World Trade Organization Rules Airbus Subsidies Were Illegal <

 

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World Trade Organization Rules Airbus Subsidies Were Illegal

By
Daniel Guevarra
 
 

March 24, 2010 - The World Trade Organization (WTO) has given its final ruling on subsidies the European jet aircraft manufacturer, Airbus had received.

WTO ruled that the European governments illegally subsidized Airbus, which allowed the manufacturer to undercut its research and development costs resulting and overtaking Boeing sales.  

"Today's final ruling puts any doubts to rest - launch aid is an illegal subsidy that has cost America jobs, hurt our ability to compete and damaged our overall economy," Sen. Patty Murray, D-Wash., said in a statement after being briefed.

Boeing issued a statement following news reports quoting officials who indicated that the United States has prevailed on all of the major issues in the WTO's final decision, which reaffirms its earlier interim decision, in the U.S. case against European subsidies to Airbus.

"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. U.S. officials have estimated the commercial value to Airbus of all the government launch aid subsidies it has received at more than $178 billion (in 2006 dollars).  Government subsidies have been used to support the creation of every Airbus product, including the A330/A340, which received more than $5 billion in development aid, and the A380, which received $4 billion in subsidies. Those and other European government subsidies to Airbus have significantly distorted the global market for large commercial airplanes, causing adverse effect to Boeing and costing America tens of thousands of high-tech jobs.   

"We appreciate the strong bipartisan efforts by both the executive and legislative branches of the U.S. government to right this wrong and ensure that America's aerospace workers get a fair shake. Because of the U.S. government's undiminished resolve to end illegal subsidies, this decision should level the competitive playing field once and for all with Airbus, as well as set an important precedent for other nations with aspirations to enter the commercial airplane business.

 

"Airbus and its sponsor governments continue to re-affirm their commitment to using subsidized launch aid to fund the next Airbus airplane, the A350.  We urge them to change course and fully comply with the WTO's clear ruling.  The WTO panel has painstakingly and professionally reviewed all of the evidence that's been presented the past four years. It is extremely important to international trade and global economic growth that governments and businesses abide by the WTO's rules. Markets, not parliaments, should pick the winners in the global aerospace industry." 

Airbus then released a statement regarding WTO panel report, below is their statement.  

“70 percent of the US claims were rejected. The European reimbursable loan mechanism is confirmed to be a legal and compliant instrument of partnership between government and industry. The Panel refused the US request for remedies as legally inappropriate.  

“Past loans were found by the Panel to contain a certain element of subsidy, a finding we will study. Possible future funding for the A350 is not affected in any way by today's report. US attempts to include the A350 were specifically rejected.  

“Neither European RLI nor any other measure has caused "material injury" to any US interest. This means that the Panel has rejected the US claims that European measure caused job losses or lost profits in the US aircraft industry. Boeing claims of lost US jobs have now been judged and found to be false. Research grants have been condemned as structurally non-compliant, with important implications for the coming report on US subsidies to Boeing.  

“These results are in stark contrast to Boeing's enthusiastic expectations announced only last night in a statement by the company. Airbus, the EU and the Member States will closely analyse today's ruling in advance of a possible review by the WTO appellate body. Airbus expects the WTO to issue the report on Boeing subsidies in June. Boeing's recent WTO enthusiasm is unlikely to survive WTO confirmation that the B787 is the most highly subsidized aircraft program in the history of aviation.  

“Airbus expects the WTO conflict to drag along for at least a few more years. As in all other trade conflicts, resolution will finally only be found in trans-Atlantic negotiations. Boeing's repeated rejection of European offers for negotiation over years and again last night usurp the proper role of the US Government and contradict the US trans-Atlantic partnership with European nations.  

“Airbus is the largest export customer of US aerospace. Over $10 billion per year is invested in the US by Airbus. That translates into ten thousands of jobs in a lot of cities all across America. In fact, Airbus supports actually over 180,000 jobs in the US.
 
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