

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

"The result is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the US taxpayer", he said.

The United States has accused European governments of providing favorable loans to Airbus for its A380 superjumbo and the A350 long-range jet that compete with Boeing's 747 jumbo jet and 787 Dreamliner, respectively.

On today's ruling, both manufacturers are claiming victory.

"The commercial success of products and services should be driven by their merits and not by market-distorting actions", Muilenburg said.

Separately, the WTO is also to rule on the EU's claim that Washington is providing illegal financial support to Boeing.

European Trade Commissioner Cecilia Malmstroem insisted that the ruling also rejected "the vast majority" of USA claims against it, while saying in a statement that the bloc "will now take swift action to ensure it is fully in line with the WTO's final decision in this case". But the United States later claimed the European Union failed to comply with the ruling, and again asked the WTO to intervene.

The shares of Airbus had fallen shortly after the WTO issued its findings and were poised to close down around 0.86 percent.

"Today's report is really only half the story", Airbus Chief Executive Tom Enders said.

Tuesday's finding wraps up a case against the EU dating back to 2004 and means the US can now seek WTO backing to impose sanctions on an as yet unspecified list of European goods.

However, the amounts will depend on arbitration, expected to take around a year.

It has been predicted that the tarrifa of Boeing could reach billions of dollars a year starting as early as 2019. It has meanwhile levelled significant subsidy claims against Boeing. This is proof of Boeing's cynical PR motives in bringing this case about in the first place.

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