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July 2, 2010 - Boeing praised the World Trade Organization's final ruling that billions of dollars in European launch aid subsidies used by Airbus to develop its commercial airplanes are illegal and must end.
The decision,
which the WTO made public earlier today, also declares that a broad
array of government funding for Airbus research and infrastructure
development violated international trade agreements. "This is a landmark decision and sweeping legal victory over the launch aid subsidies that fueled the rise of Airbus and that continue to provide its products a major cost advantage," said Boeing Chairman, President and Chief Executive Officer Jim McNerney. |
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"The Office of the
U.S. Trade Representative deserves tremendous credit for today's
decision. We now join the
Boeing Executive
Vice President and General Counsel J. Michael Luttig explained the
details and implications of the ruling. "Each and every instance of
launch aid that the
Luttig noted that
European-provided launch aid for the A380 was found to include
prohibited export-contingent subsidies, which WTO rules require be
withdrawn "without delay."
Luttig added that
"the WTO rejected all excuses for continuing launch aid, the most
pernicious form of subsidy Airbus receives, as well as all other forms
of subsidies Airbus and parent EADS use for unfair advantage in the
commercial airplane market and in defense markets for
military-derivative aircraft. Airbus must now compete on its own,
without the assistance of European taxpayers ? assistance the |
Airbus has used
government-provided launch aid to fund the development of all its
commercial airplanes since the entity was formed in 1970. It now
commands more than half the commercial airplane market. Launch aid
typically comes in the form of no- or low-interest loans with repayment
terms so generous that no repayment need occur during the several years
it takes to develop a commercial airplane, and not at all in the event a
program fails. Launch aid is a unique benefit to Airbus, as the
"The World Trade
Organization has now unequivocally declared that government subsidies to
Airbus violate WTO rules, are market-distorting, and have caused
significant harm to
Luttig said the
WTO's ruling not only makes clear that there can be no new
government-subsidized financing for Airbus' future A350 model, but also
clarifies rules for other new market participants. "The ruling
establishes an overarching principle governing all those entering
aerospace markets: Anyone that wants to use government funding
arrangements to develop new, competing products must demonstrate that
monies are provided on proven commercial terms," he said.
The WTO is an
independent, unbiased arbiter of global trade disputes. Today's ruling
results from the
"A successful
conclusion to this longstanding dispute is now in sight. Within a year,
the U.S. government will have authority to act decisively to ensure
compliance if Airbus has not entirely restructured the A380 program so
that it is financed and funded on objectively verifiable commercial
terms," Luttig said.
" |
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