WTO poised to outlaw Airbus state aid

4th Sep 2009
WTO poised to outlaw Airbus state aid

The World Trade Organization is set to rule today what is being dubbed as the biggest trade dispute in history - between aerospace giants Boeing and Airbus. The US planemaker is accusing the EU of handing out illegal subsidies to its arch rival, and it is believed that the WTO is expected to agree.

The decision would force a change in the way the world’s biggest plane manufacturers fund their development. However, the EU has also issued a counterclaim against the US for its support of Boeing, and a ruling on that is due in the next six to eight months.

The WTO’s judgement will come today with a final decision expected three to four months later. It follows five years of deliberations.

The panel will release its findings to Airbus and Beoing, but the results will not be made public.

Louis Gallois, the chief executive of Airbus’s parent company EADS, has said he believes the company has a “very good case”.


Experts say the WTO’s decision will set the boundaries for acceptable government funding in civil aviation.

However they believe that despite today outcome, there remains a long way to go in the saga.

“This whole WTO process is going to last four to five years. It’s going to be 2013 at least before we get a final settlement on this,” said Howard Wheeldon, senior strategist at BGC Partners.

He added that Boeing and Airbus have to find terms so that they can work together based on what the WTO actually rules.

Trade rules do not allow subsidies for exports, or subsidies that distort the market. Boeing does not receive launch aid from the US government but European member states have argued that the company gets state funding through research and development money.

Last month, Lord Mandelson announced the UK would lend Airbus £340m to develop its new wide-body plane, the A350 XWB. The government has made a return of £1.6bn on its previous £1.2bn investment in Airbus, according to the Department for Business, Innovation & Skills, headed by Mandelson.

At the time, a spokesman for the US Trade Representative called the UK loan “a major step in the wrong direction”.

France and Germany have also offered €1.4bn (£1.2bn) and €1.1bn respectively in launch aid for the A350.


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