WTO hands down landmark aerospace judgement

WTO hands down landmark aerospace judgement

The World Trade Organisation has reached a final conclusion on a dispute over aircraft subsidy between the United States and the European Union.

Both sides are claiming victory following the ostensibly secret decision, with Boeing branding the judgement “good news for aerospace workers across America”, while Airbus argued some 70 per cent of American claims were rejected.

The disagreement centres on state subsidy to private enterprise, with both America and the EU claiming their material interests have been damaged by the actions of the other.

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

US officials estimate the commercial value to Airbus of all government subsidies now totals around $178 billion (in 2006 dollars). 

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These 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 alone, 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, argues the American manufacturer.

Earlier this week Boeing criticised a German government decision to offer Airbus a £1 billion loan.

“Airbus and its sponsor governments continue to reaffirm their commitment to using subsidised launch aid to fund the next Airbus airplane, the A350,” continued Boeing.

“We urge them to change course and fully comply with the WTO’s clear ruling. 

“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

Despite Boeing’s enthusiasm for the World Trade Organisation’s decision, Airbus has also been quick to endorse the statement.

Airbus argues the European reimbursable loan mechanism (RLI) has been confirmed as legal and a compliant instrument of partnership between government and industry, while American claims for redress of the system have been deemed “legally inappropriate”.

Perhaps most importantly from the Airbus perspective, neither European RLI nor any other measure has caused “material injury” to any US interest, in the view of the WTO.

This means the panel has rejected the US claims 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.

However, this is unlikely to be an end to the dispute, with Airbus now expecting the WTO to issue a report on subsidies to Boeing 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,” argued Airbus in a statement.

“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.”