WTO brands Airbus subsidy illegal

30th Jun 2010
WTO brands Airbus subsidy illegal

The World Trade Organisation (WTO) has ruled subsidies from European governments to airplane manufacturer Airbus are illegal.

The decision - the latest twist in a six year courtroom saga – was made public earlier today and declares European launch aid subsidies used by Airbus to develop its commercial airplanes are illegal and must end.

“This is a landmark decision and sweeping legal victory over the launch aid subsidies that fuelled the rise of Airbus and that continue to provide its products a major cost advantage,” explained a jubilant Boeing chairman Jim McNerney.

“We now join the US government in urging full compliance with the ruling and a permanent restoration of fair competition within our industry.”

Both Airbus and Boeing had seen the judgement in March and have been deliberating over a response since then.


Airbus, however, was quick to dispute Boeing’s interpretation of the ruling – claiming 70 per cent of the US claims were rejected, while stating neither American jobs nor profits were lost as a result of reimbursable loans to Airbus.

“These results are in line with the previous versions of the WTO panel’s findings,” said Rainer Ohler, head of public affairs and communications of Airbus.

Mr Ohler also raised the prospect of an appeal to the WTO Appellate Body.


Launch Aid

The dispute centres of the position of Airbus in the global marketplace.

The European company has used government-provided launch aid – usually in the form of low or zero interest loans - to fund the development of its commercial airplanes since the entity was formed in 1970.

“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 America’s aerospace industry and its workers,” added Boeing general counsel Michael Luttig.

However, Airbus countered the WTO had found the European reimbursable loan mechanism – which sees Airbus repay loans as planes are sold – a legal and compliant instrument of partnership between government and industry.

The European Union has 60 days in which to appeal.


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