European Union failed to stop subsidizing Airbus — WTO

16 May, 2018, 08:16 | Author: Terri Saunders
  • DEVELOPING NEWS: WTO rules EU failed to stop subsidies on some Airbus aircraft

The World Trade Organization (WTO) opened the door for the Trump administration to impose billions of dollars in retaliatory sanctions on European imports with a landmark ruling on Tuesday that Europe had illegally subsidised the aircraft giant Airbus to the detriment of its U.S. competitor Boeing.

Boeing interprets the WTO ruling to say "the European Union has failed to honour multiple previous rulings and has provided more than US$22 billion of illegal subsidies to European aircraft maker Airbus".

The WTO found the subsidies to Airbus violated worldwide trade rules in 2011 and, when the United States complained the European Union had not complied with the WTO's findings, a WTO compliance panel agreed the subsidies had continued and had cost Boeing tens of billions of dollars in lost sales.

The report came almost 14 years after America brought the dispute to the WTO at the behest of Boeing, Airbus's closest rival.

Airbus shares fell shortly after the WTO issued its findings and were poised to close down around 0.86 per cent.

The findings of Tuesday wrapped up a case against the European Union dating back to 2004 and means that the US can now seek WTO backing to impose sanctions on an as yet unspecified list of European goods.

Boeing may lose upward of $20 billion in aircraft sales because of the USA withdrawal from the nuclear pact.

"Despite Boeing's rhetoric, it is clear that their position today is straightforward healthy: they have half the market and a full order book, they have clearly not been damaged by Airbus repayable loans", Airbus CEO Tom Enders said.

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"The other half coming out later this year will rule strongly on Boeing's subsidies and we'll see then where the balance lies", he said.

It has been predicted that the tarrifa of Boeing could reach billions of dollars a year starting as early as 2019.

The WTO case has yielded 5,000 pages of filings and cost tens of millions of dollars.

"The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes", the company said in a statement.

Airbus disputes those numbers, saying they overstate the amount of support embedded in the contested loans.

The European Commission argued that the WTO decision rejected most US claims and was its victory.

Both companies have cut output of four-engined A380s and 747s due to airlines' preference for smaller models and Boeing has long said the industry's behemoths have had their day.

"The Airbus case against Boeing is yet to come". It is anticipated that US tariffs will be authorized up to the amount of annual harm the subsidies are determined to cause.

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